"What people don't realize is that...unless the UST can roll its debt not on a monthly
but now weekly basis in greater and greater amounts, the interest rate
doesn't matter. All it takes is one semi-failed auction and it's game over as hundreds of billions in bills become payable."
Enter the always forgotten maturing debt argument. And as a just
released presentation by the Bipartisan Policy Center titled "Debt Limit
Analysis" reminds us, aside from the actual deficit funding math, which
is that in August there is a $134.3 billion cash shortfall that has to
be funded with debt, there is a far greater risk. Or, put numerically, 467.4 billion far greater risks.
This is the amount of debt that matures through August 31, and has to
be rolled over or the US is bankrupt... in every sense of the word. Once
again, America's politicians and media get broadsided by the definition
of gross versus net. Because, in reality, the inability to issue more
debt post August 3 means a halt to all new debt issuance. Which,
unfortunately because it means Geithner's scaremongering is actually
correct, would imply the end for the debt ponzi.

Below is the maturity schedule in August from the BPC:

And their commentary, which recaps what we said 14 months ago:

• Treasury must “roll over” almost $500 b in debt that matures during August 2011
  
  • New debt is issued and the proceeds are used to repay the maturing debt plus interest due
  • Treasury will require market access throughout August to avoid defaulting on maturing debt
• About $380 b in short-term T-Bills maturing, plus $90 b in long-term securities
  
  • Quarterly refunding auction on August 15

http://www.zerohedge.com/article/t-minus-two-months-500-billion-ticking-timebomb

http://www.zerohedge.com/article/david-rosenberg-how-can-there-not-be-qe3

There’s always Japan. Two immediate problems come to mind.
One, 10-year bonds yield a piddling 1.06 percent, about a third
of the return on comparable U.S. bonds. Two, with about 95
percent of Japan’s debt outstanding tucked under tatami mats at
home, China couldn’t get its hands on enough to make the
exercise worthwhile. Bond markets elsewhere in Asia are either
too small or too illiquid to help.

As 2011 unfolds, the Bretton Woods II architecture that
Asia created after the 1997 crisis isn’t just crumbling -- it’s
putting trillions of dollars of state wealth at risk. Romantic
notions about returning to the original Bretton Woods world of
the gold standard are unrealistic in a global system as
leveraged and nontransparent as ours. So is saving its
successor, which saw Asia establishing de facto pegs to the
dollar and amassing mountains of reserves to protect them.

http://www.bloomberg.com/news/2011-07-19/joke-is-on-china-as-u-s-s-aaa-becomes-laughable-william-pesek.html

If that is the thinking, then the game is over for dollar in about a decade. Chian Mai multilateral means entire west pacific money circulation is monitored. And protected using $5T worth of total reserve plus 5-8% growth. The assumption of bond price and national goal is definitely wrong. Again and again, the idiot in charge seems not to understand the point of holding US bond. It is NOT to store value/enrich oneself. It is to control dollar exchange by balancing circulation, thus   price competitiveness/exchange rate. whether one hold $3Billion bond or $3Trillion bond is accidental. what's more as dollar circulation in the world becomes smaller, it is easier to control exchange rate. which is where we at now.

Post-war dollar role is about to be over. US economy (15%) is not big enough to dictate dollar price as global reserve. As it should,  natural 19th century balance is returning. Europe should be biggest, if not china, but both are not politically ready yet. So things are getting funky.

I for one say, the current game will persist until dollar total collapse or European politics completely crack due to super high euro price. Bernanke printing press obviously is not big enough to flood the world to force everybody to change tack. $2-3T new money is nothing. Asia absorbed half of it a year, latam and africa another quarter, the rest will be destroyed via shadow banking. And bernank isn't going to be able to print more than that without turning dollar into toilet paper overnight. People will riot on the street if price collapse 200% in a week.

