Brother Can You Spare a T-Bill? Let the Treasury Implosion Begin!



I have one word for this: FAIL

It isn't just a regular FAIL like when Tim Geithner finally revealed his big "Financial Stability" song-and-dance, nor like when Citigroup milked the government teat for the third time. This isn't AIG bonus FAIL or even Obama's stimulus FAIL. This is big.

If you are not already painfully aware that we are in trouble, I believe now is the time to come to such awareness. You don't even have to understand percentage points nor yields nor how in the hell we pass off one kind of fake paper (FRNs) for another (T-bills) - all you have to know is that we are in serious trouble.

I wish that I had a solution, of course, but this is far beyond what any one of us could possibly fix. Only Ben Bernanke and the FOMC can turn things around at this point, and even they might have their hands tied - especially since they are the ones who drove us directly into the storm in the first place.

Hit the bunker, kids, I believe 5/27/09 may be safely marked on your calendars as "The Day the Shit Hit the Fan"

Bloomberg:

May 27 (Bloomberg) -- Treasuries fell for a fourth day, pushing the difference in yields between two- and 10-year debt to a record amid concern record supply will overwhelm investor demand as the economy begins to show signs of stability.

The slump in Treasuries is helping to send yields on mortgage bonds higher, prompting holders of the securities to sell government debt used as a hedge to protect portfolios against rising interest rates.

‘We are in a bit of a freefall,” said Kevin Giddis, head of fixed-income sales, trading and research at the brokerage Morgan Keegan Inc. in Memphis, Tennessee. “This is the beginning of a lot of sales.”

The decline pushed 10-year note yields to a record 2.75 percentage points more than two-year securities, surpassing the record of 2.74 percentage points set in August 2003.

But wait, that's not all!

Karl Denninger is always a must-read but today's "It Is Failing: ALL OF IT" is an absolute do-not-miss. Not only is KD in spectacular form, he is absolutely fucking right. Stick a fork in us, kids, we are done.

Bernanke and other policymakers, including both the Bush and Obama Administrations, have tried to deny reality.

You can't.

The Bond Market has had it with the games, and despite a "good" auction today signaled its disgust with the lies, the unending deficits and both bonds and stocks sold off at the same time:


[Jr's note: I wanted to put a giant FAIL across this but KD's notes were explicit enough]

The market calls all bets, Bernanke went all-in with 2-7 off suit, the flop came up A-A-K and the bond market is grinning.

Anyone care to bet what the bond market has for hole cards?

This will translate into corporate funding costs and when it does you're going to see a staggering impact on Corporate America, triggering another monstrous wave of bankruptcies.

THE GOVERNMENT MUST STOP THE STUPIDITY NOW; WE ARE HEADED FOR A NEAR-EXACT REPEAT OF THE 1930s WHEN FUNDING ESSENTIALLY DISAPPEARS. BERNANKE'S TAMPERING HAS DONE NOTHING BUT MAKE THE PROBLEM WORSE!


KD said it and I have nothing to add except this: LOOK THE FUCK OUT!!

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.

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