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February 11, 2010


Melinda Romanoff


No tapes. That's all I ask.




So the businesses and consumers can begin to regain enough confidence to do their own investing and make the purchases they decide to make.


--Biden On Iraq--

Shouldn't that be 'Biden on crack'?

Melinda Romanoff

Treasury Auction Lesson Pt. 1

Today's results have some particular points that each auction share and that Treasury traders use. All of them.

Start at the "Interest Rate", which in this example is 4-5/8%. This equates decimally to 4.625%. Note the next line, "High Yield", which reads 4.720%. This, compared to the previous line, is about 0.10% higher, or in the lingo of the market, 10 basis points. 100 basis points is 1%. Ordinarily, traders like to see the difference between these two figures limited to two or three basis points. This difference is always referred to as "the tail", as in the slimy tail of a worm. In the case of today's auction, this is a case of "Uh-oh".

But that is only part of the picture, traders also look at three other dynamics that are a bit more complicated, one of which is becoming as clear as mud, and has all the pros chatting, lately.

Part 2: Bid-to-Cover and Non-competitive bids (to be continued)


Merkel will not bail out Greece.http://www.guardian.co.uk/theguardian/2010/feb/11/germany-greece-merkel-bailout-euro




Along with Mel's .pdf is this link:

Federal Reserve Balance Sheet Update: Week Of February 11

This is a site Mel and Rick post links to from time to time.

On another note a wag on a Spengler forum posted this poll:

Should Obama:

Join the GOP now 50% ( 3 )
Join the GOP after the election 50% ( 3 )

Mr Perfect



From Clarice's link:

Rather than bailing out Athens, Berlin is insisting on rigorous policing of the Greek austerity programme by a triple force from the commission, the ECB and the International Monetary Fund, an exercise never attempted in the eurozone.

Could we please get Mz Merkel to come over here and run our country for awhile? ::kidding::

Malaysia Jane


My fingers are crossed. But I don't get the elephant thing.


She's no dope. Why should Germany whose workers get to retire 4 years after Greel workers do, subsidize Greece whose workers are presently striking for even more benefits?

I see an international revolt of the ants who are sick of feeding the grasshoppers.


From the Word Detective, Jane:
Dear Word Detective: I've frequently heard a phrase referring to soldiers who have been in combat, or police officers who've been in gun fights and had their lives endangered. Such people are said to have "seen the elephant." Do you know the origin of that phrase? -- Joe Torre, via the internet.

Yes I do, but I can't tell you the answer until you step up and buy a ticket. But you'll also get to see The Bearded Lady and the Human Fly, not to mention Wolf Boy and The Invisible Man, formerly known as Dick Cheney.

As you might infer from that somewhat strange paragraph, the whole story begins with the classic American traveling carnival. Back in the early 19th century, the arrival of such a carnival in a small town was a major occasion, affording the town's residents the opportunity to sample all sorts of exotic attractions, from the grotesque denizens of the sideshow to wild beasts from Africa and Asia that many people at that time had only read of in books. The big draw at many of these shows was an elephant, a far bigger and stranger critter than any animal native to North America, and to go to the carnival without "seeing the elephant" would be like going to the Ohio State Fair without seeing the Butter Cow. (Yes, it's a life-size cow sculpted from butter, sort of a giant advertisement for bypass surgery.)

So ritualized was this small-town pachyderm-mania that by about 1835 "to see the elephant" had become a catch phrase meaning "to experience all that there is to see, to see all that can be endured," with the sense that after having "seen the elephant" there was nothing left to see. A related, more general sense arose a few years later, in which "to have seen the elephant" meant "to be worldly, no longer innocent, to have learned a hard lesson." Many young people of the day who left the country for the big city with stars in their eyes only to experience hardship and disappointment were wryly said to have "seen the elephant" in this sense. And by about 1840, "see the elephant" had acquired the specialized military sense you have heard, meaning "to experience combat for the first time," with the brutal loss of innocence that ordeal conveys.

Cecil Turner

I don't get the elephant thing.

19th century expression regarding meaningful experience. In military parlance, refers to a combat tour.

So I got that going for me. Which is nice.

Cinderella story, outta nowhere . . .

Cecil Turner

I hate when that happens.



