This game is over.........

A guy on CNBC today said that the Treasury has two trillion dollars worth of bonds coming due next year. If this is true we're screwed.

We need to start circling the wagons and try to protect as many people as we can. We have an example of what they are going to do with Arnold getting rid of welfare. They will attack the poor and middle class and ask NOTHING from the rich, the banks or the corporations. They will NOT reign in military spending. They WILL cut social security and medicare. They will NOT create jobs. They will keep sending them overseas to keep their lenders happy. They don't give a fuck about us and they might even kill us with neglect.

It will be radical and cruel.

We need plans. They have to be radical enough to protect the weak.

That's gotta be worth at least half the principal right there

:hide:

Isn't Bernie Sanders from Vermont?

that might be short term foolish. But Vermont sounds good......

and making more by the minute. But it would take too much to heat your house in the winter plus we hace several big port. Still not a good idea. We can give back some of South Texas and some of west Texas though. Well now that I think of it-scratch west Texas-too many wind turbines.

I take it back... we keep Vermont and Texas and Hawaii.

But we sell West Virginia to Switzerland....

They get Sarah Palin and family as a bonus.

cnbc says?

After yesterday when the market freaked because the 10 year treasury bond yields went up.

I'm thinking that Paulson sold two trillion of 2 year notes in October right after the Lehman collapse. That would make them due next October.

They also just sold billions more. Tuesday 2 year bonds and Wednesday 7 year...

There's no proof that we're screwed but it sure looks that way. And I don't expect them to tell us since they never tell us anything else.

I hope I'm wrong but this math is just impossible. The money has to come from somewhere.

We need to audit the Fed. We need to audit all of it.

There's going to be a mad dash for sticking the bill with someone and I'm expecting the shit to all fall on the workers, the poor, the middle class, the children, the sick and the old.

The Republicans are probably already preparing. We need to come up with our own list of cuts.

Sounds scary! :scared:

:rofl:

How have you been?

Ok.

I'm great! How about you? :)

little dive. It's actually a nice dive at this time of year. I have THREE hummingbird feeders hung and loaded, and I'm threatening to complete another short story collection.

Really, I have to laugh at the CNBC crap. Did you see the thread about the new book written by Les Leopold? I think David Swanson posted an interview about it. Leopold actually writes about this economic train wreck in language that an average person can understand. I think the book's title is LOOTING AMERICA.

Here's the thread. It may alleviate some of your fears! :hi:

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=389&topic_id=5729650

for other things that happened this week.

by John Belushi.

:toast:

Or...you should really watch Animal House at least once in your life. It's one of the two. :)

Whether it happens slow or fast, they'll never give an inch through demonstrations in the streets. And guerrilla action is out of the question in the age of "terror." The only option left would be the mass strike. Preferably a mass strike leading to a reclamation of the tools of production. What would we do? "Give it 'back'" when they promise to be good?

Anyway. That's my opinion.

that it WILL cause inflation, the lesser of two evils (other one being Depression).

And OUR wages here are always going down because of free trade agreements. Inflation would hurt the wealthy more and that's why Bernake will fight it with higher interest rates and that will FUCK the recovery.

deflation leads to 25% unemployment and "lost decades".


Trust me... you don't want to live in a society that is experiencing a long-term deflationary cycle.

Bonds come due all the time. Ya know what they do? Sell new ones.

It's getting ridiculous. It's a house of cards.

They did a lot of things that

- Helped the needy
- Stopped the rich in their tracks
- Forced the Federal Government to do something for the poor


One of the first things they did is when folks' homes were foreclosed, they encouraged the homeowner to squat on the property. When evicted, after the Sheriff left, the council would move the furniture back in.

After a while, the Deputies got sick of this and stopped showing up to evict

The banks lost their distressed property

The homeowners owned their homes

We're going to auctions to try and get a deal.

