Mark McHugh

Archive for August, 2010|Monthly archive page

Updated (again) – Turbo doesn’t pick up his mail (or does he?)

In Open Thread on Friday, August 27, 2010 at 2:49 pm

Updated update:  The US Postal Service has replied to me, and for that I give them credit.  Their reply has been added to the  post.

***

I’m getting seriously annoyed here:

Last Saturday I sent an Express Mail Letter to the Treasury Secretary of the United States via the United States Postal Service.  It cost me $13 bucks.  I was supposed to get a signature confirmation of delivery and as you can see, the package was supposed to be delivered MONDAY!!!!!

Apparently the USPS tried to deliver it SUNDAY (when nobody’s there) and left a notice….and then did nothing.  Treasury also did nothing (surprise surprise) so the letter is now on it’s merry way back to me.  FYI – I cannot request redelivery, only the recipient can do that.

This is your tax dollars at work.

Come Monday, I will send another copy to Treasury….

***

On the advice of reader (and friend) James H, I have sent the following letter (via email) to the Postmaster General (shown below)

Dear Postmaster General Potter,
 
Last Saturday (August 21, 2010) I attempted to send an important letter to the United States Treasury.  Because I wanted signature information and tracking, I was directed to use Express Mail and delivery was guaranteed by Monday August 23, by 3:00 PM.  Apparently, the local carrier attempted delivery on Sunday (when I assume Treasury is closed), left notice and never attempted delivery again.  Please see the attached tracking info.
 
How can it be that THE UNITED STATES POSTAL SERVICE FAILED TO DELIVER A CERTIFIED LETTER TO THE UNITED STATES TREASURY?
 
Questions for you, Postmaster General Potter:
 
  1. I neither requested, paid for, or expected a Sunday delivery.  Why was a Sunday delivery attempted?
  2. Don’t local carriers know when the UNITED STATES TREASURY is open for business?
  3. Why wasn’t a second delivery attempt made on Monday?
  4. Why can’t a sender request redelivery?  (especially when failed delivery occured on Sunday).
  5. Would you say that this is typical of the kind of service one can expect from the USPS?
  6. Am I entitled to a refund?
  7. What do you think of my experience?
I very much would like to know how the postal service managed to fail in such a simple task.  Please reply.
 
Sincerely,
 
Mark McHugh

***

Will anything come of this?

***

The Post office did reply.  Let me be 100% honest, responding to questions goes a long way with me.  If nothing else it shows a sense of duty and accountability and I admire that.  I’m not happy with the Post Office’s explanation of events (hell, I’m not even sure I believe it), but they at least offered an explanation and for that I am grateful (and far less angry).  Here it is:

September 8, 2010
 
Dear Mr. McHugh:
 
I  researched this issue and  found that your letter was delivered on August 23, 2010 and signed by R. Deyo.  We do not know why the system did not include the scan.  On Sunday, August 22, postal personnel at our Government Mails section prepared the mail for distribution for the next business day, which was Monday, August 23.   The mail was entered onto a “firm sheet” to consolidate delivery to the U.S. Treasury Department.   When this was done, it generated a “notice left” scan.  There was no attempt to deliver the item on Sunday.  The actual delivery date was August 23, 2010 at 7:21 am.   I have attached the track and confirm record for your review.
 
I apologize for any inconvenience this matter may have caused you.  Thank you for contacting the United States Postal Service.
 
Sincerely,
 
L. Hyson
Postal Service Headquarters

***

Like I said,  I’m not happy but I’m not going to bash someone who had the decency and sense of duty to respond.

This means that Treasury has received three copies of the 15 questions.  Two were signed for, one was sent standard mail.  I guess we’ll find out very shortly whether or not the United States Treasury shares the United States Postal Service’s sense of accountability.

A Letter to Tim Geithner (’cause this is no ordinary bubble)

In Open Thread on Sunday, August 22, 2010 at 5:02 pm

By now we are all intimately familiar with the kind of group psychosis that creates price bubbles.  You can hear the irrational exuberance crackling in voices surrounding the subject.  You can feel the earth shake from the stampede as people scramble to get in on the latest surefire way to get rich.

