10 Year Bond Smashes All Records In WTF Auction

Only one word to explain the just completed 10 year reopening auction. WTF!!! While the 10 year When Issued was trading at 1.516% at 1pm, when the release hit of the final High Yield on the bond, jaws dropped, as it came at a shocking 1.459%, nearly 6 bps inside of the WI, a record, a yield which also was a record, a Bid To Cover of 3.61 which was the second highest ever, second only to the 3.72 in April 2010, but it was the internals that were the most jarring of all. Unlike all recent auctions in the past 4 years, the Primary Dealer take down was only 14% a record low in recent years, and a hit rate of 6.8%, another record low. The offset: Directs, which took down a whopping 45.4%, another record, after tendering a record $16.9 billion in bids. All in all there was no definitive reason to explain why this auction was so very, very off the charts, and so mispriced by the secondary market, suffice to say WTF, and that this is what happens when there continues to be just one game in town: frontrun the Fed! Either someone was caught massively wrong-footed going into the auction and covered a massive short into the primary market, or far more likely, some "Direct" entity somewhere, has a gaping need for good collateral and would literally pay anything for US paper ahead of an even bigger margin call. If the latter, we will find out very soon.

 

 

The Message From Gold And Treasuries: "This Time Is Different"

The last forty years have seen five distinct regimes in the relationship between gold prices and Treasury yields. It would appear that the current regime (from 2006 to Present) is 'different' indeed as the Keynesian end-point seems to have arrived.

Gold Report 2012: Erste's Comprehensive Summary Of The Gold Space And Where The Yellow Metal Is Going

Erste Group's Ronald Stoeferle, author of the critical "In gold we trust" report (2011 edition here) has just released the 6th annual edition of this all encompassing report which covers every aspect of the gold space. What follows are 120 pages of fundamental information which are a must read for anyone interested in the yellow metal. From the report:  "The foundation for new all-time-highs is in place. As far as sentiment is concerned, we definitely see no euphoria with respect to gold. Skepticism, fear, and panic are never the final stop of a bull market. In the short run, seasonality seems to argue in favor of a continued sideways movement, but from August onwards gold should enter its seasonally best phase. USD 2,000 is our next 12M price target. We believe that the parabolic trend phase is still ahead of us, and that our long-term price target of USD 2,300/ounce could be on the conservative side."

19 Warnings About A Coming Global Financial Catastrophe

from End of the American Dream:

Global leaders have tried just about everything that they can think of, but the coming global financial catastrophe continues to march steadily toward us. We have seen “stimulus packages”, quantitative easing, bond buying, interest rate cuts, emergency economic summits, bailout packages for banks, bailout packages for entire nations, “Operation Twist”, unprecedented government intervention in business and massive amounts of new government debt and yet nothing seems to revive the global economy. In fact, it looks like we are rapidly heading into the second dip of a “double dip recession”. Unfortunately, many believe that this next dip will be more like a full-blown depression. All over the world, top economic experts are warning that we are facing an unprecedented crisis of debt and insolvency that will result in a global financial catastrophe. The eurozone is drowning in debt, the U.S. government is drowning in debt and major banks all over the globe are drowning in debt. Global authorities have been trying to patch the system together and keep it going, but the incredible damage that all of this debt has done is now becoming apparent to everyone. The global debt bubble that has fueled prosperity in the western world for the last several decades is getting ready to burst, and when that happens the chaos that will result will be absolutely horrifying.
Read More @ EndoftheAmericanDream.com

Some Interesting Information on PFGBest From Ann Barnhardt

 

France, Germany, And The Reintroduction of the D-Mark

from Testosterone Pit.com:
Germany and France exist in two different universes, apparently: France, safely ensconced in a Eurozone without bailouts and with nary a debt crisis on the horizon, debates its economic and social model. Germany sees a Eurozone ravaged by a debt crisis with mind-boggling bailout costs and risks that stir up a furor on all sides, and everything is getting questioned, even the euro itself.
But there was a moment of repose on Sunday: French President François Hollande and German Chancellor Angela Merkel met in the French city of Reims to commemorate a French-German handshake. Reims was occupied by the Prussian military during the Franco-Prussian war of 1870-1871. During World War I, it was heavily damaged by German bombardment. During World War II, it was occupied by Germany. Then, on May 7, 1945, Germany signed its surrender there. And on July 8, 50 years ago, President Charles de Gaulle and Chancellor Konrad Adenauer shook hands to put an end, once and for all, to the wars between the two countries.
So, perhaps it was a bit strained: Merkel had campaigned against Hollande on French soil during the presidential election. In return, Hollande had promised to undo every single one of her save-the-euro policies.
Read More @ TestosteronePit.com

