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Jim Willie cites an interesting post from "market skeptics" concerning U.S. Treasuries and their "Fails to Deliver" problem that I haven't seen addressed anywhere. Does anyone have any insight on this issue and what it means if true?
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RAMPANT USTREASURY FRAUD
Outright counterfeit of USTBonds is the likely province of JPMorgan. Its evidence probably vanished with that of Enron fraud when a certain building was demolished in the Big Apple on an important date known by two numbers that bracket the number 10. Naked shorting is more crafty and devious, but no less counterfeit. The details of naked shorting of USTreasury Bonds are very ugly, and surprisingly broad based. This is supposedly the most liquid and transparent market in the world. NOT SO!!! Market Skeptics (cited with links above) provides some excellent insight on the totally illegal practice and its clear consequences. They wrote,
“Following the collapse of Lehman Brothers in September, fails to deliver among the 17 primary dealers in the US treasury market have rocketed to more than $2 trillion over a period of weeks and still lie above $1.3 trillion. Broker/dealers have stopped delivering bonds. Holders of US treasuries are now scared to lend into the repo market in case their bonds are not returned, and potential buyers sit on the sidelines fearful of handing over their money to a counterparty that at best might not deliver a bond on time, and at worst might go under… If investors turn their back on treasuries, the US government will find it increasingly difficult and expensive to raise money and roll over its maturing debts. Upward pressure on interest rates will occur at a time when the government needs to be loosening monetary policy in order to jump-start a domestic economy that is heading towards a depression. As a result of fails to deliver, the most transparently priced instrument available now has investors scratching their heads. The natural balance of supply and demand has been altered and the true price of treasuries has become obscured… Fails to deliver in the treasury markets are not a new phenomenon. There is data for fails for treasuries, agencies and mortgage backed securities as far back as 1990, says Susanne Trimbath, an economist, and former employee of the Depository Trust Co, a subsidiary of Depository Trust and Clearing Corp. Back then, though, there would be $50 billion of fails in a whole year, she says. That figure has grown enormously. Failures in US treasuries were 8.6% of all treasuries outstanding in the first five months of this year, compared with 1.2% in the first five months of 2007. That has ballooned further over the past three months, hitting more than $2 trillion for almost the entire month of October, more than 20% of the daily treasuries trading volume.”
http://news.goldseek.com/GoldenJackass/1241103600.php
"
RAMPANT USTREASURY FRAUD
Outright counterfeit of USTBonds is the likely province of JPMorgan. Its evidence probably vanished with that of Enron fraud when a certain building was demolished in the Big Apple on an important date known by two numbers that bracket the number 10. Naked shorting is more crafty and devious, but no less counterfeit. The details of naked shorting of USTreasury Bonds are very ugly, and surprisingly broad based. This is supposedly the most liquid and transparent market in the world. NOT SO!!! Market Skeptics (cited with links above) provides some excellent insight on the totally illegal practice and its clear consequences. They wrote,
“Following the collapse of Lehman Brothers in September, fails to deliver among the 17 primary dealers in the US treasury market have rocketed to more than $2 trillion over a period of weeks and still lie above $1.3 trillion. Broker/dealers have stopped delivering bonds. Holders of US treasuries are now scared to lend into the repo market in case their bonds are not returned, and potential buyers sit on the sidelines fearful of handing over their money to a counterparty that at best might not deliver a bond on time, and at worst might go under… If investors turn their back on treasuries, the US government will find it increasingly difficult and expensive to raise money and roll over its maturing debts. Upward pressure on interest rates will occur at a time when the government needs to be loosening monetary policy in order to jump-start a domestic economy that is heading towards a depression. As a result of fails to deliver, the most transparently priced instrument available now has investors scratching their heads. The natural balance of supply and demand has been altered and the true price of treasuries has become obscured… Fails to deliver in the treasury markets are not a new phenomenon. There is data for fails for treasuries, agencies and mortgage backed securities as far back as 1990, says Susanne Trimbath, an economist, and former employee of the Depository Trust Co, a subsidiary of Depository Trust and Clearing Corp. Back then, though, there would be $50 billion of fails in a whole year, she says. That figure has grown enormously. Failures in US treasuries were 8.6% of all treasuries outstanding in the first five months of this year, compared with 1.2% in the first five months of 2007. That has ballooned further over the past three months, hitting more than $2 trillion for almost the entire month of October, more than 20% of the daily treasuries trading volume.”
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