Follow The Money

1.The US bond market is ten times the size of the stock market. This bears watching. In the first quarter, foreign central banks purchased only 16% of issuance. The Fed purchased 200%! (The figure is correct). In other words, the Fed's activities have masked the exodus of foreign central banks including China from these auctions. So who else is the Fed purchasing from? Clearly this means that domestic banks are *huge* net sellers of Treasuries. Scary? I'm scared, but have always been a financial chicken....

2. Posted a while ago, but worth repeating: Its finally happening. The Financial times reports that China has become a net seller of US treasuries over the last 4 months. According to FT, the Chinese are purchasing European Govt. Bonds. This comes after confirmed reports that Russia has reduced its US treasuries holdings from $175B to $125B in the last 7 months.

3.Chinese Vice Premier Wang Qishan said Tuesday that China is prepared to help European Union countries with sovereign debt issues, Chinese state media Xinhua reported. "In the future, as we have done in the past, we will support Europe and the euro," Wen added.

COMMENT: Don't you just love the terminology "China is prepared to help....". Good guys eh? No such thing as something for nothing.

4.The possible departure of Treasury Secretary Tim Geithner once an agreement is reached with Congress to raise the nation's $14.3 trillion debt ceiling would signal the end of an era: Geithner is the last member of President Obama's original economic team still with the administration.

COMMENT: This departure is more worrying than the others. Geithner was Obama's confidant. I wonder what he knows that we dont. If all he sees is Obama's failure as a leader, we know that already. Even his buddies at CNN are struggling to put a positive spin on their hero.

5.Throughout history the nation who leads the world (Spain, Holland, Britain, USA) possesses two items: (1) A huge hoard of gold, (2) The world's most powerful military. A very smart writer who I follow says two things are inevitable (1) devaluation, and (2) war. Another brilliant writer says he is only sure of one thing -- lowered standards of living in the USA in coming years (at least for a decade).

6.A sign of the times: USA Today where "More children now live with grandpa and grandma. The latest census figures show that in 2009 7.8 million children in the US live with at least one grandparent, up from 4.7 million in 1991.

Unhappiness is not knowing what we want and killing ourselves to get it - Don Harold