 

Just Between Friends: The DOJ's Handling of MF Global and America's Culture of Cronyism

 

As M2 Money Supply Rolls Over, The Stock Market Will Follow

As many observers have noted, you can expand the money supply but if that money ends up stashed as bank reserves, it never enters the real economy, nor does it flow into household earnings. The velocity of that "dead money" is near-zero. M2 declined in the housing bubble as the velocity of money skyrocketed: everyone was pulling money out of housing equity via HELOCs (home equity lines of credit) and spending the "free money" on cruises, furniture, big-screen TVs, boats, fine dining, etc. The recipients of that spending also borrowed and spent as if the "free money" would never end. If M2 expansion is the only thing propping up an artificial market, what happens to the stock market rally as M2 rolls over?

Scenes Of Despair

from The Economic Collapse Blog:
Sometimes it can be easy to forget that behind all of the horrible economic numbers that we hear about are millions of real people that have had their lives absolutely devastated by this economy. Elderly couples are being brutally evicted from their homes, young families are living in their cars, terminally ill people are dying because they cannot afford medication that they need and millions of parents can’t sleep at night as they wrestle with anxiety over not being able to provide for their children. Often those that lose their jobs or their homes discover that people start looking at them very differently and that there is very little compassion out there these days. As you will read about below, one major U.S. bank is even kicking an elderly woman with stage 4 breast cancer out of her home because she cannot make her full mortgage payment each month. When the next major global financial catastrophe happens, we are going to see a whole lot more economic despair. Will society respond to that crisis by becoming warmer and more compassionate, or will the world around us become even more cold and even more cruel? As bad as things are right now, it truly is frightening to think about what the world is going to look like after the next major economic downturn.
Read More @ TheEconomicCollapseBlog.com

Why We’re Light Years Away From Solving Our Problems

It’s been said that the definition of insanity is to do the same thing over and over again but to expect a different result. On that basis, the western world’s economic policymakers are clearly certifiable. They cut rates. It does nothing. So they cut rates again. And again. They in debt future generations to ‘stimulate’ the economy. It does nothing. So they stimulate again. And again. Nothing that central banksters or politicians have done since the 2008 global financial crisis has fundamentally changed economic conditions. Yet they keep applying the same remedies, drawn from the same old Keynesian playbook. The false premise which guides their decisions is that we can all grow wealthy by borrowing and consuming, instead of by producing and saving. People have been sold this lie for more than a generation. It is embedded in social DNA. In the current western economic system, you are rewarded for going into debt with all sorts of tax deductions. Save money, on the other hand, and you are punished through taxation and inflation. The incentives are all wrong; it’s no wonder that people have over-borrowed and overspent given that the system is so blatantly slanted to promote such behavior.

Manipulating LIBOR Allows Banks to Lease & Dump Gold at Artificially Low Costs

from Silver Doctors:

Our friend Harvey Organ has released an excellent missive discussing in detail how the manipulation of LIBOR by the bullion banks allows the cartel to lease gold (that they don’t own) at artificially low borrowing costs.
DROPPING LIBOR BELOW FAIR MARKET RATES ALLOWS THE BANKS TO LEASE AND DUMP GOLD INTO THE MARKET AT ARTIFICIALLY LOW BORROWING COSTS. So that drop in lease rates is VERY ominous. The worse part is the lease rates have flipped, with the ONE YEAR RATE NOW LOWER THAT THE ONE MONTH RATE. DO I BELIEVE MY EYES!?? Since the one year term and longer is the usual lease rate period of the MINES, I can only conclude that the mines are being strongly encouraged to HEDGE their production. This puts us back under the market conditions more typical of a decade ago.
Read More @ SilverDoctors.com

We The Sheeplez... is intended to reflect excellence in effort and content. Donations will help maintain this goal and defray the operational costs. Paypal, a leading provider of secure online money transfers, will handle the donations. Thank you for your contribution.

