- This topic has 135 replies, 15 voices, and was last updated 13 years, 6 months ago by
UCGal.
-
AuthorPosts
-
October 16, 2010 at 9:01 AM #619864October 16, 2010 at 9:42 AM #618804
davelj
Participant[quote=bubba99]I think there is an insidious layer to the banks buying and holding treasuries. And that is that without them, the Fed would be forced to buy treasuries directly at an even greater rate. All those assets on the TBTF books are hiding the lack of demand for even more US debt. [/quote]
The only problem being that banks hold SHORT-TERM treasuries (when they hold them at all), while the Fed is buying LONG-TERM treasuries. And as the following graph shows, the amount of treasuries held by U.S. depository institutions is tiny – 1.2% of the total outstanding in 2008 (even if it were to have doubled over the last two years, it would still be di minimis).
http://en.wikipedia.org/wiki/File:Estimated_ownership_of_US_Treasury_securities_by_category_0608.jpg
[quote=bubba99]
It is another house of cards. The FED lends the money to buy the US debt and pays a hundred plus basis points for the lipstick on the pig. If inflation really starts as Paulson argues, look for an absolute collapse in Treasuries as the banks begin to dump the shrinking assets.[/quote]It may be a house of cards. And there may one day be a collapse in treasuries. But it will have NOTHING to do with banks “dumping the shrinking assets.” So, you may end up being right, but it will be for the wrong reasons – you clearly don’t have a good understanding of this particular topic.
October 16, 2010 at 9:42 AM #618887Participant[quote=bubba99]I think there is an insidious layer to the banks buying and holding treasuries. And that is that without them, the Fed would be forced to buy treasuries directly at an even greater rate. All those assets on the TBTF books are hiding the lack of demand for even more US debt. [/quote]
The only problem being that banks hold SHORT-TERM treasuries (when they hold them at all), while the Fed is buying LONG-TERM treasuries. And as the following graph shows, the amount of treasuries held by U.S. depository institutions is tiny – 1.2% of the total outstanding in 2008 (even if it were to have doubled over the last two years, it would still be di minimis).
http://en.wikipedia.org/wiki/File:Estimated_ownership_of_US_Treasury_securities_by_category_0608.jpg
[quote=bubba99]
It is another house of cards. The FED lends the money to buy the US debt and pays a hundred plus basis points for the lipstick on the pig. If inflation really starts as Paulson argues, look for an absolute collapse in Treasuries as the banks begin to dump the shrinking assets.[/quote]It may be a house of cards. And there may one day be a collapse in treasuries. But it will have NOTHING to do with banks “dumping the shrinking assets.” So, you may end up being right, but it will be for the wrong reasons – you clearly don’t have a good understanding of this particular topic.
October 16, 2010 at 9:42 AM #619434Participant[quote=bubba99]I think there is an insidious layer to the banks buying and holding treasuries. And that is that without them, the Fed would be forced to buy treasuries directly at an even greater rate. All those assets on the TBTF books are hiding the lack of demand for even more US debt. [/quote]
The only problem being that banks hold SHORT-TERM treasuries (when they hold them at all), while the Fed is buying LONG-TERM treasuries. And as the following graph shows, the amount of treasuries held by U.S. depository institutions is tiny – 1.2% of the total outstanding in 2008 (even if it were to have doubled over the last two years, it would still be di minimis).
http://en.wikipedia.org/wiki/File:Estimated_ownership_of_US_Treasury_securities_by_category_0608.jpg
[quote=bubba99]
It is another house of cards. The FED lends the money to buy the US debt and pays a hundred plus basis points for the lipstick on the pig. If inflation really starts as Paulson argues, look for an absolute collapse in Treasuries as the banks begin to dump the shrinking assets.[/quote]It may be a house of cards. And there may one day be a collapse in treasuries. But it will have NOTHING to do with banks “dumping the shrinking assets.” So, you may end up being right, but it will be for the wrong reasons – you clearly don’t have a good understanding of this particular topic.
