Jun

11

VigilantesIf there ever were a time that it was absolutely necessary for the welfare of the commonweal for the bonds to have gone down, it was yesterday. Time after time, the insatiable bond auctions have shown an enormous revulsion before the announcement only to go up big showing big profits for the clients of the flexions on their holdings. But finally yields had their biggest back up, i.e bond prices fell almost 2 points, in 10 years. The vigilantes did not wish to buy the bonds at the lowest yield ever and refused to countenance the movement of productive activity from the common person to the organized blocks that vote based on how much they can get from the trough.

The holdings of treasuries by the banks has been increasing steadily and they have been making a fortune by borrowing at 0% at the window, and buying bonds. Why should they lend when they can make money by buying at a discount at the auction, and then showing an immediate 1 % profit on their 1 trillion or so of holdings. Every 10 billion counts.

What could possibly stop this transer of resources in the future? Only a message that continued agrarian reform, continued transfers with all the negative multipliers, continued new programs, continued expectations of reductions in incentives to start businesses as the rates go up to 35% and more from 28% for the LLC and sub chapter s's that actually start businesses and provide jobs outside of those elicited by increased regulation, the necessity of lobbying at the interior, and jobs to provide clean energy at those proffering the regulations and redistributions, aside from the vigilantes.

I was long the bonds after they fell today and lost as it had never happened like this before. But for once, I was happy to make a contribution to the vigilantes for the greater good. 

Rocky Humbert comments:

U S Senator Tom CoburnAfter a day on the proverbial treadmill, I mount the non-proverbial treadmill with cable-tv clicker in-hand for both relaxation and stimulation of body and mind. I often watch television during this exercise period.

Last night, I allocated my viewing between:

The Housewives of New York City (Bravo) — for insights into fashion, consumption, and a lifestyle that might cause even Ayn Rand to blush;

Re-runs of Jeopardy (Game Show Network) — for factoids and trivia useful for appearing erudite at cocktail parties;

Fox News — watching with hope that Krauthammer might crack a smile — which would be a sign from G_d that there is hope for my children and children's children.

Lest one think that this is all a non-sequitur to The Chair's comment, the final show that I surfed was Cramer — whose guest was Senator Tom Coburn (R-Okla). Both Cramer and Coburn were pounding the table for a meaningful extension of US debt maturities. Cramer wants Treasury to immediately issue $2 Trillion of 30-year bonds; whereas Coburn predicts a Greek-style liquidity crisis within 2 years — and wants Treasury to promptly re-finance existing bills, notes and Fannie/Freddie at long maturities with untold Trillions of issuance. See this article.

According to Bloomberg, over the past several years, the average maturity of US Debt shortened to a 26-year low of 49 months. Geithner is in the process of extending that to 72 months, but if Cramer and Coburn's proposals gain traction, yesterday's auction result will be a pleasant memory. It will be analagous to my accidentally pressing the "MAXIMUM" speed button on my treadmill — with the headphone cord attached to the handlebars and wrapped tightly around my neck.


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