I'm PayPal Verified

Today Was Another Perfect Example of Insanity

by David Schectman, MilesFranklin.com:

Looks like Jim Sinclair was right – once again. Last week he wrote that this week the Gold Cartel will go after gold again for the eighth attempt to break it down, and once again they will fail. A quick look at the following gold chart is all you need to see he was correct.
Honestly, I am amazed that so-called “smart” investors are rushing to the “safety” of dollars (US Bonds).  How can I possibly mis-read all of the obvious data?  Either I am lost in the woods and a complete idiot or the mainstream has gone insane!  I’ll take my chances and stick with my analysis.  Today was a perfect example of this insanity.  Gold, silver, platinum, palladium, oil, the Dow and the NASDAQ were all down – and the dollar was up.  This is insanity, manipulated or not!  But it is at times like these that the few who can see through all the Bull Shit and stand strong with their beliefs will be handsomely rewarded. (See Sinclair’s commentary The War Between Manipulation and Buying).
Read more @ MilesFranklin.com

Crisis breeds xenophobia in Greece as nationalists gain clout

from RussiaToday:

Greece is also in turmoil. Violent clashes have shaken the city of Agrinio in the west. Supporters of the far-right Golden Dawn party fought with anarchists, leaving cars and shop windows smashed, and one person injured. Golden Dawn’s influence is rising. It gained around 7 per cent of the vote in the recent general election.

Austerity’s Impact: 8 Million More Jobs in Europe Could Be Destroyed

by Matthew West, CNBC:
The International Labour Organization (ILO) called on European leaders to invest in their economies and make job creation their priority on Wednesday, as it released a new report which showed 3.5 million jobs had been lost since the 2008 financial crisis and a further 4.5 million were at risk.
The report warned euro zone unemployment now stood at 11 percent, representing a total 17.4 million people.
The ILO warned if current policy did not change quickly it was possible this figure could rise sharply across the euro zone: “fueling social unrest and eroding citizen’s confidence in national governments, the financial system and European institutions.”
Unemployment among young people (those aged 16 to 24) was predictably highest among all those of working age.

Youth unemployment in April 2012 stood at 22 percent across the whole of the euro zone while in Italy, Portugal and Slovakia it was 30 percent.
In Greece and Spain youth unemployment stood at a staggering 50 percent.
Read more @ CNBC.com

PFGBest Broker Vaporizes $200m in Segregated Client Funds

from Wealth Cycles:
On March 28th we wrote MF Global Scandal Is Iceberg Tip of Vast Hidden Risk, and we meant it. MF Global was the tip of the iceberg, and vast, contiguous, hidden risk remained.

Part of the unfortunate base of the iceberg has now been revealed. The National Futures Association (NFA) has frozen all accounts at PFGBest, a commodities brokerage based in the heart of farm country, Cedar Falls, Iowa. “Until further notice, PFGBest is not authorized to release any funds.” Over half of customer assets, some $200 million in client funds have been stolen.
MFGlobal was the largest commodities brokerage in the U.S. The firm’s demise was the first big move that has limited the desire for speculation and participation in commodities markets. This move let people know that their segregated accounts did not mean their assets truly remained their own. After the scandal, 700 customer accounts were transferred in bulk to PFGBest. PFG put out a tweet at the time:
Read More @ WealthCycles.com

Downward Spiral Continues: San Bernardino Becomes Third California City Seeking Federal Bankruptcy Protection

Significant CUTS ‘Across the board; Police, fire, all of those.’
from NBC LA:
San Bernardino became the third California city in less than two weeks to file municipal bankruptcy protection Tuesday night when the city council voted to make the move in the face of a $45-million budget shortfall.
Shortly before the council’s vote, Interim Mayor Andrea Miller recommended the city of 209,000 seek bankruptcy protection due, in part, to its inability to make payroll over the next three months, the Los Angeles Times reported.
If the payroll is not met, the city attorney says there could be a mass exodus of employees. While the mayor says that’s scenario is unlikely, bankruptcy protection gives the city time to avoid payroll delinquency.
The move followed city negotiations that conceded $10 million from employees and slashed the workforce by 20 percent over the last four years, the newspaper reported.
Special budget meetings were set for Tuesday and Wednesday.
Tuesday’s special budget meeting began with a prayer invoking the “wisdom of God to be liberally poured down” on city officials. San Bernardino has a 15.7 percent unemployment rate and about 5,000 homes in foreclosure.
Read More @ NBC LA.com

