German Bond Auction Fails !!!!

[Large Sarge]

German Bond Auction Fails
QE to Infinity AND BEYOND!!! will be a worldwide fiat phenomenon. Who else will buy the bonds?

Germany sold 4.075 billion euros in its final reopening of the September 2021 bond, bringing the outstanding amount to 16 billion euros. A new January 2022 benchmark will be launched in November. The bid/cover ratio at the sale was 1.1, below the 1.5 at the previous sale in September and the 2011 average at 10-year Bund sales of 1.61, according to Reuters data. But with a target amount of 5 billion euros -- the Bundesbank retained 0.925 billion euros -- the 4.55 billion euros of bids drawn did not match the amount on offer.

The last 10-year auction deemed a technical failure was in July. "Looking at the bid/cover and the fact that ... we're facing an undersubscribed auction it shows that when risk appetite is on the rise it's difficult for the Finanzagentur to find enough demand out there," said WestLB's Leister.
Read more:

http://www.reuters.com/article/2011/10/19/markets-bonds-auction-idUSL5E7LJ1I320111019

[DMac]

German bonds failing to sell is a bad omen of things to come.

[Twisted Titan]

The bonds will be forced on The Proloteriat via some gubbermint mandate soon enough


just wait

[vacuum]

So I'm wondering if anyone knows....did it fail because of the problems in Europe, or because the world is going through another deflationary period (and there isn't enough money to buy the bonds)?

[Large Sarge]

So I'm wondering if anyone knows....did it fail because of the problems in Europe, or because the world is going through another deflationary period (and there isn't enough money to buy the bonds)?

probably a combination

1. no real budget cuts and/or tax increases. (austerity)

2. Social unrest is spreading, and getting worse, making govts look weak and inept, faith in long term paper decreases

3. no faith in the Euro currency.

likely more

I think deflation is not the big issue IMO....

[Neuro]

So I'm wondering if anyone knows....did it fail because of the problems in Europe, or because the world is going through another deflationary period (and there isn't enough money to buy the bonds)?

It is odd. According to the article if I am reading it right the auction failed because the German bunds are too SAFE!?! Certainly I can see that the interest rate on the German bunds are very low, and thus it would fail to attract buyers who would like to receive at least the inflation rate on their investment. Most probably Germany on it's own isn't involved in the currency swap with the Fed, apart from indirectly through the European Central Bank. I would bet that the biggest buyer of European debt these days are the Federal Reserve (As probably the biggest buyers of Treasury Bills and bonds is the european central bank), and maybe they want to punish Germany for not wanting bailing out of the PIIGS...

Just speculating...

[Neuro]

Imagine the irony if Germany was to default first because of failure to secure lending.

The notion is of course utterly bizarre, which makes me think that it may happen...

[DMac]

Imagine the irony if Germany was to default first because of failure to secure lending.

The notion is of course utterly bizarre, which makes me think that it may happen...

He who defaults first laughs last! :D

[hoarder]

Bonds will be purchased by bankers in another country with funds issued out of thin air, like they have been doing for decades. I don't understand why they didn't do it this time.

[Joe King]

Imagine the irony if Germany was to default first because of failure to secure lending.

The notion is of course utterly bizarre, which makes me think that it may happen...
Yes, it would be ironic to say the least. However, if it were a case of Germany having to secure lending in order to stave off default, wouldn't yields simply rise in order to attract said lending?
If that's not happening, they obviously don't need it that badly, right?

[Neuro]

Yes, it would be ironic to say the least. However, if it were a case of Germany having to secure lending in order to stave off default, wouldn't yields simply rise in order to attract said lending?
If that's not happening, they obviously don't need it that badly, right?

You are right of course. Another bizarre twist though, if this is a central bank boycot of German debt, would be that Germany may get a higher interest rate than greater risks, like France or Belgium, who are still in the favor of the bankers...

Here is another possible angle on the story:
The central bankers suspect/know that Germany is going to leave the Euro soon, they hold off on buying Euro denominated German paper at a low interest, preferring to buy D-Mark denominated bunds...

[Horn]

and maybe they want to punish Germany for not wanting bailing out of the PIIGS...

Just speculating...

Give'em a quick short sharp shot, and they'll never do it again, dig it?


http://www.youtube.com/watch?v=MYiahoYfPGk

[Neuro]

Give'em a quick short sharp shot, and they'll never do it again, dig it?

Yes, something like that.

[Horn]

Yes, something like that.

Its the English way.

[Uncle Salty]

The bonds will be forced on The Proloteriat via some gubbermint mandate soon enough


just wait

Yep. All retirement funds will be confiscated and replaced with .gov bonds!!

Woo hoo.