…..And then there’s the Treasury bubble…..

The US Treasury has sold more than $3.74 Trillion in debt in the last 24 months, which I can only describe as unbelievable.   It took almost 8 years for the world to digest the previous $3.7 Trillion.  But this time around, the enormous surge in supply has been met with an even bigger surge in demand, that has pushed prices to nosebleed levels.  It has all the earmarks of a bubble, except one.  Identifiable buyers.  I mean, the whole concept of a bubble is predicated on a  glut of buyers, isn’t it?  

For quite some time now, I’ve been trying to figure out where the never-ending supply of nit-wits lining up to buy ultra-low yielding paper comes from (don’t they understand how bonds work?).  I have no answers.  I can tell you that despite all the recent TV chatter about the popularity of US treasuries, mutual funds sold more than $100B in 2009 and the holdings of the US saving bond program have been drifting lower since 2006.  So don’t go blaming this bubble on ordinary Americans.  It’s not China either. 

As I discussed in Candy from Strangers, the fastest growing group of buyers for  Treasuries is known to us only as “Other Investors.”  Don’t get me wrong, I love a good conspiracy theory as much as anyone, but the notion that fantastically wealthy entities are emerging from the shadows to snap up Treasuries at ridiculously high prices sounds more like a fairy tale to me, and I just  can’t let this go.  On the advice of the founder of  The Daily Bail, it was decided that asking some questions directly to Treasury would be a reasonable way to proceed.

I’d like to thank the readers and staff at both  Zerohedge  and The Daily Bail for all the help and advice they offered.  This was truly a group effort, but what would be the point of all of us ending up on some “enemies” list?   Anyway, what follows is a list of 15 questions, exactly as submitted to Treasury via snail mail (Treasury has no public email).  The United States Postal Service has promised delivery by 3:00 pm Monday August 23.  I have no idea what kind of response to expect, but I’ll keep you posted.

  ***

Dear Treasury Secretary Geithner,

In perusing the 2010 Q1 Treasury Bulletin, released June 11, 2010, I am left with many questions concerning the ownership of US Treasuries (Table OFS-2). What follows is a list of specific questions I submit to you on behalf of the American people. Please be advised that your responses (or lack thereof) will be made public.

Question #1 – Why is the table incomplete? Treasury has more than 70 days to compile data from Q1, yet table OFS-2 does not include data for more than 62% ($287 Billion) of the Q1 National debt. The Federal Reserve released the flow of funds data referenced on table OFS-2 on June 10; The bulletin was released June 11.

Question #2 – Why is Treasury dependent on data from the Federal Reserve and is communication so poor that Treasury is unable to obtain data from the Fed prior to public release?

Question #3 – Why doesn’t Treasury update table OFS-2 when the Fed data is released?

Question #4 – Is this right? I have attempted to parse the Fed data and complete Table OFS-2 for the benefit of all Americans. I used data from the Fed flow of funds (Table L.209). Please feel free to comment on the accuracy (my calculations are highlighted).

Question #5 – Why does Treasury fail to more clearly identify “Other Investors”? Approximately $200 Billion (43%) of Treasuries purchased in Q1 were bought by entities only identified as “Other investors”. Treasury defines this group as:

 Individuals, Government-sponsored enterprises, brokers and dealers, bank personal trusts and estates, corporate and non-corporate businesses, and other investors.

The Fed flow of funds identifies the purchase amounts of several of these sub groups:

 GSEs – $38.2 Billion in Q1

Brokers and Dealers – $8.4 Billion in Q1

Why are these groups hidden as “other investors”? The vast majority of “other investors” fall into the Fed’s Household Sector ($148 Billion) which includes Domestic Hedge Funds. Does Treasury include purchases by Domestic Hedge as “Other Investors” on Table Bulletin? If so, why are they not specifically identified as “other investors” in Table OFS-2?

