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| User Info | Call The Whaaaambulance: Treasury Fails in forum [Ticker] | |||
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Genesis Posts: 71433 Incept: 2007-06-26 
KD^2 
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http://market-ticker.org/archives/999-Ca....
---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-04-30 08:13:41
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Stormin777 Posts: 60 Incept: 2008-10-19 
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So, what would that do to all the holders of, say, TBT? Nevermind, I'm awake now! Last modified:
2009-04-30 09:33:56 by stormin777
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Jinxx0r Posts: 2064 Incept: 2007-08-10
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so now you only have to pay a 3% premium for fraud? I guess that must be better than jail...
---------- "Americans grew tired of being thought of as dumb by the rest of the world, so in 2008, they went to the polls and removed all doubt" ~~ unknown http://www.youtube.com/watch?v=2x2W12A8Qow http://www.youtube.com/watch?v=4pXfHLUlZf4
2009-04-30 09:09:54
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Nymonkey Posts: 97 Incept: 2007-07-10 
NY
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This is a positive for the cash/repo(financing) market. It's going to bring a lot of big players i.e. central banks, legitimate relative value hf's/traders back into the market who have been on the sidelines. As for the prof...what's that old saying "those who can do and those who can't teach"...most of these guys have never held an actual position in their life.
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2009-04-30 09:37:26 by nymonkey
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Snowman Posts: 1040 Incept: 2009-03-09
avoiding yellow snow
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At least a beginning to address naked shorting. They can go even further, price it based on the value. The higher the fail, the higher the fee. Then, HELLO SEC: ENFORCE THE LAW!!! it is a federal offense to counterfeit monetary value. But mostly: replace the SEC. They are mandated to track and investigate naked shorting, and they even have a their Office of Inspector General who is obligated to audit the SEC naked short selling investigatory process. Both have failed (pun intended) on all counts. Clowns!! The data is easy to get and process, just visit the custody houses who track fails meticulously (due to the high costs involved and their vigorous work to reduce the workload).
2009-04-30 10:14:26
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Rutben Posts: 900 Incept: 2007-07-27
Phoenix, AZ
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KD.....any % breakdown available on naked and covered failures? When the failures first got out of hand, I got the impression the real risk was that borrowed treasuries were not being returned, i. e. not available for repurchase. Did I jump to the wrong conclusion? Are the failures mostly naked?
2009-04-30 10:58:18
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Watermelon Posts: 674 Incept: 2007-12-23
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Gen, "Making short-selling potentially costly can reduce market liquidity,” said Darrell Duffie...." I thought Darrell is with you? He said it will reduce market liquidity if we make short-selling potentially costly (a bad thing I guess).
2009-04-30 10:58:18
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Genesis Posts: 71433 Incept: 2007-06-26
KD^2
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Rut you mean the difference between intentional fails and "market driven" fails? I don't see a distinction. Both have the effect of increasing the amount of Ts being traded over the amount actually issued and as such are still counterfeiting. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-04-30 10:59:56
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Xanares Posts: 1288 Incept: 2008-11-10
London
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I read that the same way Watermelon did.
2009-04-30 11:05:30
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Genesis Posts: 71433 Incept: 2007-06-26
KD^2
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I can increase the liquidity of $100 bills by counterfeiting them. This doesn't make that sort of "liquidity increase" desireable. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-04-30 11:07:41
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Xanares Posts: 1288 Incept: 2008-11-10
London
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ok wasnt sure whether "costly" was referring to shorts or naked shorts. Costly could mean just make it less profitable to short at all. :-)
2009-04-30 11:11:43
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Snowman Posts: 1040 Incept: 2009-03-09
avoiding yellow snow
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About 1 to 2% of treasuries fail to settle, and normally get cleared up within 5 days (90% get cleared up in 3 or less). For equities it depends on the stock, but with typical NYSE, you are looking at also 1 to 3%. And most gets cleared up in days. BUT....(with a Big B), in the fall of 2008, nearly 20% of treasuries were still failed for six weeks, up from about 9% early in the year and up from the 1-2 norm range in 2007. Clearly, there was massive naked short selling going on. And it is illegal. Period. KD: stick to 20's, they are easier to "clear".... (small note of trivia: there are more $100 bills in circulation in Russia than in the US....)
2009-04-30 11:18:18
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Eaglewwit Posts: 1890 Incept: 2007-11-30 SoCal
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I think in the end this sends yields higher. They think they it will keep yields down.
---------- "Not even I imagined we would see trillions of dollars being created and given to the culprits as a means of allegedly "saving" the system. This is not mere Keynesianism; it is Keynesianism on steroids and crystal meth."
2009-04-30 12:21:31
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Tsberts Posts: 1809 Incept: 2008-02-05
Minnesota
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That's what I'm wretling with. Yields higher or lower? If there's teeth to the prohibition against naked shorting Ts, that would tend to keep bond prices up, yields down. If there's more safety (liquidity, transparency, whatever) in the bond market, and bonds become more desireable to the big fish (Central Banks et al) then increased demand pushes prices higher, yields down. This only results in higher yields if it results in the fail price being baked into the bond price (a risk charge) or if it reduces demand for Ts. My brain can't connect the dots. ---------- Photoguy was an optimist. In Soviet Russia, the banks are run by the politicians.
2009-04-30 13:11:46
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Lastchance Posts: 1132 Incept: 2008-11-19 Las Vegas
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This is a great line.... "A reduction in trading would be a setback for the Fed as it seeks to lower borrowing costs" What does that mean? "Lower borrowing costs" for whom? Regular Americans? ---------- "We don't quit. I don't quit" President Obama 1/27/10 Man, I would to have him in one of our poker games.
2009-04-30 13:15:50
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