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| User Info | How Do You Spell "Liquidity Trap"? in forum [Ticker] | |||
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Genesis Posts: 71432 Incept: 2007-06-26 
KD^2 
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http://market-ticker.org/archives/656-Ho....
---------- "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
2008-11-12 10:19:43
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Mtgspy Posts: 6121 Incept: 2007-10-27 
Online
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Well isnt that nice? So treasury rate can remain artificially low. ---------- It sounds antiquated, merchantilistic - until you figured out that I was hoarding for war.
2008-11-12 10:22:14
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Genesis Posts: 71432 Incept: 2007-06-26
KD^2
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Cash is preferrable to a loan at this rate. This is what happened to Japan - you get cash to be fungible with short-term credit, and the game's over. Ben's gun just went "click." ---------- "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
2008-11-12 10:24:01
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Mondocondo Posts: 3143 Incept: 2007-12-03 
Miami
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"Note the bid-to-cover. No further explanation necessary." Well, for us dumb****s out there, further explanation IS necessary. What does bid-to-cover mean, and what's the implication?
2008-11-12 10:24:28
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Jkilkelly Posts: 1419 Incept: 2007-07-20
Mercer Island WA
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help me on how to interpret - it reads to me that they couldnt sell what they were offering which says that either 1) banks dont want to borrow more money, and or 2) they dont have collateral to post. how is this keeping treasury rates low when they only sold 8% ---------- “They say there are no atheists in a foxhole. Well, there are no libertarians in a financial crisis, either.'' Jeffrey Frankel, Harvard economist
2008-11-12 10:26:32
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Mtgspy Posts: 6121 Incept: 2007-10-27
Online
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bid-to-cover ratio Definition In a Treasury auction, the number of bids received divided by the number of bids accepted. Rather than the number of bids, sometimes the total amount of the bids is used instead. The higher the ratio, the higher the demand. ---------- It sounds antiquated, merchantilistic - until you figured out that I was hoarding for war.
2008-11-12 10:27:12
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Genesis Posts: 71432 Incept: 2007-06-26
KD^2
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No demand. Ben pointed his liquidity gun at the market, pulled the trigger, and got.... CLICK! Now he gets to choose between doing the right thing and being Weimar Germany. What an *******. I updated the Ticker with an explanation. ---------- "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 Last modified:
2008-11-12 10:28:21 by genesis
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Mtgspy Posts: 6121 Incept: 2007-10-27
Online
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To be fair, it is KINDA hard to lend when several large states have 50%+ negative home equity.
---------- It sounds antiquated, merchantilistic - until you figured out that I was hoarding for war.
2008-11-12 10:29:58
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Jkilkelly Posts: 1419 Incept: 2007-07-20
Mercer Island WA
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thats what I thought - thanks GEN ---------- “They say there are no atheists in a foxhole. Well, there are no libertarians in a financial crisis, either.'' Jeffrey Frankel, Harvard economist
2008-11-12 10:30:28
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Jkilkelly Posts: 1419 Incept: 2007-07-20
Mercer Island WA
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wouldnt this have the impact of depressing longer dated treasury prices? If the banks wont borrow at these rates when they could turn around and buy treasuries and pocket the difference, then this cant be good for artificial price supports for longer dated treasuries.... ---------- “They say there are no atheists in a foxhole. Well, there are no libertarians in a financial crisis, either.'' Jeffrey Frankel, Harvard economist
2008-11-12 10:33:19
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Genesis Posts: 71432 Incept: 2007-06-26
KD^2
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This is your first indication of a failed auction. It just happened at The Fed instead of Treasury. So far. This is UGLY with a capital "U". ---------- "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
2008-11-12 10:34:02
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Bluebird Posts: 524 Incept: 2008-05-02
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Out of curiosity, what is the usual bid-to-cover ratio?
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2008-11-12 10:36:03 by bluebird
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Mondocondo Posts: 3143 Incept: 2007-12-03
Miami
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Thanks, Gen and Mtgspy, for the explanations. I'm still learning a lot, thanks to this forum.