I just blogged some of this. when you tie it into the global financial mess it gets nasty. LUN.


Well, blow me down. CBS has Ibama at +1, down from their usual +10.


I had to shut down the computer and head for home (yay) before I could ask the very same question Jane asked - about the elephant.

Thank you, Clarice, once again for the education and Cecil for the cliff notes version.

Never heard the phrase before.


This too big to fail carp is getting to me. I think at some point we all have to stop enabling profligate behavior and offer up some tough love as Merkel is doing.


matt, that's another really good blog. Why not submit it to EDITOR@AMERICANTHINKER.COM ? It deserves a wider readership.

Captain Hate

This would really send her round the bend.

She's already so far around the bend that all the animals up ahead are stampeding back.

I'm more concerned that in this new universe Captain Hate may be a TarHeel Fan and God forbid, I may actually pull for Dook!

I've cheered for the Rat's Pack and the Holes a few times in the past; always against the very rare teams I've hated more. I believe that every time I've cheered for that team in the pussy blue unis they've won; let's see once against Digger Phelps Irish, when they beat the Hoyas, the Illini and Meechigan State but definitely not when Al McGuire got deep inside Deanie's dome.

Rick Ballard


I'm not sure Merkel is going to be able to walk the talk. She may have been assured by German banks that they can survive the hit but the French (and the Swiss, although they aren't in the EU) may have a completely different view.

I suggest that we adopt "If you're Too Big to Fail, you're Too Large to Live" going forward. I have a little list...

Melinda Romanoff


I had the exact same discussion with "the powers that be", we agreed that if Bear Stearns had been allowed to "wink out" over that spring weekend in '08, all this would be different.

On to lesson Part 2.


I think the EU may crumble if Greece cannot alter course, Rick. It was a mistake to let in countries like Greece and Spain in the absence of a means for the richer states to enforce fiscal restraint on the big spenders.

Has anyone seen what EU Referendum has to say about this? I'd be curious.


Good job, Matt.


I read John Stossell's syndicated column in the op-ed pages of my local paper. One thing that jumped out at me was his claim that 60% of the country do not pay any income taxes. Does that sound right?


It does, Sue...although most of them are too dumb to realie that confusing their FICA withholdings as income tax.

Old Lurker

Good one, Matt. Thanks again.


Powerline has a great video from the Minnesotans for Global Warming. Highly recommended, particularly if you like the Who.

Here is a link to the underlying site with the video.

Rick Ballard


It's going to crumble anyway. It's the League of Nations facing Hitler and Mussolini or the UN cracking down [u-pick-em]. Merkel may be picking up on internal sentiment and be quite willing to set the exchange rate for the NeueDeutschMark starting tomorrow. It really would push France and Switzerland right over a cliff if she did.


I really don't think Germany can do much more--they were burdened with the costs of taking over East germany; they have lent a lot to the Eastern Eurpean countries..her citizens don't seem interested in working harder so Zorba can keep dancing and drinking retsina.


Wow. http://wcbstv.com/local/governor.christie.freezes.2.1487727.html>I'm impressed.

Calling New Jersey's budget a "shambles," Gov. Chris Christie announced Thursday he is immediately freezing all state spending.

Dems are furious. Anytime you piss of a democrat, you are heading in the right direction. Go Christie!

Old Lurker

60 might be slightly high, Sue. Last time I blew a gasket on that it was 54% but that was probably year old data. I'll look for the current one.

I wish more people would grasp the seriousness of that in terms of maintaining a stable, productive society. Philosophers for centuries have noted that when a majority of a population can vote themselves the property of others, it will not end well.


Oh man, that typo is bad. Anytime you piss **off** a democrat.


"If you're Too Big to Fail, you're Too Large to Live"


That would fit in nicely with Michelle Obama's obesity campaign that says "To Big is a threat to national security".

I am so confused. :(



I knew it was a large number, but 60%? And part of that number came from Bush's tax cuts, that took millions off the tax roll. Regardless of what democrats say. Everyone should pay "some" income taxes. No wonder raising income taxes doesn't bother most people. They aren't paying them anyway.


Anytime you piss **off** a democrat.

I was thinking ON.

Soylent Red

Hey good news about Merkel and Greece. The price of baklava should plummet.

