Russia Dumps 20% Of Its Treasury Holdings

[Libertarian_Guard]

Russia Dumps 20% Of Its Treasury Holdings as mystery "Belgium" Buyer Adds Another Whopping $40 Billion


Back in mid-March, there was a brief scare after the start of the Ukraine conflict, when Fed custody holdings plunged by a record $104.5 billion (if promptly bouncing back the following week), leading many to believe that Russia may have dumped its Treasurys, or at least change its bond custodian. We noted that we wouldn't have a definitive answer until the May TIC number came out to know for sure how much Russia had sold, or if indeed, anything. Moments ago the May TIC numbers did come out, and as expected, Russia indeed dumped a record $26 billion, or some 20% of all of its holdings, bringing its post-March total to just over $100 billion - the lowest since the Lehman crisis.

But as shocking as this largely pre-telegraphed dump was, it pales in comparison with what Zero Hedge first observed, is the country that has quietly and quite rapidly become the third largest holder of US paper: Belgium. Or rather, "Belgium" because it is quite clear that it is not the country of Begium who is engaging in this unprecedented buying spree of US paper, but some account acting through Belgian custody.


... to clarify for our trigger-happy Belgian (non) readers: it is quite clear that Belgium itself is not the buyer. What is not clear is who the mysterious buyer using Belgium as a front is. Because that same "buyer", who to further explain is not China, just bought another whopping $31 billion in Treasurys in February, bringing the "Belgian" total to a record $341.2 billion, cementing "it", or rather whoever the mysterious name behind the Euroclear buying rampage is, as the third largest holder of US Treasurys, well above the hedge fund buying community, also known as Caribbean Banking Centers, which held $300 billion in March.


In summary: someone, unclear who, operating through Belgium and most likely the Euroclear service (possible but unconfirmed), has added a record $141 billion in Treasurys since December, or the month in which Bernanke announced the start of the Taper, bringing the host's total to an unprecedented $341 billion!


***from the comment section***


It's my understanding the "purchaser" of these IOUs is "unknown". As such, the US is indebted to this "unknown" entity to whom we are now legally obligated to provide contractual redemption out of the national treasury, the likes of which can precipitate the wholesale collapse of the American Dream. If the US gov can coerce a sovereign nation like Switzerland to hand over information on persons depositing wealth in their banks, how can this "Belgium" purchaser remain unaccounted for? If nothing else, I would think a few casinos could figure out who this"whale" is.



The fact the US doesn't view this as a National Security issue is enough to finger the fed.

http://www.zerohedge.com/news/2014-05-15/russia-dumps-20-its-treasury-holdings-mystery-belgium-buyer-adds-another-whopping-40

[Libertarian_Guard]

Banking Euro

'00 '07 '14

Ireland $5 B ---> $19 B ---> $113 B

Belgium $28 B --> $13 B ---> $381 B

Switzerland $18 B> $34 B ---> $175 B

Luxemburg <$5 B-> $60 B --> $145 B

TOTAL $56 B $116 B $815 B (1400%+ increase)

Belgium is just the most recent torch carrier for EU treasury buying…



CORE EURO

'00 '07 '14

Germany $54 B ---> $50 B ---> $63 B

Italy $20 B ---> $14 B ---> $31 B

Netherland $13 B-> $15 B ---> $35 B

France $27 B ---> $10 B ---> $57 B

Spain $20 B ---> $<5 B ---> $23 B

TOTAL $134 B $94 B $208 B (55% increase)

http://www.zerohedge.com/news/2014-05-15/russia-dumps-20-its-treasury-holdings-mystery-belgium-buyer-adds-another-whopping-40?page=7

[Ares]

Wonder if it's the IMF or BIS or hell even our own FED buying the Treasuries through Belgium to keep rotating the deck chairs on Titanic??

[Sparky]

The Fed can buy infinity Treasuries. That's a lot.

Bond auctions have had high demand recently. Since the "alarm" that the 10-year rate had crept up to 3% last year, it has drifted all the way back down to 2.5%.

Eventually, this bond thing will be a big problem. Could be 12 months or 12 years.

[Neuro]

The Fed buys Euro bonds, the ECB buys treasury bonds... It just appears there is no monetization, but it is ONLY money printing buying all new European and US debt... They just scratch each other's back!

[Libertarian_Guard]

So, and I am asking seriously now - is there any doubt, any serious doubt, that this is the Federal Reserve doing backdoor QE, presumably because any tapering will result in the stock market, and probably bonds, taking a giant shit, while PMs would go through the roof?

I mean, it's not fucking Belgium, right? It seems like such an obvious shame - maybe hey just count on "the masses" not knowing or caring about it?


http://www.zerohedge.com/news/2014-05-15/russia-dumps-20-its-treasury-holdings-mystery-belgium-buyer-adds-another-whopping-40?page=8

[Libertarian_Guard]

Things must be getting dicey. If this is the Fed, and all indications point that way, their credibility on the world stage will take a plunge; if they lie about this what else are they lying about? Oh, everything? Taper was actually a 50% increase in QE?