Balance of payments


http://asiarr.wordpress.com/2009/10/21/japan-doesnt-need-quantitative-easing-it-needs-a-weak-yen/



http://www.data360.org/dsg.aspx?Data_Set_Group_Id=2272

http://www.bullfax.com/?q=node-another-name-trade-deficit-capital-account-surplus-bala

Gold is now $1623



http://www.zerohedge.com/news/traditional-barbaric-relic-hits-all-time-high-over-1615

Negotiations Break Down, Boehner Will Advance His Unilateral Debt Plan: Liveblog - Open Thread

Now Lory Montgomery, of the Washington Post reports, Boehner presses ahead with unilateral debt plan  

Hours before Asian financial markets were set to open Sunday
evening, talks over the federal debt limit were at a standstill, and
House and Senate leaders were threatening to pursue two different
approaches to averting a government default in a messy legislative
showdown.

In a conference call with House Republicans, Speaker John A. Boehner
(R-Ohio) said he would press ahead with a two-stage strategy that would
give the Treasury only about $1 trillion in additional borrowing
authority, forcing another debt-limit battle early next year with the
political parties in the heat of the 2012 presidential campaign.

“If we stick together, we can win this for the American people,” Boehner told his troops, participants said.

Boehner promoted that strategy on Fox News Sunday, telling host Chris
Wallace that “there’s going to be a two-stage process. It’s not
physically possible to do all of this in one step.” In a barbed aside,
he added: “I know the president’s worried about his next election. But
my God, shouldn’t we be worried about the country?”

http://www.dailykos.com/story/2011/07/24/998247/-Negotiations-Break-Down,-Boehner-Will-Advance-His-Unilateral-Debt-Plan:-LiveblogOpen-Thread-?via=siderec

Scheiffer:  Senator Durbin, Speaker Boehner is working
on a plan that he hopes can be supported in the House, but Democrats
have already said "no way" and that is this short-term extension of the
debt limit.  Could something like that possibly pass the Senate?

Durbin:  Bob, let me tell you what the problem is.
 Those who give us a rating, a credit rating, for the United States of
America -- Moody's, Fitch, Standard & Poor -- have told us "Don't do
that."  A short-term extension of the debt ceiling is going to
jeopardize our economy at a time when the global economy is so weak,
when we are facing a downgrade of America's credit rating.  They have warned us not to do it and Speaker Boehner is ignoring that warning.  We can't do that.  

I'll tell you what will happen. We know that Majority Leader Cantor
walked out of the negotiations with Vice President Biden.  We know that
Speaker Boehner walked out of negotiations with the President, not once,
but twice.  And now, the reality is if we fail to extend the
debt ceiling of the United States, we will be imposing a new tax on
working families and businesses across America.  They'll see it in their credit cards.  They'll see it in their home loans, in their automobile loans.  This is a tax which will be imposed because speaker Boehner refuses to consider a tax on the wealthiest people in America.

Scheiffer:  All right, but -- I take your point on
all of that, but wouldn't it be better to pass a short-term extension to
raise the debt limit than just letting this thing go?

Durbin:  Well, we absolutely do not want to default.  But this
notion that we're going to replay this movie in four or five months,
that we're going to face this whole thing all over again, the American
economy is too fragile at this point in recovery for us to allow that to
happen.  We've been warned, not by political advisors -- I
hear the Republicans, they want to make this a campaign issue.  Ignore
the political advisors for a moment.  Listen to the economists who are
telling us, all of them together, "Do not lurch from one five-month
period to another when it comes to the credit rating of the United
States of America, not at this moment in history.  It's going to hurt
us.  It's going to stall our recovery and I might say to Speaker Boehner
he should remember six words:  if you break it, you own it.  In
this situation, he has the responsibility to lead his Republican caucus
and to help this nation move forward in a stronger economy.

http://www.dailykos.com/story/2011/07/24/998138/-Durbin-Sticks-it-to-the-GOP?via=siderec

Basically, these fuckers kick the can down the road once again, by creating "committee".
The market punishment will be harsh, since we know eveerybody is going to play the election game even more.