October 16, 2010 at 9:42 AM #619554Participant[quote=bubba99]I think there is an insidious layer to the banks buying and holding treasuries. And that is that without them, the Fed would be forced to buy treasuries directly at an even greater rate. All those assets on the TBTF books are hiding the lack of demand for even more US debt. [/quote]
The only problem being that banks hold SHORT-TERM treasuries (when they hold them at all), while the Fed is buying LONG-TERM treasuries. And as the following graph shows, the amount of treasuries held by U.S. depository institutions is tiny – 1.2% of the total outstanding in 2008 (even if it were to have doubled over the last two years, it would still be di minimis).
http://en.wikipedia.org/wiki/File:Estimated_ownership_of_US_Treasury_securities_by_category_0608.jpg
[quote=bubba99]
It is another house of cards. The FED lends the money to buy the US debt and pays a hundred plus basis points for the lipstick on the pig. If inflation really starts as Paulson argues, look for an absolute collapse in Treasuries as the banks begin to dump the shrinking assets.[/quote]It may be a house of cards. And there may one day be a collapse in treasuries. But it will have NOTHING to do with banks “dumping the shrinking assets.” So, you may end up being right, but it will be for the wrong reasons – you clearly don’t have a good understanding of this particular topic.
October 16, 2010 at 9:42 AM #619873Participant[quote=bubba99]I think there is an insidious layer to the banks buying and holding treasuries. And that is that without them, the Fed would be forced to buy treasuries directly at an even greater rate. All those assets on the TBTF books are hiding the lack of demand for even more US debt. [/quote]
The only problem being that banks hold SHORT-TERM treasuries (when they hold them at all), while the Fed is buying LONG-TERM treasuries. And as the following graph shows, the amount of treasuries held by U.S. depository institutions is tiny – 1.2% of the total outstanding in 2008 (even if it were to have doubled over the last two years, it would still be di minimis).
http://en.wikipedia.org/wiki/File:Estimated_ownership_of_US_Treasury_securities_by_category_0608.jpg
[quote=bubba99]
It is another house of cards. The FED lends the money to buy the US debt and pays a hundred plus basis points for the lipstick on the pig. If inflation really starts as Paulson argues, look for an absolute collapse in Treasuries as the banks begin to dump the shrinking assets.[/quote]It may be a house of cards. And there may one day be a collapse in treasuries. But it will have NOTHING to do with banks “dumping the shrinking assets.” So, you may end up being right, but it will be for the wrong reasons – you clearly don’t have a good understanding of this particular topic.
October 16, 2010 at 2:21 PM #618834bubba99
ParticipantOK genius, why might it be right for the wrong reasons?
Here is an article from blumberg about bank treasury purchases – more than nothing
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aFJpn5iE_vVc
Here is another an interesting article about the banks being the first wave in the calapse of the Treasury market.
At least I am not alone in “my lack of understanding of the subject”
The applicable text being “So the TBTF banks, on seeing this run on Treasuries, will add to the panic by acting in their own best interests: They will be among the first to step off Treasuries. They will be the bleeding edge of the wave. Here the panic phase of the event begins: Asset managers—on seeing this massive Fed buy of Treasuries, and the American Zombies selling Treasuries, all of this happening within days of a largish Treasury auction—will dump their own Treasuries en masse.”
October 16, 2010 at 2:21 PM #618917ParticipantOK genius, why might it be right for the wrong reasons?
Here is an article from blumberg about bank treasury purchases – more than nothing
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aFJpn5iE_vVc
Here is another an interesting article about the banks being the first wave in the calapse of the Treasury market.
At least I am not alone in “my lack of understanding of the subject”
The applicable text being “So the TBTF banks, on seeing this run on Treasuries, will add to the panic by acting in their own best interests: They will be among the first to step off Treasuries. They will be the bleeding edge of the wave. Here the panic phase of the event begins: Asset managers—on seeing this massive Fed buy of Treasuries, and the American Zombies selling Treasuries, all of this happening within days of a largish Treasury auction—will dump their own Treasuries en masse.”
