An insolvent world?
Folks, it is important to understand what is going on. Your future depends upon it. Chuck Butler of Everbank yesterday pointed out an almost failed US 30-year Treasury bond auction from last Friday:
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Remember last week, when I told you about the 10-year Treasury auction results? I told you that the yield had to be driven higher by 7 BPS to attract investors... Well, that's cotton candy compared to the news from the 30-year Treasury auction!
Let me put this as easy to understand as possible... "indirect buyers" are the foreign Central Banks, and they normally take down 40% of a Treasury Issue... Well, last week, they only took down 28% of the issue... Uh-Oh! But then, there was the "direct buyers" upping their participation in the auction to a record level of 24%!
Now, most of the market participants don't have a clue what these numbers are telling us... But, as Pfennig readers you will now know... The "direct buyers" are "unknown"... Yes, there is no way to tell who makes up the "direct buyers"... For all we know, the Fed took down the entire amount! Why, you may ask is this a problem? Well... We almost had a "failed auction" here in the U.S. If not for the "unknown buyers" it would have failed!
Gold coins are not insolvent. Gold coins do not default. Gold coins are tangible wealth. Gold coins are a hedge against what appears to be brewing - a real wipeout around the bend.
To speak of a U.S. Treasury auction and say that it failed would almost be akin to the day the earth stood still! Then... We would see yields soar, and the dollar get deep sixed... So, until that day happens, if it would happen I should say... Every auction should become quite interesting, as long as the U.S. continues to drive up deficit spending, and keep rates at ultra low levels... "
Wow - just double Wow!
It is no wonder that other financial observers caught this as well. Tyler Durden, co founder of ZeroHedge said it this way, and it impacted me so much it is now a part of the tagline on my e-mail signature: “And here is the topic that will dominate over all pundit round table discussions in the next weeks: the entire world is insolvent, although some are more insolvent than others. Greek total net liabilities (on and off balance sheet) to GDP are 800%! EU: at 470%, the US, at over 500%. There is no way out but default.” -- Tyler Durden, 2/12/2010