We need to ORGANIZE

It's something we as a society don't do much any more. In my family, we have always moved slowly and talked things to death. "What if?" - scenarios from nuclear bombs, to natural disasters, to economic ruination. Mostly, we accept that we will work together as a family. That doesn't mean we are doing it right now in every way possible. We're supporting too many households right now. But we accept the possibility of consolidating- of ruining one member financially to save another or the whole. I have would have no problem having all of the family debt piled onto me, and then going bankrupt to save the others. I'm not a saint, it's just that I would be the one least affected by such a strategy.

There are always bonds coming due (although I can't vouch for the $2 trillion annual number, which seems a bit high), and what happens is they are rolled over as new bonds are sold.

To the extent that these are long term bonds, the Treasury will actually make money because interest rates to the Federal government are lower than they've been for a long time because investors are desperate for treasuries as a safe place to park their money.

are returning to normal rates. Is the entire financial media wrong? Do you have some alternative universe source that says that nobody is buying long term treasuries?

I'd love to take a look at it if you have a link!

Because in the real world I'm familiar with, auctions of long term treasury bonds are going off without a hitch.

At the same time, though, the Federal Reserve has taken steps to try to keep bond yields low. Because long-term bond rates have an impact on mortgage rates and other key interest rates for borrowers, keeping long rates low helps those trying to refinance mortgages and keep debt payments under control. Although the Fed typically controls only short-term rates, its efforts at quantitative easing have involved direct purchases of Treasuries and other long-term bonds in order to push rates lower.

http://www.fool.com/investing/dividends-income/2009/05/28/the-death-of-bonds.aspx

and she loved investing, long-term, in T-bills. So when you say "investors are desperate for treasuries as a safe place to park their money,"--that's the first thing that came to my mind. People are probably flocking to these.

thing: investing in the treasury long-term is one of the safest investments you can make. It's not a matter of Tuesday and Wednesday sales. These aren't stocks that fluctuate wildly and pay huge interest one week and nothing the next.

It's like the tortoise and the hare. From what I saw of my mother's investments in treasury, "Slow and steady wins the race."

She had mutual funds, sure, but she was keenly aware of those, and those were conservative too. But she valued the treasury stuff. She didn't spend a lot of money, and she didn't gamble.

be crazy to hold stuff now. Even treasurys. We need more transparency. I'd like to know who the buyers were for this weeks sales. Geez doesn't anybody ever worry about this? Everybody in the frigging world could have us blackmailed.

Not for me, friend! What little I have is staying where it is, and that hasn't been in the stock market for a very long time.

Despite the auctions going well?

And we're supposed to take that seriously -- exactly, why?

Bonds come due all the time... and new ones are sold all the time as well.



Don't be a Republican. Don't let your life be controlled by fear.



In this case, the fear is not even rational.

When are we going to get some real figures. I hear everything from 2 trillion to 11 trillion.

I'm not afraid, I just want to get ready just in case. I hate surprises.

so the thugs don't beat us to the punch. I've been thinking about this for awhile.

Cut the Empire budget...

WHY do we need over 700 military bases in over 250 countries? Let's shut them down.

Germany, Japan, Eastern Europe, the UK ALL of the ones in developed countries. We have NATO for crying out loud. Let them ante up.

Also, I think cuts in Social Security and Medicare are unstoppable. So if we have to cut let's cut the top 25% ... Something like 50%.. then cut 10% more across the board...

Tax loopholes for the rich.. Get rid of ALL of them.

Radical changes. Make homelessness LEGAL. Make it a crime for the authorities to tear down tent cities.

We could also threaten to not pay our debts. Tell china to take our jobs and shove it and trow up tariffs on American companies that moved.

I would love to see Obama make those kinds of sweeping changes...and I would like to think he is working on some of that behind the scenes, because he has to untie the tangles and tentacles of the crazy-rich-bastards-who-think-they-own-everything

in the meantime, I have my kids & my little rental bungalow in the mountains, and I have some things stocked up for a rainy day, but since I don't OWN anything, I guess I'd be screwn if the market totally dove into the dirt...

we have to force it on them.

probably are right now. At least you didn't lose a lot.