-----------------

In the melodrama that is consuming Washington this hot summer, featuring
the spectacle of how much Tea Party Republicans will be able to extort
for agreeing not to blow up the economy, the values and priorities of
most Americans were early casualties. That reality will drive — no
matter what the resolution this week — new, independent citizen
mobilizations challenging both Republican zealotry and Democratic
cravenness.

http://www.dailykos.com/story/2011/08/01/1001543/-Katrina-vanden-Heuvel-speaks-the-truth?via=siderec


http://www.nakedcapitalism.com/2011/08/tom-ferguson-on-the-debt-deal-debt-ceiling-deal-all-cuts-no-taxes.html

Gross
US Debt Surges By $240 Billion Overnight, US Debt To GDP Hits Post
World War II High 97.2%, Official Debt Ceiling Increase Only $400
Billion

More On The 2011 Edition Of US-Japan Open Currency Warfare: "This Is Just The Beginning"

-----------------

Party on like it's 2006. Holy free credit card batman. thank you china, thank you japan. Crank up that printer baby!  

(I wonder how long $2T is going to last? I'd say less than 2 years.)


competitive devaluation and currency manipulation begins.
$12B japan. easy start. Next euro then china and rest of asia. I'd say, there goes $1-200B of that money printing down the drain before it even starts.



http://www.businessinsider.com/morning-markets-august-4-2011-8

TOKYO, Aug 4 (Reuters) - Japan sold one trillion yen ($12.6
billion) and its central bank eased monetary policy on Thursday,
joining Switzerland in efforts to tame currencies buoyed by
safe-haven demand from investors fretting about the health of
the global economy.

Japan's intervention, which it continued in London trading
hours, pushed the yen beyond 79.90 yen to the dollar, a
three week low, from around 77.10, matching the extent of yen
moves in intervention in March this year and September 2010.

http://www.reuters.com/article/2011/08/04/japan-economy-yen-idUSL3E7J41YW2011080

US stocks plunge, Dow falls more than 500 points

The Dow Jones Industrial Average plunged 4.3 percent Thursday, its
worst one-day drop in more than two years, as global markets melted down
over fears of another world economic downturn.

The Dow was down
512.76 points to 11,383.68; the broader S&P 500 lost 4.8 percent to
1,200.07, while the tech-heavy Nasdaq Composite plunged 5.1 percent to
2,556.39.

http://www.google.com/hostednews/afp/article/ALeqM5ia2N-ia2rzCibk2LljnY1owY7Pjg?docId=CNG.95e1ffac6cfc53b1bf7f99c619c8d40c.991

Opening salvo of the $2Trillion currency war has been pretty spectacular so far. It's gigantic-mega-giga-super large size money being moved around. No hedge fund is going to survive this battle for sure. Because hedge fund computing algo is now the target. (The only easy target left. Sovereign funds and central banks are now the gamblers)

I wonder where Soro is right now? ...lol. Is he still shorting euro? His cash will looks like 6th grader lunch money compared to the movers.

All the authorities did was patch up a predatory banking system with
duct tape and bailing wire and hoped enough cheerleading would restore
confidence. And after the banks got their bailout money, the mood seemed
to be “we spent so much on them, we don’t have anything left for anyone
else.” The alarming rise in government deficits, which was primarily
the result of the crisis (falls in tax revenues and increases in
automatic stabliizers like unemployment payments) and not discretionary
spending, has led to a deadly combination of austerian policies (which
is making debt to GDP ratios worse, see Ireland, Latvia, and Greece for
proof), dysfunctional government responses, faltering recoveries, and
deliberate shredding of social contracts. It’s like watching a house
burn and then having people throw Molotov cocktails at it.

The pattern of serious financial crises is the market meltdown hits
first, then the real economy plunge takes place later. Our officialdom
had been patting itself on the back that “better” policy responses had
stopped the sort of damage that the US suffered in the Great Depression
and Japan experienced in its post bubble hangover. But the GDP revisions
of last week included some stunning reductions to 2008 figures which
called the comparatively cheery story we’ve been told into question. And
the powers that be have refused to take the important step of writing
bad debt down. Zombification was treated as the solution to our woes,
when the result of past financial crises shows that taking the losses
early which does result in a worse initial GDP hit, leads to much better
outcomes. And here, the casualty has been not only growth but to a fair
degree our political system, as the corporocrats have used the crisis
to solidify their position.

