The major question unasked and unanswered is whether the USFed gave foreign central banks the USDollars with which to bid up the USTreasurys at auction. My belief is obviously yes, for three reasons. First, the USFed was struggling at auctions with rising bond yields and bad publicity. Second, the process was applying sufficient pressure to their own stable of primary bond dealers, which was sitting on over $360 billion in gradually lower quality bond inventory, to bring down their own dealer network. Dresdner Kleinwort exited the dealer network, but two Canadian big banks entered (or are entering) the dealer network motivated by grave stupidity. See Toronto Dominion and Royal Bank of Canada. Third, they have the means, they have the ability, they have the sway, they have the bold defiant arrogance. The US banker syndicate can rejigger the Indirect Bidder definition, but that is but a small smokescreen that fades by noontime. Notice how Indirect Bidders (largely foreign central banks) grabbed over half the USTreasury supply with a participation rate of 54% in a recent purchase of $18.878 billion of the $35 billion for sale. Thanks to the superstar Greg Weldon for the chart.

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tvsterling at 10:05 2009-07-17 said:
We are obviously now engaged in a war of economics & guess who has all the bullets. China, of course. Draw the obvious conclusion; we are losing this war. The result will be a crash of our system (the US led Bretton Woods Camelot with US in the catbird's seat). Just like the Russian system cratered in the early 90's our time has come; dragged down by the greed & foolishness of the privileged few. EXACTLY like in Russia. Welcome to the new downsized & offshored America.Very clever or lucky the Republicans have gotten the crisis shifted onto a Democratic administration. The outcome is inevitable. Permalink

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