Question #6 – What was the total dollar amount of Treasuries purchased by Domestic Hedge Funds in Q1?

Question #7 – What was the dollar amount purchased by Individuals in Q1? Treasury limits the purchases of securities by individuals to $5 million per auction, so treasury must keep records of individual purchases. If this information is not available under the FOIA, please explain why.

Question #8 – How could the GSEs possibly have been responsible for purchasing more the $38 Billion in Treasuries in Q1? I am under the impression that the GSE are a taxpayer liability, yet the Fed Flow of funds (Table L.209) claims the GSEs purchased more that $38 Billion in Q1 (see chart). How? And specifically, which GSEs?

Question #9 – Is the $66.8 Billion of Treasuries purchased by Commercial Banks in Q1 the direct result of the Federal Reserve’s Zero Interest Rate Policy (ZIRP)? More than 40 commercial banks were taken over by the FDIC in 2010 Q1, so I am puzzled by the 32.5% increase in Treasury holdings in Q1.

Question #10 – Are there any regulations to prevent banks from borrowing money at zero percent from the Fed and purchasing Treasuries? The Fed will exchange Treasuries for cash through various programs, so in reality purchases made with money borrowed from the Fed are actually “stealth” Fed purchases, unless there are rules to prevent this kind of systemic abuse. Are there?

Question #11 – Are TARP recipients (like Citigroup) allowed to take free money from the Fed, purchase Treasuries and collect interest from taxpayers? This kind of behavior should be prohibited for obvious reasons, please comment on any restrictions.

Question #12 – How are the holdings of the Primary Dealers accounted for? Most are members of the Federal Reserve, as well as Depository Institutions, and “Brokers and Dealers.” Please explain how they are accounted for on Table OFS-2.

Question #13 – What percentage of the debt issued in Q1 was purchased by entities not insured in any way by the FDIC, or any government or government agency, and who do not have access to any Treasury or Federal Reserve programs? In other words, what percentage were purchased by entities who bear the full risk of sovereign default. It is my estimation that no more than 50% of the Q1 Treasury purchases could be classified in this manner.

Question #14 – Why does Treasury issue debt in excess of deficit? This has been an area of some speculation recently. Is this merely the effect of rolling over maturing debt? If not. What happens to proceeds from surplus issuance?

Question #15 – Does Treasury provide information on maturing debt? The US has run deficits for 22 consecutive months as of this writing and issued more than 3 Trillion dollars in debt during that time. Unless drastic changes in policy are made, that $3 Trillion will need to be rolled again, along with any other maturing debt. If the Treasury tracks maturing debt schedules, would you please direct me to that information?

Closing Remarks

Thank you for reviewing these questions. The Emergency Economic Stabilization Act (US Title 12 Chapter 52) granted the Secretary of Treasury extraordinary powers, but requires “public accountability for the exercise of such authority.” Under that authority, I humbly request answers to these questions on behalf of all Americans.

I hope you understand that without clarification the public will be left to speculate about the veracity of Treasury’s auctions. It would seem that either the owners of hundreds of billions of Treasuries are being hidden to disguise free transfers of taxpayer money to major banks, or being made by entities that do not wish to be identified, thus raising questions about other potential “exchanges” (influence over policy, weapons, military intervention, etc.).

You have the power and obligation to provide the transparency Americans deserve regarding our future. I urge you to seize this opportunity.

Sincerely,

Mark McHugh

About This Hole in My Foot…

In Open Thread on Tuesday, August 10, 2010 at 6:38 pm

In case you don’t know, the original version of Candy from Strangers contained a bunch of erroneous numbers. In preparing the piece, I got confused between the Fed flow of funds flow table (F.209) and the Fed flow of funds levels table (L.209). The Treasury Bulletin clearly states to use L209 and I used F.209, which contains quarterly data, annualized. Dividing the changes by four does not give you the same numbers you get from using simple subtraction on table L.209. Close, in most cases, (the household sector being a glaring exception), but not the same. I screwed up and I’m really sorry.