http://www.nakedcapitalism.com/2011/08/market-craters.html

The final collapse of the international free trade floating fiat
currency game is not here just yet but looming on the horizon.  The
entire premise of this system is, all nations should be allowed to
import into the country with the strongest currency regime!  This
usually was the US markets which has soaked up around $4-5 trillion in
trade red ink, fueling a global hot trade market game.  But the US is
now going slowly bankrupt and to keep this regime running one way only
requires all other nations to constantly weaken their own currencies vis
a vis the US dollar.  This is increasingly impossible as the US dollar
is losing great value every day as it collapses due primarily to the
creation of far too much ZIRP credit.  The desire for infinite debt
money creation versus the power of zero embedded in the concept of ZIRP
money lending is coming to a breaking point pretty fast.

http://emsnews.wordpress.com/2011/08/04/as-nations-race-to-weaken-currencies-zirp-creates-more-money/

First, the $2 trillion plus compromise we hear
about so often is slated to take place not over the next ten months, but
the next ten years! Only $917 billion in cuts are officially mandated by the bill. The final $1.5 trillion will be voted upon at a later date. Only
$21 billion in cuts will be applied to discretionary spending in 2012,
$42 billion in 2013, and the remaining cuts after 2014. This
strategy, by itself, is wholly inadequate in making even the slightest
dent in our national debt, being that our government’s spending has
grown exponentially with each passing year.

In June of 2009, our national debt stood at $11.5 Trillion. Today, it climbs past $14.5 trillion. That’s an increase of $3 trillion in the span of two years. Now, I don’t know where men like Boehner, Reid, or Obama, learned simple math, but I can tell you their numbers don’t add up. Even
if current spending levels stay static (which they won’t), by 2013, we
will have to increase the national debt to at least $17.5 trillion,
while only cutting $63 billion from the budget. Wow….sounds like progress to me.

http://www.zerohedge.com/news/guest-post-debt-deal-con-it-fooling-anyone





Sorry, the market player has made up its mind. It's QE3. So everybody is preparing for Ben printing more money. Hence why everybody is bailing out of USD asset.

On fundamentals, the stock plunge makes no sense. We’ve never had
this kind of market bloodshed with a corporate earnings above 7% (and
well above 8% on a forward-based bottom-up estimate), and the monetary
authorities ready to provide unlimited liquidity to the market.
Corporate earnings are solid–we aren’t talking about the phony
financials’ earnings of 2006 or dot.coms with burn rates of 2000. The
problem is one of market segmentation.

90% of US equities are
held by the top 10% of the population in terms of net worth, that is,
households who are more concerned about capital preservation than
income. 90% of US households have most of their net worth in homes or
in small business equity, and remain paralyzed for the duration.
Pension funds and insurers should be massive buyers of dividend stocks
at these levels, but have little dry powder. The equity market crash of
2007-2008 forced them into bonds, and their book yields remain much
higher than the yields available. It makes little sense for them to
liquidate assets now booked at a premium in order to buy into the
equity market.

http://seekingalpha.com/article/284779-the-great-hedge-fund-de-levering-event-has-arrived

List of sovereign states by current account balance

http://en.wikipedia.org/wiki/List_of_sovereign_states_by_current_account_balance

1      People's Republic of China     272.500     2010
2      Japan     166.500     2010
3      Germany     162.300     2010
4      Iran     70.797     2010

186      United Kingdom     –40.340     2010
187      Brazil     –52.730     2010
188      France     –53.290     2010
189      Italy     –61.980     2010
190      Spain     –66.740     2010
191      United States     –561.000     2010