I just got a feeling...

We could have woken up then. We could have put impeachment on the table. We could have saved the Dems from their fate entwined with Repukes.

We could have had our country back.

:wtf:

I don't think that anyone could have corrected the economic crisis between the time of Katrina and now...

If my post isn't clear: Katrina NOLA showed what happens to disenfranchised populations in 21st Century America. It shows what the rest of the nation will put up with and accept cuz the TV says so.

If we had responded to Katrina NOLA as the genocide that it was, the whole story would be different.

I didn't mean to be rude. The connection wasn't clear at first. And you are certainly right about the media and about what people will believe.

I apologize if I insulted you with the WTF icon. I think it's the first time I've used it.

The economic disaster is comparable in some ways and not in others.

On our street last night in the pre-Solstice dusk, a man walked by, emotionally ill and threatened four of us standing and talking. Someone commented "They're not picking up any more 5150's." Local gov'ts are broke and the Terminator wants to borrow from them.

The people voted down borrowing money against future projected earnings of the state gamling system. That's their BEST idea?

We are on a precipice. Altho the OP is being mocked for concern about that partiucalar news, we are still on a precipice.

Today there's video of Ohio troopers beating an ambulance driver after both were on calls ("failure to yield") while the famliy and hospital bound patient waited!!

So, eveyone's on edge and no worries about your post. Thanks for the reply.

We have about $11T in debt obligations.

Average length of bonds sold is 8 years so....... <drum roll> <gasps> <scary sighs> every year about $1.5T is due.

Due to the changing debt amount, interest rates, and existing maturity dates is varies a little.

Saying govt has $2T in bonds due next year is like saying my neighbor has $100 min credit card payment due next year.

We never pay off the debt. We just resell it. There was an auction for 7 year treasuries today. $80 billion worth.

We print the money, buy our own debt and put out our own propaganda, it's the basic way our fictionalized deregulated disaster capitalism works. How dare you recognize it, go watch American Idol and "ask your doctor"!

As the bear market crushed investors' stock portfolios, many people turned to Treasury bonds for safety, security, and protection from losses. But as the returns on those bonds this year clearly show, you definitely shouldn't trick yourself into thinking that Treasuries are immune from potentially huge losses.

Is the Treasury bubble bursting?

After reaching low yields late last year around 2.5%, rates on 30-year Treasury bonds have skyrocketed in the first five months of 2009. On Wednesday, the long bond closed with a yield of about 4.6%, the highest since last summer.

When bond yields rise, the prices of existing bonds go down. As an example, one ETF that tracks long-term Treasury bonds maturing in 20 years or more has dropped over 23% since the beginning of January. A similar intermediate-term Treasury ETF, which is typically less vulnerable to big fluctuations in rates, has still dropped 7.6% since the year started. And those returns include the interest payments that investors have received on their bonds.

What's going on?
Turbulence in the bond markets is coming from a number of different sources. On the fundamental side, higher budget deficits and government spending are forcing the Treasury to issue more bonds, increasing supply and driving yields higher.

At the same time, though, the Federal Reserve has taken steps to try to keep bond yields low. Because long-term bond rates have an impact on mortgage rates and other key interest rates for borrowers, keeping long rates low helps those trying to refinance mortgages and keep debt payments under control. Although the Fed typically controls only short-term rates, its efforts at quantitative easing have involved direct purchases of Treasuries and other long-term bonds in order to push rates lower.

Yet from the market's recent moves, it's clear that quantitative easing is no longer working to prop up bond prices. Spreads between inflation-indexed bonds and other Treasuries show increasing concern about future inflation, which is the biggest threat to bond investors.