Anyone hear any news at all out of Iran today? I know they had another lock down of the internet and there were some riots, but that's all I've seen reported.

Soylent Red

I guess I should have said: Opa!


Grasshopper wants to know what the elephant sees?


I am guessing this one just saw Michelle's backside. :)


check out gateway pundit for pics and updates, Soylent.

Melinda Romanoff

Treasury Auction Lesson Part 2:

The two other most common metrics used to gauge the strength of a Treasury Auction are the Bid-to-Cover ratio and the Non-competitive bids. Back to the results from today.

The Non-competitive bid is from the TreasuryDirect Program that Rick so kindly pointed out earlier. It, by definition, is those participants who wish to participate in the auction, but are not allowed to bid. They RECEIVE the resulting yield awarded by the auction process, not the "High Yield" awarded to competitive bidders, in this case 4.625%, not the 4.720% awarded and a 10 basis point haircut over the life of the bond.

The Bid-to-Cover ratio is just that, the face value of bids compared to the face value of those accepted. Today's Bid-to-Cover ratio, which is located in the footnotes of the results page, was 2.36 (always assumed to be reflective of i.e. 2.36:1, a proper ratio descriptor). The prior month's ratio was 2.68, which, in comparison, shows less interest in this auction, but needs to be compared to a month trailing average. Bloomberg uses 10 months at 2.48, but they are "special", most everyone uses 12 months and that's on my desk tab in the office, but was only a bit lower. This tells me that the year end auction was probably something weird and there is slightly higher interest in the 30 yr. than before today.

The last Non-competitive bid was $17 million, this was $19 million, which is no biggie.

As an aside, and this is why I'm subjecting you all to this data. Earlier comments referred to a "failed" auction. A failed auction is where, say, $25 Billion of 10 yr. notes are to be auctioned, and only $23 Billion are bid for. That would mean a Bid-to-Cover ratio of less than 1, also known as a fraction, like what happened in Portugal, a few days ago.

These are not normal times, in the markets, I realize that, but there is more order than you can imagine in how things are unfolding, taking away the politics.

I'm about to lose a BIG bet this weekend, but I am not bitter, because I was betting that the cram down was coming tomorrow, in front of the recess.

Damn snow.

Old Lurker

I still think it's closer to 50/50 Sue. Which is bad enough of course.

Melinda Romanoff


The country with the largest bank lending exposure to Eastern Europe is Austria. The EU is the entity that has agreed, pro forma, to assist Greece. There is no framework, other than "commitments to support Greece". There have been some grumblings that Germany will guarantee some of Greece's debt, but nothing concrete, except from the EU. Trichet, and the ECB for that matter, are silent, because they have no tools in this matter as they are currently constructed.

And they ARE on a gold standard, mind you, so learn from that what you will.

This is far from over mechanically, but politically, Greece is first, Portugal second, Ireland, and then there is the little issue of France having to roll over some debt in March, a LOT of it.

This is far from over.


Oh. My. Gawd. Ann!!!


Did yu forget, Spain,Mel?


Hokay - I need to read Mel in the morning with lots of coffee, rather than after two cocktails.

You keep posting Mel, and I will keep drinking (caffeine or alchohol) - either would be appropriate, no?


because of the pressure put on the previous administration by then candidate Obama.

Sure, it's kinda like how if a health care bill passes and it works, Palin will deserve all the credit. Right?


Without extra consonants, natch.

Melinda Romanoff

No, I didn't forget Spain, because that's the one they really want to carpet over.

I brought up Ireland specifically, because the UK guaranteed their bank debt already, sealing their fate.

Are all EU countries going to be subjected to German finance rules, or can the EU step through to political union under the financial gun.

Personally, I'll bet my little envelope of 40 year old Lire will be good again. Maybe for only a dime, but good.


Well, well, well - news flash - the Joker is leaving the state.

See ya, Patches!!!!!

Jim Miller

All right, I have to see if I am missing an avatar.

(Incidentally, I see the missing ones as the person's blog name.)

A Democratic official says Rep. Patrick Kennedy has decided not to seek re-election for his seat representing Rhode Island in the U.S. Congress.

via Michelle Malkin


And, with that bit of wonderfully good news, I am gonna go to bed and watch HGTV.

Oh Happy Day!


Cryptic post, but thanks.,cc. Patches will not run for re-election.

