Foreigners Sell Second Largest Amount Of US Bonds Ever In Past Week, Record $93 Billion In US Paper Sold In Past 2 Months

Two weeks ago when we reported that there had been a record consecutive week dump of US Treasury paper in the Fed's custodial account, as reported by the weekly H.4.1, we made the assumption that this was China preemptively selling US paper. Well, that may or may not have been the case, but it was only part of the full story. We have now learned that Europe, and especially Germany has been just an active seller of sovereign bonds, most certainly including US paper, in recent weeks. As FAZ reports, the head of Commerzbank Martin Blessing has been dumping all bonds in his possession, primarily PIIGS paper, but also US and German ones. He does add the clarification that this has been a complicated project as there has been a buyer's strike (and with the CDS extinction it will only get more difficult as there is no natural hedge remaining), and his dumping has certainly not made things easier. Now as we all know by now, when starting a panic exodus, one has to be first, be smarter, or cheat. Here we will add a fourth one: or sell US paper. After all the demand for this is nearly insatiable, or so the neo-Keynesians out there will have us believe. Well, in the last week, someone used our definition. According to today's update in the H.4.1, the total amount of securities held in the custodial account for foreign official and international accounts just plunged by $20 billion, of which $19 billion was attributable solely to Treasurys: the second largest weekly dumb ever. And since this total number includes both Treasurys, which are used for political purposes, as well as Agency securities, which don't really serve much in terms of a diplomatic statement but are great at shoring up liquidity, one can assume that the relentless selling in all types of US paper has had one purpose only: to generate capital. As the third chart shows, that amount is substantial: in the last 8 weeks foreigners have sold a unprecedented $93 billion across the custodial account bringing it to $3.392 trillion, the lowest since March 2011! So the next time someone asks where European banks are finding emergency liquidity now that commercial paper, money market and Libor Markets are all dead, you will have the answer.
Chart 1: Total Treasurys held in custody and weekly change: in the past week $19 billion worth of Treasury paper was sold, the second largest weekly amount ever.

Chart 2: Total securities held in custody and weekly change: in the past week, $20 billion worth of paper has been sold.

Chart 3: Rolling 8 week change in the Fed's custodial account

 

America’s government has taken on a life of its own

Letter To SOC:

“The government now justifies its own existence and pillages the serfs to fund its ever growing appetite. My concern is how do you avoid the poorhouse in this situation? How can I make enough money to save, actually save it, and then build upon it effectively without the tax man robbing me blind?”

Nicely Said...............

If the very rich got that way through special access to government power, then why is the solution to tax them more, and not just to reduce government power?
And if the very rich got that way through hard work and innovation, then why the hell are we proposing to take resources out of these people’s hands?..................Coyote Jones

Freddie CEO Leaving Company: To Get $3.9 Million For Receiving $14.5 Billion In Bailout Cash Over His Tenure

If you are a CEO in America, what is the surest way to get at least $4 million in compensation in two years? Why to burn $14.5 billion of course. Such is the sad plight of mortgage zombie Freddie Mac CEO Ed Haldeman, who as Politico reports, is set to depart the company after just two years of joining. So what is Mr. Haldeman's claim to fame over those 8 quarters? Why nothing short of collecting $14.5 billion in "Treasury Draws" over the two years. What is a draw? The technical definition: "Represents the draw requested based on Freddie Mac’s net worth deficit for the quarter presented. Commencing in 2Q 2011, the draw request represents the company’s net worth deficit at quarter end rounded up to the nearest $1 million." In other words, this is the minimum amount of money that the Treasury had to donate to the nationalized mortgage giant for it to continue pretending it is viable. As the chart below demonstrates, the total "draws" received under Haldeman's tenure amounts to $14.5 billion. This excludes the Q3 number which will be made clear next week. Something tells us with this abrupt departure, the number may be higher to quite higher than expected. But regardless: a job well done Ed. As Politico reports: "Haldeman joined Freddie Mac in 2009 and received $3.9 million in compensation last year, according to Forbes. He intends to remain as CEO until a succession plan is in place. “Ed Haldeman has brought strong leadership to Freddie Mac,” said FHFA acting director Edward DeMarco. “I appreciate his commitment to leadership stability during the upcoming transition." And now you know how to make millions in America and be part of the 1%.

 

Gun Ownership Soars To 18 Year High: 47% Of Americans Admit To Owning A Gun

Americans may be fleeing from stocks in droves, but they sure aren't shy about rotating the resulting meager liquidation proceeds into weaponry. According to Gallup, "Forty-seven percent of American adults currently report that they have a gun in their home or elsewhere on their property. This is up from 41% a year ago and is the highest Gallup has recorded since 1993, albeit marginally above the 44% and 45% highs seen during that period." Considering the social situation "out there", and the fact that the world is one badly phrased or translated headline away from a complete HFT-facilitated market collapse, this is hardly all that suprising.
More:

The new result comes from Gallup's Oct. 6-9 Crime poll, which also finds public support for personal gun rights at a high-water mark. Given this, the latest increase in self-reported gun ownership could reflect a change in Americans' comfort with publicly stating that they have a gun as much as it reflects a real uptick in gun ownership.

Not surprisingly, republicans pack more heat than democrats. Perhaps it is best not to piss too many off...

