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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (45347)	11/12/2005 3:55:04 PM
From: Gulo	Respond to of 110194

<sheepish grin>I thought that part looked familiar</sheepish> Thanks. I thought you had read something more about foreign central banks' role in the stock market bubble. I didn't pick that up from the Puplava article, which didn't distinguish between FCB and foreign investors generally with regards to the stock market. I know that most foreign purchases of U.S. treasuries is from FCBs, but I had assumed that the FCB did't buy much U.S. equity. -g

To: russwinter who wrote (45347)	11/13/2005 9:10:19 AM
From: Ramsey Su	Read Replies (1) \| Respond to of 110194

This is now Sunday morning and I am still thinking about the turn of events last Thursday. Specifically, I am thinking about the "successful" treasury auction. Your Puplava link summarized it well. Here is the Ramsey Su conundrum: WHY WOULD THE MARKET THINK THIS IS A GOOD THING? I cannot help but feel like a heroin addict who is celebrating because the pushers just credited us with yet another high? # During 2004, foreign investors absorbed an extraordinary 98.5% of all Treasury issuance, a net of $357.2 billion acquired, versus a net of $363.5 issued. # Foreigners absorbed almost as large a proportion of the issuance of US agency securities, 93.7%, a net of $129.6 billion acquired, versus net issuance of $138.3 billion. # Thus, combined foreign purchases of Treasuries and agencies equaled a stunning 97.2% of total issuance, $486.8 billion, versus $500.8 billion. # As to the purchase of corporate bonds, foreign investors took down a net of $265.5 billion, 44.7% of total issuance of $594.3 billion. # In addition to the huge proportion of foreign Treasury acquisitions last year, the Federal Reserve added $51.2 billion to its own Treasury portfolio. This means that during 2004, the Fed and foreign investors absorbed $408.4 billion or about 112.7% of the total issuance of $362.5 billion. Obviously, this had a highly favorable influence, on balance, on Treasury yields during 2004, although an influence hugely lacking in traditional open-market characteristics. [Author's note—this explains the Greenspan conundrum as to why long-term yields fell, while the Fed raised short-term rates] # As of 3/31/05, foreign investors held a total of $9.723 trillion of US financial assets, up almost $400 billion from revised holdings of $9.326 trillion as of 12/31/04. From 3/31/04, the increase was approximately $1.11 trillion. # As of 3/31/05, foreign financial liabilities totaled $4.634 trillion, resulting in a net foreign claim against the US of $5.089 trillion. # For all of 2004, foreign investors acquired a record net $1.255 trillion of US financial assets. During 2005’s first quarter, this figure fell to an annual rate of $1.170 trillion, not materially below last year’s record level. # During this year’s first quarter, a very high 73.6% of US financial-asset acquisition by foreign investors was in highly marketable (therefore, highly liquid or “exposed”) asset classes. This was up from 66.0% for all of 2004, and equal to the same 73.6% level achieved in 2003.

To: russwinter who wrote (45347)	11/13/2005 12:34:24 PM
From: ahhaha	Read Replies (2) \| Respond to of 110194

So russ, so what happens after the great cataclysm that Papluvu sees? Are things all hunky then, or do things continue to deteriorate until every last person on the face of the earth is dead? If you believe anything from Papluvu, necessarily such absolutism must imply one of these two extremes. If it's the former, then we shouldn't care in the least. If it's the latter, it doesn't matter whether we care in the least. So in any case we shouldn't care at all. This latter conclusion means we should ignore Papluvu altogether. Being rid of such concern enables us to prosper in case things pretty much don't change at all, but following his expectations causes us to lose in all cases. This is what happened to the coin biters, money buryers, bomb shelter builders, 30 years ago, but you don't hear about that because it doesn't sell.