I’ve issued a corrected version of the piece, which I can only hope gets as far as the original did, and I certainly wouldn’t blame anyone who’s angry with me. The thought that I’ve added to the deluge of poorly-prepared information in the world embarrasses me beyond words.

All that said, I still stand 100% behind the core of the piece. The point was we really don’t know who’s buying US Treasuries these days. If it’s China, the insolvent banks, or the Fed itself, they are buying them anonymously and that should be sounding alarms. Other explanations are even more terrifying, but the notion that ordinary individuals are responsible for the purchases is laughable. None of that changes. 

Bobble-head Nation

Less than two years ago it was discovered that the World’s largest hedge fund was a complete and total fraud (in fact,  it wasn’t even registered as a hedge fund). Bernie Madoff turned himself in; he was never caught. For almost fifty years, he was treated like a magic unicorn on Wall Street. Sure, there were tons of articles about how obvious the fraud was after Bernie turned himself in and to all those “journalists,” I say thanks for nothing!  You suck! 

Only one person was convinced of Madoff’s true nature and had the stones to say so in no uncertain terms, Harry Markopolos. Everyone else involved was either pretending to understand that which they clearly did not (bobble-heads), or assisting Madoff by ignoring him (if you read Harry’s complaint to the SEC, it’s not much of a stretch to put Hank Paulson in the latter group).  His book title says it all, No One Would Listen.

Harry never saw the “magic”….

The Madoff scam ended in tears for his investors, but has somehow become little more than an over-used punchline to most of us. Not me, though. It is a testament to how corrupt we’ve let our system become, how little we care about fixing it, and how likely rampant theft is to continue. The very same people who allowed Madoff to thrive remain in power, undisgraced by their failure and in some cases, promoted for it.

As horrific as the SEC’s treatment of the Madoff scandal was, FINRA’s was even worse. Yet on January 22, 2009. Barack Obama appointed FINRA president Mary Schapiro to head the SEC. This was the first time I felt like Obama had hocked a loogie in my eye (if I were smarter, I’d have realized that is was actually the second loogie – Geithner being the first). I think she was picked for the job because of her inability to spot a Ponzi scheme (that is the closest thing she has to an achievement). FYI – Bernie has referred to Schapiro as a “dear friend.”

The lesson I take away from the Harry Markopolos story is how dangerous it is when people who should be asking questions pretend to understand. I can ask questions and I’m no bobble-head. That’s why I write. And while I would never criticize Harry, I wish that I had had the chance to hear his story before Madoff was forced to confess. In short, I wish he had been a blogger. 

I’m no Harry Markopolos and everybody knows that. At best, I’m the kid pretending to be Spider-man with red underpants on his head. You’re supposed to laugh, but that doesn’t mean these stories have no relevance, or that you know the answers to the questions I ask. 

So while I’m embarrassed by the stupid mistake I made in preparing “Candy from Strangers,” I’m not embarrassed for asking the question, “Who exactly is buying all these treasuries?” and I still don’t know the answer. Do you?

Candy from Strangers (Corrected)

In Government, Open Thread, Treasuries on Tuesday, August 10, 2010 at 5:33 pm

 Author’s note: Numbers in the original published version of this piece were derived from fed table F.209 not L.209 (in other words, the wrong table). I sincerely apologize to all for the error. And I hope the fact that I’m a dunce won’t distract you from issues I was trying to address. A more detailed description of the error can be found here.

When TrimTabs Charles Biderman questioned the source of the money that propelled stocks 65% from the March 2009 lows, he got beaten with the idiot stick so badly that he turned bullish in April 2010.  Lost in the ensuing choke-out was the fact that no one ever actually answered his question, unless scoffing and muttering “dark pools and stuff,” under your breath counts (and he’s the one who should be wearing the tin-foil hat?).  Here we go again.

 

The first thing you should notice when looking at The Treasury’s 2010 Q1 Bulletin is that it’s  incomplete, as I’m sure most of Secretary Tim Geithner’s homework assignments were(1).  Of the 12 columns on Table OFS-2 (Estimated Ownership of U.S. Treasury Securities), Turbo managed to fill in only 5 (FYI: it takes Treasury more than two months to prepare the bulletin).