Melinda Romanoff


I saved a little link ( and I hope I got this rght ) for you, only.

I believe you like this guy, as opposed to my partial, Major Holly.

Soylent Red


If you think you're winning the HGTV dream house, you are in for a heartbreak when you tune in to see me roll up with the moving truck. Just saying.


Last time I blew a gasket on that it was 54% but that was probably year old data.

Depending on whether Stossel was talking about "people" as opposed to "workers", could the difference in the employment rate account for the jump?

Melinda Romanoff

I have a crash review of all my research tomorrow, so I'm signing off now.

G'night all.


Does this mean that "Camelot" has left the building?

Oh, C - didn't mean to be cryptic (my typos are the result of cocktails, not kittens), plus the news flash on the TV takes time to check out on the internet.

Jim Miller

For what it is worth, I am running Firefox.

Melinda Romanoff

And, yes, I know the gift of "Avatar"!


Soylent, dahling - I thought you were off to battle elephants or something? But, hey, I would really love the HGTV dream house, but you are so much more deserving - plus I know you would be looking for reliable vacation renters. I figure the best "applicants" would be regulars at JOM. Good grief, you know all about us, where to find us, etc., etc.

Have I kissed up enough yet?

Melinda Romanoff


Add a character to your e-mail address, every post. It's fun! (and got rid of the "green" that I couldn't see to begin with...)


Really, I am going to bed, but dang it Mel - you were so much cuter when you were BLUE!


Let me see how much Treasury stuff I get now:
So a primary dealer ~ market maker, direct bidder ~ somebody domestic in a position to deal directly with treasury (like Helicopter Ben), and indirect bidder ~ China. Is that right? Much (any?) activity by direct bidder is a good sign of QE; a big jump in direct bidder activity when QE is supposed to be winding down is a good sign of WTF. Yes?


Does the trick work?


Yes, it does.


really, really going to bed to watch HGTV, but Greta just announced that Paul Van Der Sloot (of Natalie Holloway infamy and father of the main suspect) died while playing tennis.

Captain Hate

Patches will not run for re-election.

Does that mean that he's finally sober enough to understand polls?

Dave (in MA)

He's leaving to spend more time with his Ambien™.


Really nice time lapse video to the song:

"White Winter Hymnal" by Fleet Foxes

Dave (in MA)

You don't have to change your e-mail address to fix the avatar; just change the case of one of the characters.

Rick Ballard


That's about it. The Fed has become a bit more adept at direct monetization since being nabbed in August.


So what is being done to solve this whole EU
meltdown, I'm sure the President has his 'top
men' working on it



I hope that was a funny "Oh.My.Gawd,Ann",
because I was just kidding, really. :) Had to post and run because "Project Runway" was coming on the T.V. One of the only shows I watch every week...natch!

Good news about Patches.


I love your blog. Take Clarice's advice, you need more exposure. SEND TO A.T.


My fingers are crossed you get on that plane tomorrow. Hug wolverine for us. (I must of missed why you call her that but I do love it.)

And Glasater:

If anyone missed your gallery I am posting it again: Marvelous

We have to figure out how to get you more exposure.


For you guys that follow twitter, don't miss knifework he is funny:

Any day a Kennedy makes headlines without killing or molesting someone is a good day.




When you get on that plane tomorrow think about the snow tunnel you told us about.


You almost had one in D.C.

h/t mkhammer tweet

Danube of Thought

Obama inherited the EU mess. It's Bush's fault.

Dave (in MA)

Video of Patches quitting. I wonder if he thinks he can beat Brown in '12?


What Europe needs is comprehensive health care reform and cap-and-trade.


What Europe needs is more immigration, especially from Muslim countries.

Danube of Thought

For many years I have read, and believed, that Edward Markey of Massachusetts is the dumbest person in the United States congress. For a long time I have harbored doubts about this assertion, believing that the honor must surely belong to the dolt Kennedy from RI.

Now, I suppose, the issue is moot. With the departure of the final imbecile from that stunted family, the laurels are clearly excusively those of the simpleton Markey.


Ann--bless your heart and many thanks. It should be better and perhaps one day it will evolve:)

Ralph L

It would be funny if Teddy had tied up his money trying to avoid inheritance tax and then died in the one year the federal is 0%.