War and the Model Soldier

By Joel Bowman, Daily Reckoning.com.au:
When Napoleon crossed the Niemen, at the outset of the 1812 French invasion of Russia, he had under his command some 422,000 men. When he approached those same waters the next year, this time from the east, in sluggish, worn down retreat after defeats in Moscow, Borodino, Smolensk…his ranks had been cut to barely 10,000. A few enfeebled diehards were all that remained of the Grande Armée.
[This famous graph, by Charles Joseph Minard, shows the decreasing size of the Grande Armée. The brown line (followed from left to right) shows Napoleon’s march to Russia. The black line (followed from right to left) depicts his retreat. The size of the army is show equal to the width of the lines.]
Of course, military strategists are slow to learn and quick to forget. Napoleon wasn’t the only fool to covet the vast plains of the east. One hundred and thirty years later, Adolf Hitler embarked on Operation Barbarossa, the largest military operation in human history, both in terms of manpower…and casualties. His monstrous panzer divisions rolled east, pounding Napoleon’s tracks past Minsk, Orsha and Smolensk.
They thundered north, over the River Dvina to Leningrad, and South, through the Ukraine and onto Stalingrad. Once again it was a remarkable show, equal parts brute strength and determined stupidity.
Read More @ DailyReckoning.com.au

Swiss Bank Crackdown Accelerates As Credit Suisse, UBS Clients Raided In Germany, France

from Zero Hedge:
While virtually every European risk indicator is now being gamed to underreport the true nature of the capital flow panic on the continent, one remains steadfast: Swiss nominal yields, which as we pointed out a month ago, have become the only true indicator of liquidity stress. And as noted this morning, Swiss 2 Year bond just hit a record nominal -0.37% (which coupled with record low yields in German yields explains everything about where money is sprinting to in Europe, and just how much “confidence” in the system is left). And while the SNB continues to suffer massive losses on its EURCHF peg, the reality is that it continues to offer a free put to all those who wish to move away from EUR exposure and into the relative safety of the CHF (the risk of cantonal disintegration is still relatively low). Which is why the only recourse authorities have in dealing with the now record flight to Swiss safety is brute force. Sure enough, as Reuters reports, clients of the two largest Swiss banks: Credit Suisse and UBS was raided in two independent, but likely linked, operations in Germany and France, respectively, in a show of force that moves beyond mere tax-evasion and has a goal of scaring anyone who still thinks of keeping their money in the relative safety of Geneva and Zurich bank vaults.
Read More @ Zero Hedge.com

Richard Russell – Gold, Stocks & Massive Fed Manipulation

from KingWorldNews:

With continued uncertainty in global markets, the Godfather of newsletter writers, Richard Russell, wrote, “…we see the stock market up on Fed-created stilts … I’m stating that deflationary and deleveraging forces are still in command, and all the Fed’s manipulations are, and will, fail to turn the bear market into a new bull market.”
Russell also pondered, “Yes, we had the usual late-session rally … Is the Fed buying the Dow at the close? It wouldn’t surprise me.” But first, this is what Russell had to say about gold: “Most of my subscribers are interested in gold. All I’m going to say about gold is wrapped up in the chart below. Here we see gold in a large rectangle formation. The 1550 level has been tested numerous times and it has shown to be solid support.”
“Now gold has its choice of breaking out on the upside of the rectangle or on the downside … It’s obvious that there are buyers at 1550 or below, and that there are sellers near the 1800 area. All of which has given us a trading range of almost one year.
Jeffrey Saut continues @ KingWorldNews.com