October 16, 2010 at 2:21 PM #619464ParticipantOK genius, why might it be right for the wrong reasons?
Here is an article from blumberg about bank treasury purchases – more than nothing
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aFJpn5iE_vVc
Here is another an interesting article about the banks being the first wave in the calapse of the Treasury market.
At least I am not alone in “my lack of understanding of the subject”
The applicable text being “So the TBTF banks, on seeing this run on Treasuries, will add to the panic by acting in their own best interests: They will be among the first to step off Treasuries. They will be the bleeding edge of the wave. Here the panic phase of the event begins: Asset managers—on seeing this massive Fed buy of Treasuries, and the American Zombies selling Treasuries, all of this happening within days of a largish Treasury auction—will dump their own Treasuries en masse.”
October 16, 2010 at 2:21 PM #619584ParticipantOK genius, why might it be right for the wrong reasons?
Here is an article from blumberg about bank treasury purchases – more than nothing
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aFJpn5iE_vVc
Here is another an interesting article about the banks being the first wave in the calapse of the Treasury market.
At least I am not alone in “my lack of understanding of the subject”
The applicable text being “So the TBTF banks, on seeing this run on Treasuries, will add to the panic by acting in their own best interests: They will be among the first to step off Treasuries. They will be the bleeding edge of the wave. Here the panic phase of the event begins: Asset managers—on seeing this massive Fed buy of Treasuries, and the American Zombies selling Treasuries, all of this happening within days of a largish Treasury auction—will dump their own Treasuries en masse.”
October 16, 2010 at 2:21 PM #619902ParticipantOK genius, why might it be right for the wrong reasons?
Here is an article from blumberg about bank treasury purchases – more than nothing
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aFJpn5iE_vVc
Here is another an interesting article about the banks being the first wave in the calapse of the Treasury market.
At least I am not alone in “my lack of understanding of the subject”
The applicable text being “So the TBTF banks, on seeing this run on Treasuries, will add to the panic by acting in their own best interests: They will be among the first to step off Treasuries. They will be the bleeding edge of the wave. Here the panic phase of the event begins: Asset managers—on seeing this massive Fed buy of Treasuries, and the American Zombies selling Treasuries, all of this happening within days of a largish Treasury auction—will dump their own Treasuries en masse.”
October 16, 2010 at 3:07 PM #618839Participant[quote=bubba99]OK genius, why might it be right for the wrong reasons? [/quote]
As I said, you may end up being right. But not for the reason you purport. That’s self-explanatory. I might predict the right outcome for every football game this weekend. But it won’t be because I’m some football guru – it will be due to blind luck.
[quote=bubba99]
Here is an article from blumberg about bank treasury purchases – more than nothinghttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aFJpn5iE_vVc [/quote]
Aside from the fact that the article is almost a year old, did you bother to actually read it? Here’s the money quote:
“Even after banks including Bank of America Corp. and Capital One Financial Corp. increased such investments 26 percent to $125 billion in the 12 months through June, they have only about 1 percent of their assets in Treasuries, Fed data show. That’s down from the 8.5 percent average for the year after the past five recessions. Banks would have to buy $1 trillion more to reach past levels, so demand ‘could remain quite high for some time,’ Barclays Plc said.”
Yes, banks have for the last year been buying SHORT-TERM treasuries, which they – no, make that no one – needs to dump. There’s very little duration – and thus interest-rate risk – in holding short-term treasuries.