2008-11-12 10:36:36
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Jkilkelly Posts: 1419 Incept: 2007-07-20
Mercer Island WA
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What the ****ing dumb **** pol's cant grasp on this credit crisis is that there are no good "borrowers" out there to either approve for new lending or who even want more debt. It is baffling them that they cant force this to happen. they will print - isnt it obvious? ---------- “They say there are no atheists in a foxhole. Well, there are no libertarians in a financial crisis, either.'' Jeffrey Frankel, Harvard economist
2008-11-12 10:36:38
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Jkilkelly Posts: 1419 Incept: 2007-07-20
Mercer Island WA
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Oh **** Paulson is talking Will make for a good opening act for tonights video (the Ben and Hank chronicles) Gen is watching............. ---------- “They say there are no atheists in a foxhole. Well, there are no libertarians in a financial crisis, either.'' Jeffrey Frankel, Harvard economist
2008-11-12 10:38:04
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Weezie Posts: 3601 Incept: 2008-05-19
Obama's personal message to the American people...
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Mtgspy, I'm not following how the rates could remain low. Isn't this bid/cover ratio horrendously low and wouldn't that mean there's poor demand, thus rates would have to rise in order to pique interest in the auctions? Is my understanding backwards? Edit: I started writing this but wasn't able to post until AFTER the other responses. ---------- ---------------------------- Do not write below this line. Last modified:
2008-11-12 10:41:25 by weezie
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Nobody Posts: 1057 Incept: 2007-11-26
Nowhere
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Interesting. So who's the buyer of this debt normally? 16 bidders, surely that doesn't include people going thru TreasuryDirect etc.
2008-11-12 10:40:19
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Genesis Posts: 71432 Incept: 2007-06-26
KD^2
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No, it means that rates are too close to zero - there's too much liquidity for demand. You cannot stimulate with lower rates once cash becomes fungible with credit at the short end. This is the definition of a "liquidity trap" and means you're literally out of policy tools. The gun is empty and Bernanke's policy has failed. ---------- "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
2008-11-12 10:41:28
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Weezie Posts: 3601 Incept: 2008-05-19
Obama's personal message to the American people...
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Thanks, got it backwards.
---------- ---------------------------- Do not write below this line.
2008-11-12 10:43:28
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Gt80 Posts: 218 Incept: 2008-01-20
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Karl -check out IRX
2008-11-12 10:44:27
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Jkilkelly Posts: 1419 Incept: 2007-07-20
Mercer Island WA
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wont he pull out some liquidity by selling treasuries?
---------- “They say there are no atheists in a foxhole. Well, there are no libertarians in a financial crisis, either.'' Jeffrey Frankel, Harvard economist
2008-11-12 10:44:32
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Widgeon Posts: 6527 Incept: 2007-08-30
OK Online
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Just thinking ... They can't "give" anymore money to corporations and expect any further 'spending' activity ... IMHO they've already essentially opened the spigot full-on for any corporation that asks. The Spring'08 "stimulus check" DID produce about a 6 week spike (I think) - if they want to actually go the Weimar route it's gonna have to be through 'stimulus check' like actions - giving money directly to people that will spend it in stores ... at the ground level. I can't imagine that happening ... BWTFDIK?
2008-11-12 10:45:43
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Jkilkelly Posts: 1419 Incept: 2007-07-20
Mercer Island WA
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well if the monetary policies arent working based upon the results of this auction, then they only other stimulative steps available would be fiscal - deficit spending via stimilus and public works programs ---------- “They say there are no atheists in a foxhole. Well, there are no libertarians in a financial crisis, either.'' Jeffrey Frankel, Harvard economist
2008-11-12 10:49:41
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Bozonian Posts: 14033 Incept: 2007-09-01
PFT - Pure F'n Tin
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Next step: Negative interest rates, FED starts borrowing from private banks!
---------- I'm so depressed about outsourcing I called the suicide hotline and got a call center in Pakistan. They got all excited and asked me if I could drive a truck. Everything I write is my opinion and not to be considered proven fact. Nothing I write should be considered financial advice.
2008-11-12 11:00:13
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Lemonaid Posts: 4782 Incept: 2008-01-20
Detroit Metro
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Does been still have long Term T's? So there's three options... the right thing, Weimer Germany, and hawking long term T's? Wouldn't he burn through long term T's before outright printing? Of course that will put upward pressure on morgage yields but certainly printing dollars is worse. ---------- "There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved." Ludwig von Mises Last modified:
2008-11-12 11:01:48 by lemonaid
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