Oligarchy in the USSA

By Edwin Tucker, Dollar Vigilante:
The US is a great place to be an oligarch. You are permitted to steal with impunity from people who are too brain dead to notice they are being robbed. Additionally, in the US it is inexpensive to gain oligarch status. In other societies you have to fight your way to the top and vigorously defend your power. In the US it only takes a few hundred thousand dollars in campaign donations to buy immunity. Let’s take a look at the differences in treatment between an oligarch and a common citizen when committing crimes.
At the end of 2011, these two men held up a gas station in Arlington, VA. They stole some cigarettes and the register cash, putting the value of the total haul at a few hundred dollars. These two were swiftly apprehended and a trial date was set. The jury was not sympathetic as the sentencing shows. The two will have 24 years between them in prison to think about their actions.
In this case, the US justice system appears swift and thorough. The real problem for these two guys is they didn’t think big enough. In the US, a small crime gets you a big punishment while a massive crime gets you a book deal.
Read More @ DollarVigilante.com

Libor scandal: Bob Diamond says allegations ‘unfair and unfounded’

by Harry Wilson, The Telegraph:
Bob Diamond has reacted angrily to claims that he lied to MPs last week at the Treasury select committee, saying the suggestions were “terribly unfair” and “unfounded”.
Bob Diamond has branded as “terribly unfair” and “unfounded” claims that he misled MPs over Libor rigging as the former Barclays chief tried to rescue his reputation by dropping claims for bonuses worth up to £20m.
In a letter to Andrew Tyrie, the chairman of the Treasury Select Committee, Mr Diamond said he was “dismayed” by suggestions that he had lied while giving evidence. The former bank chief resigned last Tuesday over his part in the scandal.
“Having watched the Committee’s session today, I was dismayed that you and some of your fellow Committee members appear to have suggested that I was less than candid last week,” wrote Mr Diamond. “The comments… have had a terribly unfair impact upon my reputation.”
The letter was released hours after Mr Diamond dropped a claim to bonuses worth as much as £20m as part of a settlement with Barclays. He will receive £2m in salary and pension contributions over the next year as part of the deal, but gave up his right to further shares and options.
“It is my hope that my decision to step down and today’s agreement on my remuneration will help close this chapter and allow Barclays to move forward and prosper,” said Mr Diamond in a statement.
Read More @ Telegraph.co.uk

90 Seconds with Art Cashin: “There May Be a Clandestine Currency War Going On Here”

from CNBC:
 
CNBC’s Brian Shactman and Art Cashin, of UBS, discuss why the euro “went into the tank and took the stock market with it.”CNBC’s Brian Shactman and Art Cashin, of UBS, discuss why the euro “went into the tank and took the stock market with it.”

The German Constitutional Court Rules Against Euro Hysteria

from Testosterone Pit.com:

Chancellor Angela Merkel did the right thing. She left Germany. And Germany is in turmoil. The bailout policies she and her government had pushed through and that parliament had passed just after the EU summit ran into discord, accusations, and threats. Everybody was applying pressure. And the Federal Constitutional Court would have to decide. On Tuesday, it began its hearings on the permanent European Stability Mechanism (ESM) and on the fiscal union pact. A high-urgency, top-priority, super-rush hearing, restricted to oral arguments to speed things along. Very unusual for the Court. A sign it was taking the time pressures seriously.
Plaintiffs had swarmed the Court from all sides: the Left, conservative Peter Gauweiler (CSU), former Minister of Justice Herta Däubler-Gmelin (SPD) with the association More Democracy, representing now over 23,000 citizens, and the Association of Tax Payers. They claimed that the Bundestag, in passing the laws, had transferred critical parliamentary rights—controlling the national budget—to other organizations, thereby curtailing the rights of voters to participate democratically in budget decisions. [Read.... The “European Monster State“].
Read More @ TestosteronePit.com