You're money is no good here. Got gold?

http://www.zerohedge.com/news/2014-05-15/russia-dumps-20-its-treasury-holdings-mystery-belgium-buyer-adds-another-whopping-40?page=4

[Libertarian_Guard]

http://thenewsdoctors.com/wp-content/uploads/2014/05/Treasury-holdings-March-2014-y-y.png

[singular_me]

My son, 32yo, lives in belgium and recently told me, that EU was doomed and that he found quite nerve racking that most people dont see it.




I mean, it's not fucking Belgium, right? It seems like such an obvious shame - maybe hey just count on "the masses" not knowing or caring about it?

[Libertarian_Guard]

The Great Deceiver — The Federal Reserve

Paul Craig Roberts and Dave Kranzler

Is the Fed “tapering”? Did the Fed really cut its bond purchases during the three month period November 2013 through January 2014? Apparently not if foreign holders of Treasuries are unloading them.

From November 2013 through January 2014 Belgium with a GDP of $480 billion purchased $141.2 billion of US Treasury bonds. Somehow Belgium came up with enough money to allocate during a 3-month period 29 percent of its annual GDP to the purchase of US Treasury bonds.

Certainly Belgium did not have a budget surplus of $141.2 billion. Was Belgium running a trade surplus during a 3-month period equal to 29 percent of Belgium GDP?

No, Belgium’s trade and current accounts are in deficit.

Did Belgium’s central bank print $141.2 billion worth of euros in order to make the purchase?

No, Belgium is a member of the euro system, and its central bank cannot increase the money supply.

So where did the $141.2 billion come from?

There is only one source. The money came from the US Federal Reserve, and the purchase was laundered through Belgium in order to hide the fact that actual Federal Reserve bond purchases during November 2013 through January 2014 were $112 billion per month.

In other words, during those 3 months there was a sharp rise in bond purchases by the Fed. The Fed’s actual bond purchases for those three months are $27 billion per month above the original $85 billion monthly purchase and $47 billion above the official $65 billion monthly purchase at that time. (In March 2014, official QE was tapered to $55 billion per month and to $45 billion for May.)

Why did the Federal Reserve have to purchase so many bonds above the announced amounts and why did the Fed have to launder and hide the purchase?

Some country or countries, unknown at this time, for reasons we do not know dumped $104 billion in Treasuries in one week.

Another curious aspect of the sale and purchase laundered through Belgium is that the sale was not executed and cleared via the Fed’s own National Book-Entry System (NBES), which was designed to facilitate the sale and ownership transfer of securities for Fed custodial customers. Instead, The foreign owner(s) of the Treasuries removed them from the Federal Reserve’s custodial holdings and sold them through the Euroclear securities clearing system, which is based in Brussels, Belgium.

We do not know why or who. We know that there was a withdrawal, a sale, a drop in the Federal Reserve’s “Securities held in Custody for Foreign Official and International Accounts,” an inexplicable rise in Belgium’s holdings, and then the bonds reappear in the Federal Reserve’s custodial accounts.

What are the reasons for this deception by the Federal Reserve?

The Fed realized that its policy of Quantitative Easing initiated in order to support the balance sheets of “banks too big to fail” and to lower the Treasury’s borrowing cost was putting pressure on the US dollar’s value. Tapering was a way of reassuring holders of dollars and dollar-denominated financial instruments that the Fed was going to reduce and eventually end the printing of new dollars with which to support financial markets.The image of foreign governments bailing out of Treasuries could unsettle the markets that the Fed was attempting to sooth by tapering.

A hundred billion dollar sale of US Treasuries is a big sale. If the seller was a big holder of Treasuries, the sale could signal the bond market that a big holder might be selling Treasuries in large chunks. The Fed would want to keep the fact and identity of such a seller secret in order to avoid a stampede out of Treasuries. Such a stampede would raise interest rates, collapse US financial markets, and raise the cost of financing the US debt. To avoid the rise in interest rates, the Fed would have to accept the risk to the dollar of purchasing all the bonds. This would be a no-win situation for the Fed, because a large increase in QE would unsettle the market for US dollars.

Washington’s power ultimately rests on the dollar as world reserve currency. This privilege, attained at Bretton Woods following World War 2, allows the US to pay its bills by issuing debt. The world currency role also gives the US the power to cut countries out of the international payments system and to impose sanctions.

As impelled as the Fed is to protect the large banks that sit on the board of directors of the NY Fed, the Fed has to protect the dollar. That the Fed believed that it could not buy the bonds outright but needed to disguise its purchase by laundering it through Belgium suggests that the Fed is concerned that the world is losing confidence in the dollar.

If the world loses confidence in the dollar, the cost of living in the US would rise sharply as the dollar drops in value. Economic hardship and poverty would worsen. Political instability would rise.

If the dollar lost substantial value, the dollar would lose its reserve currency status. Washington would not be able to issue new debt or new dollars in order to pay its bills.

Its wars and hundreds of overseas military bases could not be financed.

The withdrawal from unsustainable empire would begin. The rest of the world would see this as the silver lining in the collapse of the international monetary system brought on by the hubris and arrogance of Washington.


http://www.paulcraigroberts.org/2014/05/12/fed-great-deceiver-paul-craig-roberts/

[Spectrism]

The financial system is doomed because they destroyed the engine providing it power. Down it will all go. For now they plug the holes in the boat with other pieces of the boat. At some point the water comes over the rails and no plugging of holes will matter.