Republicans (including independents who lean Republican) are more likely than Democrats (including Democratic leaners) to say they have a gun in their household: 55% to 40%. While sizable, this partisan gap is narrower than that seen in recent years, as Democrats' self-reported gun ownership spiked to 40% this year.

Women are more armed than ever. Perhaps it is best not to piss too many off...

The percentage of women who report household gun ownership is also at a new high, now registering 43%

Southerners, yes shocking, are the best armed of all. Perhaps it is best not to piss too many off...

Gun ownership is more common in the South (54%) and Midwest (51%) than in the East (36%) or West (43%) -- a finding typical of Gallup's trends in gun ownership by region.

Gallup's conclusion: "A clear societal change took place regarding gun ownership in the early 1990s, when the percentage of Americans saying there was a gun in their home or on their property dropped from the low to mid-50s into the low to mid-40s and remained at that level for the next 15 years. Whether this reflected a true decline in gun ownership or a cultural shift in Americans' willingness to say they had guns is unclear. However, the new data suggest that attitudes may again be changing. At 47%, reported gun ownership is the highest it has been in nearly two decades -- a finding that may be related to Americans' dampened support for gun-control laws. However, to ensure that this year's increase reflects a meaningful rebound in reported gun ownership, it will be important to see whether the uptick continues in future polling."
Our conclusion: Buy gold. Buy guns. Buy ammo. Be prepared. It's coming.

Western European Problem Solving......................

This is hilarious, all the more so because the actors involved have absolutely no self-awareness of just how bad this looks

This week alone has seen a ratings downgrade for Spain as well as a threat by agencies to review France’s AAA status — and the markets have taken notice. Once again, it would seem, ratings agencies are making things difficult for European countries.
Now, the European Union is considering doing something about it.

European Internal Market Commissioner Michel Barnier is considering a move to ban the agencies from publishing outlook reports on EU countries entangled in a crisis, according to a report in Thursday’s issue of the Financial Times Deutschlandnewspaper

This is not even a content neutral ban on speech – it obviously will only be applied to bad reports, not positive ones.  No wonder Obama has always been so admiring of the Europeans.

The World Turned Upside Down

Check this out: We don’t have a right to be free from being groped by the TSA or stopped and searched for absolutely no specific reason when we’re out driving… but maggots on the public teat can’t be subjected to drug testing as a condition of their welfare because it constitutes an “unreasonable search” -
ORLANDO, Fla. (AP) — A federal judge temporarily blocked Florida’s new law that requires welfare applicants to pass a drug test before receiving benefits on Monday, saying it may violate the Constitution’s ban on unreasonable searches and seizures.

Judge Mary Scriven ruled in response to a lawsuit filed on behalf of a 35-year-old Navy veteran and single father who sought the benefits while finishing his college degree, but refused to take the test. The judge said there was a good chance plaintiff Luis Lebron would succeed in his challenge to the law based on the Fourth Amendment, which protects individuals from being unfairly searched.

The drug test can reveal a host of private medical facts about the individual, Scriven wrote, adding that she found it “troubling” that the drug tests are not kept confidential like medical records. The results can also be shared with law enforcement officers and a drug abuse hotline.

“This potential interception of positive drug tests by law enforcement implicates a ‘far more substantial’ invasion of privacy than in ordinary civil drug testing cases,” said Scriven, who was appointed by President George W. Bush.

The judge also said Florida didn’t show that the drug testing program meets criteria for exceptions to the Fourth Amendment.
The injunction will stay in place until the judge can hold a full hearing on the matter. She didn’t say when that hearing will be scheduled.

More than two-dozen states have also proposed drug-testing recipients of welfare or other government assistance, but Florida was the first state to enact such a law in more than a decade. Should any of those states pass a law and face a court challenge, Scriven’s ultimate ruling would likely serve as a legal precedent.
The law’s proponents include Gov. Rick Scott, who said during his campaign the measure would save $77 million. It’s unclear how he arrived at those figures. A spokesman for the Florida Department of Children and Families deferred all comments to the governor’s office.
“Drug testing welfare recipients is just a common-sense way to ensure that welfare dollars are used to help children and get parents back to work,” said Jackie Schutz, a spokeswoman for Scott. “The governor obviously disagrees with the decision and he will evaluate his options regarding when to appeal.”
Earlier this year, Scott also ordered drug testing of new state workers and spot checks of existing state employees under him. But testing was suspended after the American Civil Liberties Union also challenged that policy in a separate lawsuit.
Nearly 1,600 applicants have refused to take the test since testing began in mid-July, but they aren’t required to say why. Thirty-two applicants failed the test and more than 7,000 have passed, according to the Department of Children and Families. The majority of positives were for marijuana.
State officials said Monday that applicants previously denied benefits for testing positive or refusing the test could reapply immediately. The Department of Children and Families will also approve all pending applications that await drug test results.
Supporters had argued applicants skipped the test because they knew they would have tested positive for drugs. Applicants must pay $25 to $35 for the test and are reimbursed by the state if they pass. It’s unclear if the state has saved money.
Under the Temporary Assistance For Needy Families program, the state gives $180 a month for one person or $364 for a family of four.
Those who test positive for drugs are ineligible for the cash assistance for one year, though passing a drug course can cut that period in half. If they fail a second time, they are ineligible for three years.
Lebron, who is the sole caretaker of his 4-year-old son, said he’s “happy that the judge stood up for me and my rights and said the state can’t act without a reason or suspicion.”