Deflation and the Global Garage Sale

by Rick Ackerman, Rick Ackerman.com:
The media frequently report the chronic disappointment of the political elites that the economy isn’t rebounding. Is this perhaps because people with different incomes see the economy differently? The simple fact is that people buy less if they are jobless or working part time. These days, quite a few of them , including those The Government would count as employed, are seeking additional sources of income. It may be all the same to the Labor Department’s statisticians whether the economy is creating full-time or part-time jobs, but the latter don’t put much spending money in the hands of those who hold them. Buying power is something that those who work full-time with benefits and some sense of security possess. Those are the jobs we all want, because they amount to a career.
For everyone else, needing to make ends meet leaves one scrambling for other sources of income. Holding garage sales or selling things on eBay are popular ways to go. I have experience in both, as a garage-sale seller and the eBay seller. As a garage sale veteran, I have noted patterns of buyers who can be grouped into four waves. If the sale starts at 9 a.m. the first wave is there and raring to go a half-hour early. When the clock strikes 9:00, they give the merchandise a once-over in less than a minute, then they either leave or make a low bid on one item.
Read More @ RickAckerman.com

One-on-One with Robert Shiller

by Greg Hunter, USAWatchdog:
The One-on-One series continues with Yale Professor Robert Shiller. He predicted the current housing meltdown which is now five years old. If you think we are at the bottom, think again. When asked, “If the current housing crisis was a baseball game, what inning would it be?” Shiller replied, “Maybe we’re in the fourth.” Shiller recently said that home prices may not recover “in our lifetime.” He cited the Florida land boom in the 1920’s, where prices did not rebound for a “half century.” Shiller adds, “There are a lot of long term doubts about home prices right now.” If real estate does not recover “in our lifetime,” what about the banks still holding it? Shiller called that a “dark scenario.”

Shiller says, “A lot of people have the mistaken impression that we must be at a bottom.” He goes on to say real estate could go up in price but “There is also the risk of further substantial drops in home prices.” Please join Greg Hunter as he goes One-on-One with Robert Shiller.

Bob Barr: Feds Determined to Label Conservatives “Thought Criminals”

by Paul Joseph Watson, InfoWars:

Former Congressman Bob Barr has slammed as “frightening,” “bizarre,” and “insidious” a new study funded by the Department of Homeland Security with lists ‘liberty lovers’ as right-wing terrorists, noting that the federal government is determined to re-define legitimate political beliefs as thought crimes.
As we reported last week, a study produced by the National Consortium for the Study of Terrorism and Responses to Terrorism at the University of Maryland with the aid of $12 million dollars in DHS funding characterizes Americans who are “suspicious of centralized federal authority,” and “reverent of individual liberty” as “extreme right-wing” terrorists.

The report lists numerous other political ideologies which would normally be considered as American as mom and apple pie as extremist beliefs, including people who consider themselves “anti-global,” Americans who believe their “way of life” is under attack, those who consider themselves “fiercely nationalistic,” and people who “believe in conspiracy theories that involve grave threat to national sovereignty and/or personal liberty.”

Former Georgia Congressman and staunch liberty advocate Bob Barr responded to the story by warning that it provides a “frightening” and “bizarre” example of how “government officials seem to have become increasingly distrustful of individual liberty.”

Read More @ InfoWars

The Real Fiscal Cliff

by Peter Schiff, Euro Pac:

The media is now fixated on an apparently new feature dominating the economic landscape: a “fiscal cliff” from which the United States will fall in January 2013. They see the danger arising from the simultaneous implementation of the $2 trillion in automatic spending cuts (spread over 10 years) agreed to in last year’s debt ceiling vote and the expiration of the Bush era tax cuts. The economists to whom most reporters listen warn that the combined impact of reduced government spending and higher taxes will slow the “recovery” and perhaps send the economy back into recession. While there is indeed much to worry about in our economy, this particular cliff is not high on the list.
Much of the fear stems from the false premise that government spending generates economic growth (for stories of countries experiencing real growth, see our latest newsletter). People tend to forget that the government can only get money from taxing, borrowing, or printing. Nothing the government spends comes for free. Money taxed or borrowed is taken out of the private sector, where it could have been used more productively. Printed money merely creates inflation. So the automatic spending cuts, to the extent they are actually allowed to go into effect, will promote economic growth not prevent it. Even most Republicans fall for the canard that spending can help the economy in general. But even those who don’t will surely do everything to avoid the political backlash from citizens on the losing end of any specific cuts.
Read More @ EuroPac.com

We The Sheeplez... is intended to reflect excellence in effort and content. Donations will help maintain this goal and defray the operational costs. Paypal, a leading provider of secure online money transfers, will handle the donations. Thank you for your contribution.

I'm PayPal Verified