[quote=bubba99]
Here is another an interesting article about the banks being the first wave in the calapse of the Treasury market.At least I am not alone in “my lack of understanding of the subject”
The applicable text being “So the TBTF banks, on seeing this run on Treasuries, will add to the panic by acting in their own best interests: They will be among the first to step off Treasuries. They will be the bleeding edge of the wave. Here the panic phase of the event begins: Asset managers—on seeing this massive Fed buy of Treasuries, and the American Zombies selling Treasuries, all of this happening within days of a largish Treasury auction—will dump their own Treasuries en masse.”[/quote]
You’re right. You’re not alone. You AND this “Writer, Filmmaker” don’t understand the relationship between the Fed, the TBTF banks and treasuries.
If FOREIGNERS start selling long-term US Treasuries (or not buying them “when issued”), THEN we have a problem. The same applies to other LARGE buyers of LONG-TERM Treasuries. But banks don’t hold much in the way of Treasuries (and, again, what they do hold are short-term) in the whole scheme of things as the graph in my prior post makes abundantly clear. You’re chasing a red herring. Because, like your “Writer, Filmmaker” friend above, you don’t know any better.
October 16, 2010 at 3:07 PM #618922Participant[quote=bubba99]OK genius, why might it be right for the wrong reasons? [/quote]
As I said, you may end up being right. But not for the reason you purport. That’s self-explanatory. I might predict the right outcome for every football game this weekend. But it won’t be because I’m some football guru – it will be due to blind luck.
[quote=bubba99]
Here is an article from blumberg about bank treasury purchases – more than nothinghttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aFJpn5iE_vVc [/quote]
Aside from the fact that the article is almost a year old, did you bother to actually read it? Here’s the money quote:
“Even after banks including Bank of America Corp. and Capital One Financial Corp. increased such investments 26 percent to $125 billion in the 12 months through June, they have only about 1 percent of their assets in Treasuries, Fed data show. That’s down from the 8.5 percent average for the year after the past five recessions. Banks would have to buy $1 trillion more to reach past levels, so demand ‘could remain quite high for some time,’ Barclays Plc said.”
Yes, banks have for the last year been buying SHORT-TERM treasuries, which they – no, make that no one – needs to dump. There’s very little duration – and thus interest-rate risk – in holding short-term treasuries.
[quote=bubba99]
Here is another an interesting article about the banks being the first wave in the calapse of the Treasury market.At least I am not alone in “my lack of understanding of the subject”
The applicable text being “So the TBTF banks, on seeing this run on Treasuries, will add to the panic by acting in their own best interests: They will be among the first to step off Treasuries. They will be the bleeding edge of the wave. Here the panic phase of the event begins: Asset managers—on seeing this massive Fed buy of Treasuries, and the American Zombies selling Treasuries, all of this happening within days of a largish Treasury auction—will dump their own Treasuries en masse.”[/quote]
You’re right. You’re not alone. You AND this “Writer, Filmmaker” don’t understand the relationship between the Fed, the TBTF banks and treasuries.
If FOREIGNERS start selling long-term US Treasuries (or not buying them “when issued”), THEN we have a problem. The same applies to other LARGE buyers of LONG-TERM Treasuries. But banks don’t hold much in the way of Treasuries (and, again, what they do hold are short-term) in the whole scheme of things as the graph in my prior post makes abundantly clear. You’re chasing a red herring. Because, like your “Writer, Filmmaker” friend above, you don’t know any better.
October 16, 2010 at 3:07 PM #619469Participant[quote=bubba99]OK genius, why might it be right for the wrong reasons? [/quote]
As I said, you may end up being right. But not for the reason you purport. That’s self-explanatory. I might predict the right outcome for every football game this weekend. But it won’t be because I’m some football guru – it will be due to blind luck.
[quote=bubba99]
Here is an article from blumberg about bank treasury purchases – more than nothinghttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aFJpn5iE_vVc [/quote]
Aside from the fact that the article is almost a year old, did you bother to actually read it? Here’s the money quote:
“Even after banks including Bank of America Corp. and Capital One Financial Corp. increased such investments 26 percent to $125 billion in the 12 months through June, they have only about 1 percent of their assets in Treasuries, Fed data show. That’s down from the 8.5 percent average for the year after the past five recessions. Banks would have to buy $1 trillion more to reach past levels, so demand ‘could remain quite high for some time,’ Barclays Plc said.”
