"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Friday, July 19, 2013

Ten Year Treasury Note back below 2.5%

My thesis is that the recent sharp spike higher in interest rates on the longer end of the yield curve sent shock waves and convulsions into the hallways of the Federal Reserve's headquarters. This is why I maintain that Chairman Bernanke's abrupt reversal and subsequent contradiction of his June comments concerning tapering of the bond buying program was so forthcoming.

The Fed watched in horror as the bond vigilantes did their thing and took interest rates higher. Concerns began arising that the higher yields were already pushing prospective home buyers out of qualifying for certain properties and were reducing downward the size and price of the homes that they were able to quality for.

Enter the Chairman and VOILA!.... presto, change-o, down comes the yield on the Ten Year to back below the 2.5% level. It is going to be entertaining to say the least to see how this all important indicator behaves as we move deeper into the latter part of this year.

My guess is that if it gets too disobedient and begins to climb too sharply once again, we will see more backtracking from the respective Fed governors about the pace of the tapering....


  1. you"re a better man than me if you can figure out what these sonsofbitches are going to do next; have a good wknd; steve in sparks

  2. Look no further than Home Depot and Lowe's. Investors know that there is no way the Fed will do anything to interrupt the "Buy/Rehab/Rent/Flip" bubble now going on in major markets everywhere.

    Several major "flipper" firms I know are now using "crowdfunding" sources through the Internet to draw in the retail investor into these investment pools. Basically you can click with a mouse and use PayPal now to make a $5,000 equity investment in a "flipper house".

    Put another way, all the "cash for gold" proceeds fleeced from the unsuspecting retail investor is now being directed towards Fed-sponsored and approved investment schemes, "For The Greater Good", LOL....

    And of course, now that Bernanke has successfully "jawboned" down basic material prices, killed gold to remove any inflation threat, Joe Sixpack now believes that the Road to Riches is once again in housing and U.S. common stocks.

    No other Fed Chair has been able to re-activate the same bubble that caused the previous meltdown, and encourage even greater speculation and participation than ever before.

    Simply amazing.

    1. Mark;

      that is definitely amazing stuff! Is this "crowdfunding" you mentioned for real?

      You are so correct in that the Bernanke-led Fed has spent most of its time basically attempting to reconstruct the various bubbles that existed prior to the credit meltdown of 2008.

      Create a bubble and call it prosperity... no consequences, no worries, be happy is the new motto.

  3. Any comment on the Zerohedge post at 431pm today?

    1. daveycydell;

      It all depends on whether those standing for delivery retender the gold at a later date or take it off the market more permanently. We have no way of knowing that until the events confirm it one way or the other.
      Back when the pork belly pit was still in existence (most guys do not even know what those were) a large number of guys would make a living taking delivery of the bellies and retendering them later at a higher price. The bellies moved out of the approved warehouses but were not consumed. They were just stored elsewhere and sold later when prices moved higher.

      Some guys are clever enough and have the financial wherewithal to be able to move supplies of physical commodities in and out of storage and profit by selling them into the cash market or buying them from the cash market, depending on how they see the future price.

      My view is that the gold is being taken out by those who plan to use it later to sell it when the price moves higher.

      I will try to elaborate further on this in a full post as my schedule permits.

  4. Emperor has no cloths moment not far away now, over the last few years I have thought what would give a clue as to the end game for the Fed and it's BB siblings and I guessed a crashing Gold price would proceed the real crash of FIAT and a REAL market price for physical Gold.

    If you didn't have something you want and you could manipulate the price short term what would you do? You would cause that item in this case Gold to cheapen. Exactly as we have seen over the last few months.

    First Germany demands return of it's Gold, Fed objects to allow audit of it's Gold, ABNAMRO failure to deliver physical followed by Comex gold and silver daily warehouse stock reports adding a disclaimer (The information in this report is taken from sources believed to be reliable; however, the Commodity Exchange, Inc. disclaims all liability whatsoever with regard to its accuracy or completeness. This report is produced for information purposes only.)

    All this followed by futures paper Gold shorted in a very suspicious manor with waterfall falls in price over a handful of days during the last three months and now these reports of JPM eligible Gold plummeting.

    The question now remains how low can futures Gold be manipulated, as I understand it futures are an open ended market so there is no limit as to how many futures trades can be stacked up against a real commodity. I guess we need a really big player to stand for delivery to end this Ponzi once and for all!

  5. Has ANYONE else notice the National Debt is ABOVE $17T??????

  6. Dan,

    Is there a way to post a picture on this blog? I cannot believe no one has mentioned the debt above $17T.....


    1. Nate - if you can get me a .jpg image of that national debt, I will post it up....

    2. Here are some interesting comps (to me anyway) on the US debt to GDP ratio:

      December 31, 2006 (before first BS hedge fund problems surfaced) US GDP $13.786 trillion, US total credit market debt $46.202 trillion, US debt to GDP ratio 3.36

      March 31, 2013 (latest available last I checked) US GDP $15.984 trillion, US total credit market debt $56.999 trillion, US debt to GDP ratio 3.57

      Conclusion: on eve of 2007-2008 global financial crisis there was $3.36 of debt outstanding in the US for every dollar of goods and services produced in our economy; today there is $3.57.

      Question: Is Detroit really a unique situation?

  7. How do I get it to you? I don't know the format I have it in. I took a snapshot of the debt clock used during Bernanke's last speech from my MacBook Pro. So it MUST be the official one!

  8. Dan,

    I found your email, so no need to respond to my last post. I sent it to your earthlink acct.


Note: Only a member of this blog may post a comment.