In other words, the bond market isn't nearly as safe as many people thought it was. And after a bull market in bonds that has pushed their returns over those of stocks over the past 40 years, a reversal of fortune could well last for decades.

http://www.fool.com/investing/dividends-income/2009/05/28/the-death-of-bonds.aspx

...its probably too late.

You know that mortgage rates soared yesterday, following the collapsing demand for Treasuries and Fannie & Freddie bonds. But just the numbers don't really do it justice.

The Field Check Group blog has an excellent on-the-ground report of what yesterday felt like at banks around the country. The whole thing is a great read:

Yesterday, the mortgage market was so volatile that banks and mortgage bankers across the nation issued multiple midday price changes for the worse, leading many to ultimately shut down the ability to lock loans around 1pm PST. This is not uncommon over the past five months, but not that common either. Lenders that maintained the ability to lock loans had rates UP as much as 75bps in a single day. Jumbo GSE money — $417k - $729,750 — has been blown out completely with some lender’s at 8%. I have seen it all in the mortgage world — well, I thought I had.

A good friend in the center of all of the mortgage capital markets turmoil said to me yesterday “feels like they have lost the battle…pretty obvious from the start but kind of scary to live through it … today felt like LTCM with respect to liquidity.”

There are some really interesting dynamics at work now, which the entry discusses in great deal. For one thing, it's a tremendous blow to industry psychology that quantitative easing has proven to be a total failure. Let's face it: The Fed doesn't have the firepower to drive rates lower. It can't manufacture low rates at this point -- not with the kind of borrowing the government needs to do.

What's more, the spike is a serious blow to people who were close to buying a house. At the new rates, pre-qualified borrowers may no longer be eligible for a mortgage.

Here's more:

Mortgage loan officers around the country are having a very very bad day today explaining to their clients why their rate was not locked and how rates are going to come right back down. They are also taking calls from borrowers with locked loans to confirm that the loan is indeed locked, inquiring as to when it will be approved or fund, and to rush the process in order to fund the loan by end of the lock-in term. This creates a customer service log-jam that chews through lender capacity quickly making the loan process even longer. Loans with second mortgages that need to be subordinated, are in a world of their own. Essentially, everything becomes a rush. Subsequently, loan officers will not feel like getting too aggressive taking new loan applications at least for the next month unless this corrects quickly.

Definitely read the whole thing >
http://www.businessinsider.com/the-day-the-mortgage-market-stood-still-2009-5

Yesterday 10 year treasury yields went soaring and the mortgage market literally seized up. Mark Hanson at the Field Check Group has this report that I can share.


As Bad As You Can Imagine

With respect to yesterday’s episode in the mortgage market -- yes, it is as bad as you can imagine. Yesterday, the mortgage market was so volatile that banks and mortgage bankers across the nation issued multiple midday price changes for the worse, leading many to ultimately shut down the ability to lock loans around 1pm PST. This is not uncommon over the past five months, but not that common either. Lenders that maintained the ability to lock loans had rates UP as much as 75bps in a single day.

A good friend in the center of all of the mortgage capital markets turmoil said to me yesterday “feels like they have lost the battle...pretty obvious from the start but kind of scary to live through it ... today felt like LTCM with respect to liquidity”.

The negative consequences of 5.5% rates are enormous. Because of capacity issues and the long timeline to actually fund a loan very few borrowers ever got the 4.25% to 4.75% perceived to be the prevailing rate range for everyone A significant percentage of loan applications (refis particularly) in the pipeline are submitted to the lender without a rate lock. This is because consumers are incented by much better pricing to lock for a short period of time…12-15 day rate locks carry the best rates by a long shot. But to get this short-term rate lock, the loan has to be complete enough to draw loan documents, which has been taking 45-75 days over the past several months depending upon the lender’s timeline. Therefore, millions of refi applications presently in the pipeline, on which lenders already spent a considerably amount of time and money processing, will never fund.