From the data actually present, we can determine that Treasury issued 461.7 Billion in new debt Q1.  That’s not surprising, we’ve been running at the $500 per person per month clip for almost two years now.  What is surprising is that the Fed  &  Intragovernment holdings went down $17B.  Foreigners, God bless ‘em, scooped up an additional $192.5 B, while  US saving bond  holdings were basically flat (-$1.1 B).

Um, we’re out of data now, but not debt.  287.4 Billion  (62%) of  Q1′s public debt is not accounted for on the report.   Fortunately when discussing who could digest that much debt in three months, we can quickly eliminate 6 of the 7 “not available” data points (depository institutions, pension funds, mutual funds, insurance companies, and State & local governments).  The only logical conclusion is at least a quarter trillion  in debt was purchased by “Other Investors” in Q1.

Aren’t you glad we cleared that up?

What’s that?  “Who the hell are Other Investors,” you say?  Good question.  It does seem rather nebulous, especially considering that they are now clearly our best customer(s).   Not very bright though.  They stepped in and bought like crazy as interest rates went to record lows.  Still I think we should send a basket of fruit and a nice thank you note, because without them we would surely have had a failed auction (read Keynesian apocalypse).

The Treasury defines Other Investors as: 

Individuals, Government-sponsored enterprises, brokers and dealers, bank personal trusts and estates, corporate and non-corporate businesses, and other investors.

Thanks Turbo, for narrowing  it down to just about everyone under the sun.

Let’s go ask Ben!

Geithner’s a slacker, this is known, but Fed Chair Ben Bernanke’s SAT score (1590!) suggests analality (?) (mine was considerably lower).   Besides, Treasury’s footnotes on tables OFS-2 tell us that  the source for 6 of the 7 empty columns is the Federal Reserve Board of Governors, Flow of Funds Table L.209 (and which was actually released before the Treasury Bulletin – don’t get me started…).

The Fed’s flow of funds data is an exercise in convolution, but it wasn’t too difficult to extract the data missing from the Treasury bulletin.  Here’s the breakdown:

  • Depository Institutions   +$67.2 B (up 32.5% in one quarter!)
  • Private Pension Funds   +$32.4 B
  • State & Local Government Pension Funds  +$7.1 B
  • Insurance Companies  +$2.1 B
  • Mutual Funds  -$13.1 B
  • State & Local Governments  -6.6 B

Depository institutions and Private pensions purchased record amounts of  Treasuries in Q1.  Which means that “Other Investors” accounted for $198 B of the Treasuries issued in Q1.  Yes, I realize that this is somewhat lower than my original estimate, but in my defense that was a logical conclusion.  Who knew banks and private pensions are expecting another stock market collapse?  Nobody at CNBC anyway.  They’re too busy laughing at Main Street for not seeing the awesomeness of the recovery.

Before putting away the Fed’s flow of funds, it is worth noting that brokers and dealers added $8.4 B in holdings and GSEs bought 38 B (both groups are included as other investors and no the GSE number is not a mistake!)(2).  This brings us to the turd in the punchbowl.  The Household sector, who the Fed says purchased a whopping $148 B.  Now before you start thinking your neighbors are taking their unemployment checks and sneaking off to Treasury auctions, listen to what Sprott Asset Management’s Eric Sprott and David Franklin said of the household sector in their December 2009 report entitled, Is it all just a Ponzi Scheme?:

To quote directly from the Flow of Funds Guide, “For example, the amounts of Treasury securities held by all other sectors, obtained from asset data reported by the companies or institutions themselves, are subtracted from total Treasury securities outstanding, obtained from the Monthly Treasury Statement of Receipts and Outlays of the United States Government and the balance is assigned to the household sector.” (Emphasis ours) So to answer the question – who is the Household Sector? They are a PHANTOM. They don’t exist. They merely serve to balance the ledger in the Federal Reserve’s Flow of Funds report.

