When is the next big US TReasury debt auction? Do you think this will have an effect there, requiring another big liquidity pull?

To me it looks more like failure to sell at the desired yield. There is always a buyer, the question is at what price.

I find it interesting that the current yield on a 6-month T-bill is less than 0.3%, yet the Chinese can't sell their 6-month bills at 1.6%?

What's up with that? Does the market not trust the Yuan to retain its value? ;-)

-Uwe-

Yep. Its basically a demand to the government - stop forcing liquidity into the system or pay up for potential forward inflation (despite the fact that CPI and PPI in China showed DEFLATION on the last prints!)

Look for interest rates to continue to rise. Like you said if China cant get financing then they will get money by more than likely selling US debt. There are always people looking for fixed income the question is at what price. The TBT is up to $52 and will go higher.

Could China crash their equity market in an attempt to force money into their bonds? There is some theory that Bernanke is doing that here.

Coming soon to a country near you!

Given China's reputation as a closed system ... why are "they" letting this news out? Easy enough to paper this over if they wanted to. This is (at least) the third failure in the last 2-3 weeks.

Oh, and dude... Chinaman is not the preferred nomenclature.. Asian American, please.

;)

(ObTopic: from 0.85 to 1.39%, that's a nice bit of pain right there..)

In spite of Chinese govt propaganda, all the eyewitness evidence I am reading online is that China is in big trouble. Their exports have cratered and their economy is in shambles. Everyone waiting for China to save the global economy will be waiting a very long time.

One example from Zero Hedge:

http://zerohedge.blogspot.com/2009/07/gu....

I think they are going to do their best to manipulate the data put their best foot forward this year as well as last; this is the 60th anniversary of the PRC and there will be enforced factory shutdowns in October (also coinciding with the Moon Festival).

They desperately want everything to look good at that time and will do whatever it takes to ensure domestic tranquility -- beat up some ethnic minorities, fake GDP numbers, sell some USTs, you name it.

Sooooo ... the USA has a Chinese doctor to make it well ... :-)
jal

Here comes the squeeze right here in America

http://247wallst.com/2009/07/15/fomc-min....

A Revenge Crash, Ahead?
Fed chairman Ben Bernanke is an academic. Before joining the Federal Reserve, he was chairman of the economics department at Princeton University. He has written extensively on the Great Depression. He knows the financial history of central banking in America. He certainly knows the history of the battle over central banking that took place between President Andrew Jackson and Nicholas Biddle.

At the age of 37, Biddle was named president of the Second Bank of the United States. Trouble started for Biddle, and the bank, after Andrew Jackson was elected president. Jackson believed that "the world is governed too much," and was deeply suspicious of banks, especially of central banks.

On October 1, 1833, Jackson decreed that no more government money could be deposited into the bank. Thus weakening the banks political power. The bank was not rechartered.

Biddle was furious. In an act of revenge, he squeezed credit out of the banking system dramatically. It led to the Panic of 1837. Hundreds of banks closed. And resulted in a five year depression.

Now, let's move back to the current day. Bernanke is under pressure from many directions. There is a Congressional investigation of Bernanke's involvement in the Bank America/Merrill Lynch merger. There are widespread rumors that Larry Summers will be named to replace Bernanke when his term is up in January 2010. And Ron Paul is putting so much pressure on the Fed with his "audit the Fed" campaign that the Fed has hired a lobbyist to deal with Congress.

The future does not look bright for Bernanke in the catbird seat at the Federal Reserve. So what does this have to do with Biddle?

Suddenly, the Fed has stopped printing money, again. Ater climbing at a rate of 15% annually, it has slowed to a crawl of under 3% (3 month annualized M2 nsa).

Does Bernanke believe his days are numbered as head of the Fed? Is this money slowdown a parting gift from Bernanke to Obama and Summers? Is he setting up a Biddle type revenge crash of the economy?

He knows the history. He knows how to do it, and money growth is slowing in Biddle like fashion.

http://www.economicpolicyjournal.com/200....

How stupid. A crash is ahead, period. He could make it worse, or trigger it, but it's coming regardless. I'm sure they'll be happy to make him the fall guy though.

