Share on Google Plus Share on Twitter Share on Facebook Share on LinkedIn Share on PInterest Share on Fark! Share on Reddit Share on StumbleUpon Tell A Friend

Printer Friendly Page Save As Favorite View Favorites (# of views)   6 comments
Diary (Diaries are not moderated)


By       Message Tom Dennen     Permalink
Related Topic(s): ; ; ; ; ; ; ; ; , Add Tags

Must Read 1   Supported 1   Interesting 1   View Ratings | Rate It

Treasury trading in negative


- Advertisement -


Is the U.S. Treasury a bubble about to burst?

Tom Dennen

This is from Google's U.S. NATIONAL DEBT CLOCK .

The Outstanding Public Debt as of 08 Dec 2008 at 05:27:32 AM GMT was $10,666,471.590,646.24

The estimated population of the United States is 305,231,141, so each citizen's share of this debt is around $35 000 and counting.

- Advertisement -

Google it up and just refresh it a few times, it seem to increase at about a half a million dollars every ten seconds which means that the National Debt is still increasing by an average of $3.80 billion per day since September 28, 2007 when the clock started!

Most of the "gloom-anD-doom" generated in the financial press is the result of the distance it is from actual markets as well as its heavy dependence on 'pundits' and other experts in the field who report on, but perhaps don't really get it across to us exactly why, among other things, 'shorting' has been banned for some time now (see Backwardation, below).

How many top traders are writing about their inner world where 'connecting the dots' is a lot like looking at a sheet full of pinholes between you and what you want to see and all you get is a nanosecond flash on what you're looking for?

- Advertisement -

Recent reports through the pinholes are slowly revealing a pattern that the 'plundits' (the guys who charge big bucks to advise the gullible, but don't actually trade) have followed each other faithfully in describing and clarifying - it's not like they haven't done a good job of at least improving our understanding of the vocabulary that reveals the pattern -- we all understand terms like 'fiat money', Mortgage Default Swaps and predatory lending now, which in varying degrees describe the financial flimflam that's been bamboozling the general population since the invention of mortgages, compound interest and stock exchanges.

It's all just a little clearer now why at least twenty years of the most productive part of the average person's life is totally dedicated to paying for the proposition that he must own his home, and that that's just the way it is: that it takes twenty or more years to pay the debt he's signed in exchange for his life.

That's just the way it is!

And now that we're seeing how our 'debt-based' society was set up and the debt sold and 'cleverly packaged' and sold again even though it was junk, and sold again to people who do not subscribe to this American Dread, sorry, 'Dream', well I don't know about you, but I don't like it.

Those twenty indentured years are a bulletproof guarantee for the production of a smooth, continuous and long-term supply of wealth.

But not wealth you own. You own a mortgage.


The definition of this situation is not really a financial one, but sociological. A definition contained in that supremely ironic word, 'Mortgage".

'Mortgage' comes from two easily recognizable French words: 'Mort' meaning death, and 'Gage', meaning fence or cage, which is what today's indentured servant is locked into for the length of his working life, 'free' as he may be moved to see himself, yet peripherally (and frustratingly) aware of the theft of that life.

These 'mortgages', these debt-until-death-based dues for membership in today's society is leveraged on all tiers of workers, those who produce the wealth for those who own the means for producing that wealth and who, by so owning them, take and hold possession of and use the majority of all the wealth you produce.

As part of our illusion of being free, we are allowed to gamble through stock exchanges (where one can also lose, of course unless one has grown up in a factory making Japanese 'candlesticks', or win some of the crumbs from the bonfire tables of our get-rich-quick vanities).

An amusing exercise is browsing through stock exchange terminology -- you'll soon see that it's a crap game I think deliberately complicated to the point of arcane to disguise that: Totally random unless the dice are loaded (and as you have now seen, they are and always have been: insider trading and many other fun things like Credit Default Swaps come to mind).

But what's behind all this criminal activity suddenly and recently coming to light?

Party's over.

The owners are pulling out of wealth streams leveraging the little power left in paper currencies that neither metals nor properties have backed for almost a hundred years.

These are patient players.

It's over because the owners of the wealth have also lost control of awareness among their indentured servants; as ex-slave and former Statesman Frederick Douglass pointed out, ""Knowledge makes a man unfit to be a slave."

All of which may just mean a change of ownership and terminology.

'Backwardation' is a lovely almost childish term as if poorly understood. It's a Market situation "in which futures prices are progressively lower in the distant delivery months (italics mine -- go back over the last two years and look -- you can't really short gold).

"For instance," according to the Primary Asset Management Company (PAMCO), "If the gold quotation for February is $160.00 per ounce and that for June is $155.00 per ounce, the Backwardation for four months against January is $5.00 per ounce.' Backwardation is the opposite of being 'in contango' a market situation 'in which prices in succeeding delivery months are progressively higher than in the nearest delivery month," the normal and up until now prevailing situation.

(PAMCO "deals only with the Bills, Notes and Bonds of the United States Government", which should tell you something about my term for this chaos: 'The Last Fandango', a lively Spanish dance that begins slowly and tenderly with say, a slight upward inflationary trend and then ends in a triple time rhythm marked by the clattering castanets of Wall Street golden parachutes snapping open to short gold cats bouncing.

Gold Backwardation took a full and possibly final hold on December 2, 2008.

Antal E. Fekete's Safe Haven, a financial 'observation post" fielded this report on The Day After:

According to the December 3rd Comex delivery report, there are 11,759 notices to take delivery (of gold). This represents 1.1759 million ounces of gold, while the Comex-approved warehouses hold 2.9 million ounces. Thus 40% of the total amount will have to be delivered by December 31st. Since not all the gold in the warehouses is available for delivery, Comex supply of gold falls far short of the demand at present rates. Futures markets in gold are breaking down. Paper gold is progressively being discredited."


One of the last hints you'd have to be blind not to trip over of the Dec 2 tipping point's arrival surfaced quietly a couple of months earlier on the Huffington Post, which does keep watch: "The U.S. Mint " on September 28, 2008 " is temporarily halting sales of its popular American Buffalo 24-karat gold coins because it can't keep up with soaring demand as investors seek the safety of gold amid economic turbulence.

"Mint spokesman Michael White said Friday that the sales were being suspended because demand for the coins, which were first introduced in 2006, has exceeded supply and the Mint's inventory of the coins has been depleted.

"The Mint had to temporarily suspend sales of its American Eagle one-ounce gold coins on Aug. 15 and then later that month announced sales of the American Eagle coins would resume under an allocation program to "designated dealers."

Fekete's 'Safe Haven' picks it up again:

"December 2, 2008, was a landmark in the saga of the collapsing international monetary system, yet it did not deserve to be reported in the press (when): gold went to Backwardation for the first time ever in history. The facts are as follows: on December 2nd, at the Comex in New York, December gold futures (last delivery: December 31) were quoted at 1.98% discount to spot, while February gold futures (last delivery: February 27, 2009) were quoted at 0.14% discount to spot. (All percentages annualized.) The condition got worse on December 3rd, when the corresponding figures were 2% and 0.29%. This means that the gold basis has turned negative, and the condition of Backwardation persisted for at least 48 hours."

Is the U.S. Treasury a bubble about to burst?

"Freedom is just another word for nothing left to lose".

- Kris Kristofferson, "Me and Bobby McGee."


- Advertisement -

under construction

Tom is a contributor to public debate on issues affecting our survival; works with a London and a South African think tank, is a working journalist and author.
The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Writers Guidelines

Contact EditorContact Editor
- Advertisement -