I guess that means your neighbor isn’t our superhero, and besides, if he was he’d have a cooler car.  So who are these strangers with candy hell-bent on making sure this sugar high doesn’t end?   I don’t know.  There I said it.  Maybe Charles Biderman gets rattled when everyone calls him a moron, but I’m used to it.  So fire away, but answer the question.

By the end of 2010, Other Investors will own more than 10% of the US public debt (1.5 Trillion or so).  They bought more than 40% of the new debt in Q1.  At what point does this kind of opacity become unacceptable?  Why can’t the Treasury fill out its own bulletin with information already available?  Why do we have to wait five months for information that is so vague, you can’t even call it information with a straight face?

And last but not least, where do we send the fruit basket?

  1. Treasury’s bulletins have always omitted the most recent data – the omissions are not unique to Geithner. The omissions are inexcusable, especially now, but not new. I didn’t explain that because I didn’t think it was particularly relevant and it ruined a perfectly good joke.
  2. This sentence was replaced. Data on the GSEs was omitted from the original post, and the broker and dealers number was changed from -19B to +8.4B.

 

Other Reading:

Is it all just a Ponzi Scheme? (Sprott & Franklin)

http://www.zerohedge.com/article/chinese-treasury-dump-brings-its-total-holdings-one-year-low-uk-continues-exponential-accumu

Treasury table OFS-2 (updated and corrected).

Candy from Strangers

In Open Thread on Tuesday, August 3, 2010 at 12:41 pm

Warning: This version of the article contains known errors – a corrected version can be found here:

When TrimTabs Charles Biderman questioned the source of the money that propelled stocks 65% from the March 2009 lows, he got beaten with the idiot stick so badly that he actually turned bullish in April 2010.  Lost in the ensuing choke-out was the fact that no one ever actually answered his question, unless scoffing and muttering “dark pools and stuff,” under your breath counts (and he’s the one who should be wearing the tin-foil hat?).  Here we go again. 

The first thing you should notice when looking at The Treasury’s 2010 Q1 Bulletin is that it’s  incomplete, as I’m sure most of Secretary Tim Geithner’s homework assignments were.  Of the 12 columns on Table OFS-2 (Estimated Ownership of U.S. Treasury Securities), Turbo managed to fill in only 5 (FYI: it takes Treasury more than two months to prepare the bulletin).

From the data actually present, we can determine that Treasury issued 461.7 Billion in new debt Q1.  That’s not surprising, we’ve been running at the $500 per person per month clip for almost two years now.  What is surprising is that the Fed  &  Intragovernment holdings went down $17B.  Foreigners, God bless ‘em, scooped up an additional $192.5 B, while  US saving bond  holdings were basically flat (-$1.1 B).

Um, we’re out of data now, but not debt.  287.4 Billion  (62%) of  Q1’s public debt is not accounted for on the report.   Fortunately when discussing who could digest that much debt in three months, we can quickly eliminate 6 of the 7 “not available” data points (depository institutions, pension funds, mutual funds, insurance companies, and State & local governments).  The only logical conclusion is at least a quarter trillion  in debt was purchased by “Other Investors” in Q1.

Aren’t you glad we cleared that up?

What’s that?  “Who the hell are Other Investors,” you say?  Good question.  It does seem rather nebulous, especially considering that they are now clearly our best customer(s).   Not very bright though.  They stepped in and bought like crazy as interest rates went to record lows.  Still I think we should send a basket of fruit and a nice thank you note, because without them we would surely have had a failed auction (read Keynesian apocalypse).

The Treasury defines Other Investors as: 

Individuals, Government-sponsored enterprises, brokers and dealers, bank personal trusts and estates, corporate and non-corporate businesses, and other investors.

Thanks Turbo, for narrowing  it down to just about everyone under the sun.

Let’s go ask Ben!