I'd have to agree there, Kab - it's almost as they're painting Bernake as a martyr, here. He is just as complicit as anyone in this entire cluster-****, and needs to be held to account. IF Bernake is actually taking an active hand in the crash (ie: making it come faster), then I'm all for it honestly. The fedgov will NOT allow it to crash until they have tried every trick ever invented, then invented plenty of new ones themselves.

I just purchased a good quantity of long-term stored food. If all goes quietly, the boy and I will be camping in the backyard for the next 10 years eating freeze-dried corn. If it goes the other direction.... well, you can't be too prepared, eh?

Exactly. I don't subscribe to the notion that we're going to go Mad Max or live through the Dark Ages. None the less all it takes is a good blizzard or natural disaster and you need at least a few weeks of supplies anyway. My goal is to have enough cash to pay off all debt, everything necessary for personal defense which in our case is two pistols, an AR-15 and a shotgun, with plenty of range and personal defense ammunition, and six months of supplies.

If things go truly Mad Max or anything close to it for an extended period of time there's nothing short of subsistence living on a farm that would suffice anyway, and that's just not going to happen. We have been making friends with plenty of people within a day's walking distance that have land suitable for it though.

Sounds like you're in a similar position to me; the weaponry and stores you describe mirror mine. I've got 2 kids under 4 years old; I'm NOT happy about having to prepare as such, but I'm given no choice. Add to that I lost my job in May, so a LOT of this has been financed through ... painful means, personally. VERY little is on credit, and that's really my only hedge - I do not believe we'll be in the MadMax type scenario, either.

If we do go that unbelievable route, debts and credit will be meaningless. Much more likely will be a nasty, nasty Depression, and Mrs. Frat luckily is an RN who can still pick up crazy shifts at the hospital. If I have to, it will be manual and/or menial labor, but more likely I'll be watching the kids while we put her on even more shifts - no pleasant, but if needed, so be it.

My long term End-Of-The-World Mad Mad scenario? Wifey's father is an actual farmer, with plenty of land - - I would have to handle security, he the food. I'd prefer NONE of this be necessary to even think about... but I'm doing my family a general disservice if I do not.

I am not a trained economist but here's what I think...

Am I right in thinking that these are sterilization bills? If so, given the large expansion in credit fear of inflation leads investors to demand a higher price, especially given China's lack of credibility and past experiences with inflation. In that case CB printing can't do the job as those bills are especially designed to mop up the printed money. China prints excess yuan in order to keep the value of its currency low and has to issue such sterilization bills in order to keep inflation low. Since China posted a huge gain in foreign reserves (and thus printed yuan) and expanded credit heavily that may frighten some investors. They need 'real' money to buy into these bonds, another way of mopping up excess yuan would be to sell the US bonds and bring those yuan back home...

Those failing debt sales hopefully show clearly how valuable the credibility the US enjoys is. Unfortunately it is being messed with....

Why is it that a large percentage of tickers and threads for that matter go into the direction of Mad Max? This haappened several months ago and is beggining to take that turn again. Is this the vibe that is out there in the communities as well?
While I am trying to prepare for my families future, Mad Max is one I am sure everyone would abhore.

Mad Max will suck.

Note - not "could suck". Will suck.

Gen, this is the most Doomish & Gloomish I've seen you be (haven't been a 2-year ticker guy, so don't know if it's better or worse!), but "WILL" suck?

Even with all the ****storm that may come, I don't see the US devolving into something quite that badly. I think it will definitely be ugly, maybe even as ugly as GD1, but do you honestly believe this will be THAT nasty?

I'm very much beginning to believe that we are on the cusp of Mad Max. I won't repeat myself here, but some of my reasons for believing this are reflected in my very first post on page 3 of the What Are They Smoking? ticker. I'm one of those people who feels forced to build a new home, at least partially for safety reasons.

We're getting damn close to the "least suckish" outcome being 10 years or more of an absolutely flat economy and **** employment prospects. That's pretty sucky, and the possible outcomes only get worse from there.

Now you ARE frightening me. I'll be the first to admit I'm often financially retarded, but that's one reason I follow your ticker - I'm not too proud to listen and learn. Being unemployed sucks, but it has allowed a lot more time with the babies, if nothing else.

So my question is: Are these the "good ole days" that we're currently in? Something my children can tell theirs as they grow up, and have my grandchildren thinking we embellished it all?