Finance ministers and central bankers are preparing a statement to
release before the open of Asian markets, the Nikkei newspaper
reported, without citing anyone. Japan may intervene in currency market
if dollar falls. G-7 finance ministers, central bankers expected to
express confidence in dollar, pledge liquidity. U.S. to explain fiscal
rebuilding efforts." [so no more sniping at S&P and actually doing its job eh?]
"Japan to express intention to maintain Treasury holdings. G-7
expected to show support for EU fiscal efforts." And while the G7 is
about to realize that when faced with a $100 trillion (equities plus
debt) market onslaught its printing powers are next to laughable, Dow
Jones reports that the "ECB is weighing Italian, Spanish bond buying on a massive scale."
Two take homes: i) the Fed has just lost its competitive advantage of
doing idiotic things on a massive scale as the world wake up to tits
trickery (unless of course the Fed resumes said thing on a massiver
scale, which it will), and ii) tomorrow is the day when the infinite
force of central planning meets the immovable object of capital markets.
We will find out who blinks first in a few hours.

http://www.zerohedge.com/news/g7-preparing-statement-support-dollar-eu-fact-everything-would-otherwise-collapse-tomorrow-asia

Former
PBOC Member: "The Situation Is Unsustainable. The Longer It Continues,
The More Violent And Destructive The Final Adjustment Will Be....

Japan Official Warns of More Yen Selling

http://www.bloomberg.com/news/2011-08-07/japan-official-warns-of-further-yen-selling-to-deter-currency-speculation.html

Japan’s currency may trade around 73 per dollar at the end
of the year as the government will probably have to sell yen
without U.S. support, Sakakibara said on TV Asahi yesterday.
Last month, he said the yen may go as high as 75.

This has to be at least in the range of $200B + if the point is to spook the market, then again $100B ... 85 - 95 Yen/USD. So big no one is going to mess around with the exchange ever again.

ECB Considers Massive Purchases of Italian and Spanish Bonds

Even thought the US media has been fixated on the downgrade of
Treasuries to AA+ by Standard and Poor’s, the real risk to the markets
is continuing decay in Eurozone sovereign debt. The BBC’s Robert Peston
said today that the failure of the ECB to buy Italian bonds would be a
Lehman moment. As our Ed Harrison stresses, while some countries like
Greece have a solvency crisis and need to have their obligations
restructures (as in written down), the stress on Spanish and Italian
bonds looks like a classic liquidity crisis. And the concern has spread
to the core, as French sovereign debt (remember, rated AAA) was trading
at a 90 basis point premium to German bunds.

But the reason for the downgrades is that hedge funds have crippled out. Hedge
funds can't earn the 15%-20% returns they promise investors in a world of 3%
bond yields and 2% gross domestic product (GDP) growth. Investors desperate for
higher returns, including pension funds, returned to the hedges during 2010 and
2011, and are now suffering spasms of buyers' remorse.


That prompted an across-the-board liquidation of all assets, including
commodities and emerging market equities most favored by the hedges. The nearly
$2.6 trillion of hedge fund assets constitute the system's only real bubble:
too much money chasing too few returns, with a lot of fingers on the recall
button. As of May, equity hedge funds with $1.25 trillion in assets had
strongly net bullish positions.




They are stampeding to get out. Their overwhelmingly bullish bias left them
vulnerable to a wave of redemptions, what has happened to the real-money
investors who require the income that only the equity market can provide?
No-one can fund a retirement on Treasuries yielding 2.4%, or a corporate bond
index yielding less than 3.5%.




There are other investors, to be sure, who need income to fund current and
prospective retirements cannot act as quickly as the hedge funds. Pension funds
and insurers require months of committee meetings to change their allocations.
They shifted massively to bonds after 2008, moreover, and their book yields
cannot be replaced in the present market. Tactical asset allocation is out of
the question; they can filter funds into the equity market slowly.




If them that has 'em can't hold 'em, them that wants 'em can't buy 'em. That
leaves individual investors to ponder the cheaper valuations on the equity
market. The trouble is that the vast majority of American households are deeply
in the hole: according to the Federal Reserve's most recent survey of personal
wealth, American households' real estate is worth about a third less than it
was in 2006, that is, $16.1 trillion compared to $22.7 trillion.




The problem is that most Americans approaching retirement age in 2007 had most
of their net worth in non-financial assets.






http://www.atimes.com/atimes/Global_Economy/MH09Dj02.html

The second wave crash is about to begin. And this time, printing more money isn't going to help. It will only turn the mini dollar run into a real one.

