G2Rad
16th September 2010, 09:42 AM
Treasury FTDs are over $2 trillion. Major banks sold more than $2 trillion dollars worth of Treasury bonds to the Fed, but then FAILED TO DELIVER.
NOTHING is being done about it, except that the Fed loaned the guilty parties the money to buy Treasurys to cover, at nearly zero interest cost.
The bond settlement system has broken down. Broker/dealers have stopped delivering bonds and holders are now afraid to lend them into the repo market for fear they’ll never be returned and potential buyers sit on the sidelines fearful of handing over their money to a counterparty that at best might not deliver a bond on time, or at worst might go under.
US Treasuries are no safe haven. There is a lack of functionality in the Treasury market and if not soon connected it could lead to negative investor perception.
The situation is so far advanced that 10-year TIPS are pricing in zero or netative average inflation for the next ten years, which, of course, is insane and shows you the extent of bond market manipulation by the Fed to keep interest rates low in order to keep mortgage rates low enough to allow refinancing and new buyers. Our government has savaged the TIPS inflation spread in order to keep their scam going and to give retirees no return on their Treasury investments. Anyone who buys US Treasuries is insane or stupid.
Delivery needs to be enforced. If it isn’t it is over. It’s a situation similar to the SEC not enforcing the law on naked shorting. This game of Wall Street, banking and government always winning is over. You cannot have 8.6% of all treasuries outstanding failing in the first five months of the year. Now the figure is $2 trillion.
NOTHING is being done about it, except that the Fed loaned the guilty parties the money to buy Treasurys to cover, at nearly zero interest cost.
The bond settlement system has broken down. Broker/dealers have stopped delivering bonds and holders are now afraid to lend them into the repo market for fear they’ll never be returned and potential buyers sit on the sidelines fearful of handing over their money to a counterparty that at best might not deliver a bond on time, or at worst might go under.
US Treasuries are no safe haven. There is a lack of functionality in the Treasury market and if not soon connected it could lead to negative investor perception.
The situation is so far advanced that 10-year TIPS are pricing in zero or netative average inflation for the next ten years, which, of course, is insane and shows you the extent of bond market manipulation by the Fed to keep interest rates low in order to keep mortgage rates low enough to allow refinancing and new buyers. Our government has savaged the TIPS inflation spread in order to keep their scam going and to give retirees no return on their Treasury investments. Anyone who buys US Treasuries is insane or stupid.
Delivery needs to be enforced. If it isn’t it is over. It’s a situation similar to the SEC not enforcing the law on naked shorting. This game of Wall Street, banking and government always winning is over. You cannot have 8.6% of all treasuries outstanding failing in the first five months of the year. Now the figure is $2 trillion.