How long will it take the Kennedy children to go through it?


Kudlow's worried Britain is next


Looking at Ann's picture above about a snowbound Washington DC makes me think this is a good time to bring up the old topic of how the Fed's (EPA) are trying to ban the burning of firewood for heat in wintertime Fairbanks Alaska.

For 4 days now DC has been shut down. News reports I've heard say 25-30 % of the snow removal trucks are broken, store shelves are emptying, and who knows what the heck folks are using for heat. Well welcome to a smidgeon of the snow fall and nothing like the -30 degree Temps that Fairbanks folks have to deal with for months on end.

Yet "The federal government has put Fairbanks on notice that PM 2.5 levels must be reduced by 2014. The primary cause for the pollution is wood smoke, studies show."

"Rep. Tammie Wilson, R-North Pole,...believes a pollution control effort would be futile.
Wilson told the commission the borough should adopt a strategy of convincing the Environmental Protection Agency that its regulations don’t work in Fairbanks.

“Nobody wants to breathe dirty air,” Wilson said. “Why do people burn wood? They burn it because it’s available. Until we have another option, we can only do what we can afford to.”

I've linked about this stuff before, but it's a bit satisfying when the shoe is on the other foot, and the guys who have been dictating how folks run their lives from 4,000 miles away get a wake up call from Mother Nature and can't get out of the driveway.

So fix your stinking trucks DC. We pay for them. And once you do, don't use them since they cause pollution---instead use shovels. And if the power goes out arrest anybody who uses a wood stove period. Live exactly by the rules you're mandating for everybody else. C'mon DC, get with the ECO-act. Save Gaia, blah, blah, blah.

Anyhow, if anybody cares, here is a recent story from some reporter about the ">http://newsminer.com/view/full_story/5581184/article-Trio-of-communities-might-offer-insight-into-Fairbanks’-air-pollution-problem?"> Fairbanks Air Pollution problem, which tries to compare apples to oranges. The 10 or so comments at the bottom from regular joe citizens are educational and refreshing, and my guess is not a single one of them went to Harvard.


glasater - that time lapse video was very cool. Really well done.
and Ann, thanks for posting the link to glasater's photos again.

Such talent out in our world.


LUN the WaPo is "worried" that Republicans are losing their momentum. HaHaHa!

this from the comments...
"How silly. ALL of the momentum is with the Republicans, and it's a tidal wave.

The only thing that might throw them off stride would be if Obama and Biden threatened to campaign for THEM instead of the Democrat candidates in November."

Melinda Romanoff


Now, THAT is funny.


These people are certifiable, daddy, you can't use a wood stove, or coal, oil, at that point you're back to the middle ages. They need to kept on a very short leash, I think Alaska's relatively sparce population, has kept the idiocy from spreading, no explaining
a Begich though.


Ralph, the Kennedy money is in a tax free trust in Tahiti. I'm not kidding. They've been fighting for you with your money.


Ann, friends of her parents named her that because of his spirit.


Clarice - are you going to be able to "get out of Dodge?"

Jack is Back!

Snowpocalypse in time-lapse. Shot in DC.

Clarice, is that your teddy sitting there?


"to see the elephant"

That is very cool, thank you Clarice and Cecil.

I hope you are getting out Clarice.

I just learned that I've been selected to be a delegate to the MA republican convention this year. That should be fun.


Congratulations, Jane!

Jack is Back!


Who is the other delegate?:)

Rob Crawford

Funniest comment of the day, on the LUN, a story about DeMint's challenger dropping out:

Purposefully and actively trying to undermine the POTUS' foreign policies is treason any way you slice it.

This is from a Democrat, criticizing DeMint.

Do these people have no memories? Do they really believe the crap they spew?


Jane, that's great!

Ann is a great supporter of the arts! Thank you.

The Great Santelli is at it again on that Kudlow clip.

Old Lurker

Mel (when you catch up)...

I very much enjoyed your decoder ring of the bond auction. Could you please elaborate a little on this (it confuses me, I admit):

"They RECEIVE the resulting yield awarded by the auction process, not the "High Yield" awarded to competitive bidders, in this case 4.625%, not the 4.720% awarded and a 10 basis point haircut over the life of the bond.


Ras -15 today.

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