Global market is collapsing. Everybody is pulling their money from stock.

http://www.ritholtz.com/blog/2011/08/open-thread-correction-bounce-or-crash/#comments

August 8th, 2011 at 9:09 pm

Brazil is off about 30% from its highs. As of this evening, Shanghai has just kissed the 20% bear market threshold.

Russia is down almost 25% from its high. India’s Sensex index is down
18.5%, still eluding bear market territory. On a composite basis, we’re
in a BRIC bear market.

It’s a warning shot across the bow for commodity currencies and emerging markets (both equities and debt).

 

It was just 4 days ago that the BOJ purchased Y4.5 trillion (or $58
billion) worth of dollars in the open market to lower the Yen against
the dollar. Well, that intervention last not even a full 4 days. As the
chart below shows it is time for Shirakawa and Noda to start watching...
watching... watching... the yen as it once again approaches all time
highs against the dollar. But at least the equity market is confused
enough to believe that 2 years of projected deflation is good for risk.
Ben wins.... if only for a few hours. The irony is that everyone
expected that a fixed inflation (or in this deflation) calendar language
is the weakest of the Fed's options. Now that this is precisely what
has been utilized, a soft form of Operation Twist 2 which locks in the
rates on the 2 Years as explained previously, the market is cheering it
deliriously. Once the market has slept on it, it will likely realize why
it was so skeptical as recently as 2 hours ago on the viability of this
approach.

http://www.zerohedge.com/news/look-how-58-billion-usd-purchases-buys-you-4-days-fx-intervention

Well, at the very least Toyota, Honda and Mrs. Watanabe are able to liquidate and repatriate their dollar asset at 5% premium. (I bet there was a lot of japanese money bailing out from wall st.)  It was an epic crash. Come to think of it. It was a friggin brilliant move. (everybody panic, and funds/idiots need to buy US bond to move cash from equity before jumping off the window.  So, japan can get rid of the lowest yield bond. plus bring back cash home in that short window.)

We'll see if BOJ will intervene again.  If they do it bigger and the panic will be even bigger. Those mutual fund and hedge fund are all going bust. QE3 is going to screw everybody anyway, so fuckitall.

I wonder what china is thinking. I swear they are thinking something BIG. The ultimate FU/stfu market move. (what good is owning money and power if not to use it?)

Update 5:30 AM: Holy shit. The perils of not having a
real Bloomberg access. I have to depend on the kindness of friendly
hedgies, in this case reader Scott. German CDS spreads have risen above
UK CDS spreads and the Swissie has shot higher. The crisis has
officially spread to the core.

http://www.nakedcapitalism.com/2011/08/irony-alert-if-this-is-72-hours-of-central-bankers-trying-to-save-the-world-what-would-abject-capitulation-look-like.html

http://www.ritholtz.com/blog/2011/08/bipolar-market/



http://www.ritholtz.com/blog/2011/08/equity-correlations-and-volatility/

stock market as ...Price discovery mechanism? WTF is that....? lol. anybody seeing the price lately? anybody see what the price of dollar lately?

complete fubar.

http://ipezone.blogspot.com/2011/08/roubini-markets-arent-working-marx-was.html

147 Superentities dominate the network of global corporate control

Arxiv - The network of global corporate control

The structure of the control network of transnational
corporations affects global market competition and financial stability.
So far, only small national samples were studied and there was no
appropriate methodology to assess control globally. We present the first
investigation of the architecture of the international ownership
network, along with the computation of the control held by each global
player. We find that transnational corporations form a giant bow-tie
structure and that a large portion of control flows to a small
tightly-knit core of financial institutions. This core can be seen as an
economic "super-entity" that raises new important issues both for
researchers and policy makers.

.

http://nextbigfuture.com/2011/08/147-superentities-dominate-network-of.html

This is the image of banking web. The usual name, but one can see the contagion proximity. (we allll....gonnnaaa dieeeee......) a group of fat mountain clinbers, running out of oxygen and half of them slipping into the cliff. everybody is holding on each others rope.....

ahhhhhhhhhhhhhhhhhhhhh............