Yes, banks have for the last year been buying SHORT-TERM treasuries, which they – no, make that no one – needs to dump. There’s very little duration – and thus interest-rate risk – in holding short-term treasuries.
[quote=bubba99]
Here is another an interesting article about the banks being the first wave in the calapse of the Treasury market.At least I am not alone in “my lack of understanding of the subject”
The applicable text being “So the TBTF banks, on seeing this run on Treasuries, will add to the panic by acting in their own best interests: They will be among the first to step off Treasuries. They will be the bleeding edge of the wave. Here the panic phase of the event begins: Asset managers—on seeing this massive Fed buy of Treasuries, and the American Zombies selling Treasuries, all of this happening within days of a largish Treasury auction—will dump their own Treasuries en masse.”[/quote]
You’re right. You’re not alone. You AND this “Writer, Filmmaker” don’t understand the relationship between the Fed, the TBTF banks and treasuries.
If FOREIGNERS start selling long-term US Treasuries (or not buying them “when issued”), THEN we have a problem. The same applies to other LARGE buyers of LONG-TERM Treasuries. But banks don’t hold much in the way of Treasuries (and, again, what they do hold are short-term) in the whole scheme of things as the graph in my prior post makes abundantly clear. You’re chasing a red herring. Because, like your “Writer, Filmmaker” friend above, you don’t know any better.
October 16, 2010 at 3:07 PM #619589Participant[quote=bubba99]OK genius, why might it be right for the wrong reasons? [/quote]
As I said, you may end up being right. But not for the reason you purport. That’s self-explanatory. I might predict the right outcome for every football game this weekend. But it won’t be because I’m some football guru – it will be due to blind luck.
[quote=bubba99]
Here is an article from blumberg about bank treasury purchases – more than nothinghttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aFJpn5iE_vVc [/quote]
Aside from the fact that the article is almost a year old, did you bother to actually read it? Here’s the money quote:
“Even after banks including Bank of America Corp. and Capital One Financial Corp. increased such investments 26 percent to $125 billion in the 12 months through June, they have only about 1 percent of their assets in Treasuries, Fed data show. That’s down from the 8.5 percent average for the year after the past five recessions. Banks would have to buy $1 trillion more to reach past levels, so demand ‘could remain quite high for some time,’ Barclays Plc said.”
Yes, banks have for the last year been buying SHORT-TERM treasuries, which they – no, make that no one – needs to dump. There’s very little duration – and thus interest-rate risk – in holding short-term treasuries.
[quote=bubba99]
Here is another an interesting article about the banks being the first wave in the calapse of the Treasury market.At least I am not alone in “my lack of understanding of the subject”
The applicable text being “So the TBTF banks, on seeing this run on Treasuries, will add to the panic by acting in their own best interests: They will be among the first to step off Treasuries. They will be the bleeding edge of the wave. Here the panic phase of the event begins: Asset managers—on seeing this massive Fed buy of Treasuries, and the American Zombies selling Treasuries, all of this happening within days of a largish Treasury auction—will dump their own Treasuries en masse.”[/quote]
You’re right. You’re not alone. You AND this “Writer, Filmmaker” don’t understand the relationship between the Fed, the TBTF banks and treasuries.
If FOREIGNERS start selling long-term US Treasuries (or not buying them “when issued”), THEN we have a problem. The same applies to other LARGE buyers of LONG-TERM Treasuries. But banks don’t hold much in the way of Treasuries (and, again, what they do hold are short-term) in the whole scheme of things as the graph in my prior post makes abundantly clear. You’re chasing a red herring. Because, like your “Writer, Filmmaker” friend above, you don’t know any better.
-
AuthorPosts
- You must be logged in to reply to this topic.