Geithner’s a slacker, this is known, but Fed Chair Ben Bernanke’s SAT score (1590!) suggests analality (?) (mine was considerably lower).   Besides, Treasury’s footnotes on tables OFS-2 tell us that  the source for 6 of the 7 empty columns is the Federal Reserve Board of Governors, Flow of Funds Table L.209 (and which was actually released before the Treasury Bulletin – don’t get me started…).

The Fed’s flow of funds data is an exercise in convolution, but it wasn’t too difficult to extract the data missing from the Treasury bulletin.  Here’s the breakdown:

  •  Depository Institutions   +$59.6 B
  • Private Pension Funds   +$30.9 B
  • State & Local Government Pension Funds  +$7.1 B
  • Insurance Companies  $2.1 B
  • Mutual Funds  -$18.9 B
  • State & Local Governments  -8.5 B

Depository institutions and Private pensions purchased record amounts of  Treasuries in Q1.  Which means that “Other Investors” accounted for $215 B of the Treasuries issued in Q1.  Yes, I realize that this is somewhat lower than my original estimate, but in my defense that was a logical conclusion.  Who knew banks and private pensions are expecting another stock market collapse?  Nobody at CNBC anyway.  They’re too busy laughing at Main Street for not seeing the awesomeness of the recovery.

Before putting away the Fed’s flow of funds, it is worth noting that brokers and dealers (who are included as other investors) do not share the pessimism of banks and private pensions.   They dumped $19 B during the quarter.  This brings us to the turd in the punchbowl.  The Household sector, who the Fed says purchased a whopping $68 B.  Now before you start thinking your neighbors are taking their unemployment checks and sneaking off to Treasury auctions, listen to what Sprott Asset Management’s Eric Sprott and David Franklin said of the household sector in their December 2009 report entitled, Is it all just a Ponzi Scheme?:

To quote directly from the Flow of Funds Guide, “For example, the amounts of Treasury securities held by all other sectors, obtained from asset data reported by the companies or institutions themselves, are subtracted from total Treasury securities outstanding, obtained from the Monthly Treasury Statement of Receipts and Outlays of the United States Government and the balance is assigned to the household sector.” (Emphasis ours) So to answer the question – who is the Household Sector? They are a PHANTOM. They don’t exist. They merely serve to balance the ledger in the Federal Reserve’s Flow of Funds report.

I guess that means your neighbor isn’t our superhero, and besides, if he was he’d have a cooler car.  So who are these strangers with candy hell-bent on making sure this sugar high doesn’t end?   I don’t know.  There I said it.  Maybe Charles Biderman gets rattled when everyone calls him a moron, but I’m used to it.  S0 fire away, but answer the question.

By the end of 2010, Other Investors will own more than 10% of the US public debt (1.5 Trillion or so).  They bought more than 45% of the new debt in Q1.  At what point does this kind of opacity become unacceptable?  Why can’t the Treasury fill out its own bulletin with information already available?  Why do we have to wait five months for information that is so vague, you can’t even call it information with a straight face?

And last but not least, where do we send the fruit basket?

Other Reading:

Is it all just a Ponzi Scheme? (Sprott & Franklin)

http://www.zerohedge.com/article/chinese-treasury-dump-brings-its-total-holdings-one-year-low-uk-continues-exponential-accumu

Smoking Guns of US Treasury Monetization (Jim Willie)

Treasury table OFS-2 (updated by author).

Addendums:

Thanks to the Daily Bail, Zero Hedge, Business Insider and anyone else who carried this story.  This issue requires far more brain power than I possess.

If I may, I’d like to add two points not in the original post:

1) GSEs, who are included as “other investors” bought $38 B in Treasuries Q1. Um, yes that strikes me as odd.

2) Treasury’s bulletins have always omitted the most recent data – the omissions are not unique to Geithner. The omissions are inexcusable, especially now, but not new. I didn’t explain that because I didn’t think it was paticularly relevant and it ruined a perfectly good joke.

Geithner’s been a disappointment, to put it mildly, but for whatever it’s worth, I think I am the only person on the planet who ever defended Geithner for his tax problems:

http://acrossthestreetnet.wordpress.com/2009/11/23/my-apology-to-tim-geithner/