Furthermore, many of these ‘applicants’ with loans in process were awaiting the magical 4.5% rate before they lock -- a large percentage of these suddenly died yesterday. To make matters worse, after 90-days much of the paperwork (much taken at the date of application) within the file becomes stale-dated and has to be re-done with new dates -- if rates don’t come down quickly many will have to be cancelled out of the lender’s system. To add insult to mortal injury, unless this spike in rates corrects quickly, a large percentage of unlocked purchases and refis will have to be denied because at the higher interest rate level, borrowers do not qualify any longer. For the final groin kicker, a 5.5% rate just does not benefit nearly as many people as a 4.5%-5% rate does. Millions already have 5.25% to 5.75% fixed rates left over from 2002-2006.

This is a perfect example of why the weekly Mortgage Applications Index is an unreliable indicator of future loan fundings and has been for a year and a half. As a matter of fact you will see this index crumble over the next few weeks at the same disproportional rate as it increased over the past several months if rates don’t settle lower quickly.

With respect to banks, mortgage banks, servicers etc, under-hedging a potential sell-off with the Fed supposedly having everybody’s back was a common theme. Banks could lose their entire Q2 mortgage banking earnings and middle market mortgage banker may never recover or immediately have to close shop.

Lastly, consider sentiment -- this is a real killer. This massive rate spike may have invalidated hundreds of billions spent to rig the mortgage market literally overnight. This leaves the mortgage and housing market very vulnerable. Mortgage loan officers around the country are having a very bad day today explaining to their clients why their rate was not locked and how rates are going to come right back down. They will not feel like getting too aggressive taking new loan applications at least for the next month unless this corrects quickly.

We have to see where all this settles over the next few days before making a near to mid-term call on the outright damage because at this point, Fed or Treasury shock and awe is almost certain. Another common theme has been ‘if it doesn’t work throw much more money at it’. Obviously they have been following this closely for the past few weeks, as conditions started to deteriorate, and have likely been waiting to see where the upper range was before shocking in order to get maximum benefit…that would be a humongous short squeeze in Bonds. The problem is…if they do shock her and it is sold into with the same fury that we have been seeing, there may not be an act two.
Treasuries Massacred

For more on the 10-year treasuries please see Treasuries Massacred; Yield Curve Steepest On Record.

This morning there was a bit of a treasury rally on a rumor the Fed was going to buy $10 billion in long dated treasuries but treasuries are now back to the lows of the day, with 10-year yields essentially unchanged vs. yesterday.

Continued>>>
http://globaleconomicanalysis.blogspot.com/2009/05/mortgage-market-locks-up.html

Bernanke cannot have his cake and eat it too. If the economy is recovering the yield curve should steepen. And steepen it has. The Yield Curve Is Steepest On Record.


The difference in yields between Treasury two and 10-year notes widened to a record on concern surging sales of U.S. debt will overwhelm the Federal Reserve’s efforts to keep borrowing costs low.

The so-called yield curve steepened to 2.75 percentage points, surpassing the previous record of 2.74 percentage points set on Aug. 13, 2003.

Ten-year notes have lost 10.3 percent this year, according to Merrill Lynch & Co. indexes, while 30-year bonds have lost 27.5 percent. Two-year notes have gained 0.2 percent.

Rising 10-year Treasury yields are pushing yields on mortgage bonds higher, prompting holders of the securities to sell government debt used as a hedge to protect portfolios against rising interest rates.

As mortgage rates rise, the expected average lives of mortgage bonds and mortgage-servicing contacts extend as potential refinancing drops, leaving holders with portfolios of longer-than-anticipated durations. Duration is a measure of bond price sensitivity to interest-rate change.

“The back-up is mostly related to convexity selling by mortgage investors,” said Gary Pollack, who helps oversee $12 billion as head of fixed-income trading at Deutsche Bank AG’s Private Wealth Management unit in New York. “This will be a test for the Fed.”
Yield Curve 1999 - Present

http://globaleconomicanalysis.blogspot.com/2009/05/treasuries-massacred-yield-curve.html