Use access key #2 to skip to page content.

XMFSinchiruna (27.08)

Is Bill Gross in the House?

Recs

32

May 17, 2011 – Comments (46) | RELATED TICKERS: TBT

Okay, maybe we don't need Mr. PIMCO himself, but surely I can't be the only Fool who feels plainly duped by the wholesale revision to trailing data on foreign holdings of U.S. debt that took place in February. I remember seeing a headline at the time, but only today did I finally return to the data table that I watched so diligently last year, and discover for myself the enormous implications thereof.

Here is the chart

http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt

You'll find two columns labeled 'June 2010', wherein a massive discrepancy appears between previous estimates of foreign holdings and current estimates of same. 

Below the table is the note:

New series reflect new benchmark survey taken in this month. Estimated positions based on the previous survey are shown for comparison.

.........

What is a Fool reasonably to make of such a data series?  Back in August of 2010, I remarked upon China's steady reductions in U.S. debt exposure from June 2009 through June 2010; only to find that the June 2010 figure has been restated higher by 32% to $1.11 trillion from $844 billion! Since data prior to June 2010 has not been similarly restated, are we as investors / concerned citizens left with no meaningful ability to interpret trailing data or broad trends in foreign ownership of our debt?

That would certainly appear to be the case. 

Does anyone have any specific background information on precisely what is meant by "new benchmark survey" in the context of the above note? The word benchmark suggests that a new reference point has been established by which subsequent data will be measured, so clearly my prior assumption that the table reported actual tallied figures was totally misplaced. Silly me! If anyone has specific knowledge of the Treasury's reporting system and how it operates, I would appreciate further insight on the matter.

Digging around a bit, I found where one blogger posted an excerpt from the May 1998 issue of Current Issues in Economics and Finance: Knowing exactly which foreigners own specific amounts of U.S. Treasury debt in a global market of about $3.4 trillion in outstanding issues, however, is simply not possible. This inability to identify the ultimate foreign owners of Treasury securities does not reflect a lack of effort by the U.S. government to collect data on the foreign ownership of its debt. Nor is it the result of any governmental unwillingness to make data available to the public. Rather, the inability of both policymakers and private sector analysts to determine with full accuracy the foreign ownership of U.S. Treasury debt—whether held by private or official investors—stems not only from the Treasury Department’s obligation to respect the confidentiality of individual respondents but also from the nature of the reporting requirements themselves.

........

Procedural issues aside, there's a bottom line:

Which is it? Did China hold $843.7 billion in U.S. debt in June 2010, or did it hold $1.112 trillion? Did the UK hold $363.6 billion as stated in the "old series", or a revised $94.5 billion as stated in the "new series" (74% less than the previously reported figure!!). I think it's fair to say that the scale of the divide between those figures as reported by our government's Treasury Department are sufficient to warrant our full attention.

Via Reuters, one analyst addressed the glaring nature of the discrepancies for China and the UK, in particular, with the following intrepretation:  "This provides the most substantive evidence to what has been previously suspected -- that China has been increasingly transacting through the U.K.," said Alan Ruskin, global had of G10 foreign exchange strategy at Deutsche Bank in New York.

Does that explanation sit well with you Fools? Is it truly plausible that Treasury could have had so dismal an understanding of the UK's real-world holdings of US debt as to place its stamp of approval on a $363.6 billion figure, only to discover months later that it held only $94.5 billion? C'mon guys, you've fooled us more than once, and you know how the saying goes. Shame on me.

 

........

I always aim to take government-reported data with a boulder-sized grain of salt, but this is beyond ridiculous. It's clear to me after observing the revisions that the data is nearly devoid of all utility. Next to the UK data, where is the note that concedes: "actual figures may differ from those reported by plus or minus 74%"!!?!!?? Silly Fools like me who checked the table every month last year looking for signs of fatigue in Chinese demand for Treasuries can now be said to have done nothing more than WASTE THEIR TIME, since sequential changes to monthly data paled in comparison to the now-clear margin of error, and so at their core these numbers must now be perceived in their proper context: as fiction

 

46 Comments – Post Your Own

#1) On May 17, 2011 at 10:15 AM, XMFSinchiruna (27.08) wrote:

Speaking of Bill Gross:

http://seekingalpha.com/article/270032-pimco-s-bill-gross-continue-to-short-u-s-bonds-unless-double-dip-happens

I sit before you as a representative of a $1.2 trillion money manager, historically bond oriented, that has been selling Treasuries because they have little value within the context of a $75 trillion total debt burden. Unless entitlements are substantially reformed, I am confident that this country will default on its debt; not in conventional ways, but by picking the pocket of savers via a combination of less observable, yet historically verifiable policies - inflation, currency devaluation and low to negative real interest rates. - Bill Gross, Head of PIMCO

"If the USA were a corporation, then it would probably have a negative net worth of $35-$40 trillion once our 'assets' were properly accounted for, as pointed out by Mary Meeker and endorsed by luminaries such as Paul Volcker and Michael Bloomberg in a recent piece titled 'USA Inc.'

However approximate and subjective that number is, no lender would lend to such a corporation. Because if that company had a printing press much like the US with an official 'reserve currency' seal of approval affixed to every dollar bill, that lender/saver would have to know that the only way out of the dilemma, absent very large entitlement cuts, is to default in one (or a combination) of four ways:

Outright via contractual abrogation - surely unthinkable

Surreptitiously via accelerating and unexpectedly higher inflation - likely but not significant in its impact

Deceptively via a declining dollar- currently taking place right in front of our noses, and

Stealthily via policy rates and Treasury yields far below historical levels - paying savers less on their money and hoping they won't complain."

- Bill Gross, Head of PIMCO

 

Report this comment
#2) On May 17, 2011 at 10:16 AM, XMFSinchiruna (27.08) wrote:

Here's my article on Joy Global's big acquitision:

http://www.fool.com/investing/general/2011/05/17/joy-global-wants-to-get-wet.aspx

Report this comment
#3) On May 17, 2011 at 10:24 AM, XMFSinchiruna (27.08) wrote:

Brigus drill results on 147 zone:

http://www.commodityonline.com/commodity-stocks/Brigus-Gold-finds-high-grade-assays-at-Black-Fox-39080-3-1.html

Report this comment
#4) On May 17, 2011 at 11:04 AM, XMFSinchiruna (27.08) wrote:

Tyhee has filed the equivalent of an EIS report for Yellowknife ... the moment of truth approaches.

http://www.tyhee.com/investors/documents/1105DARbEd1_v4_.pdf

Report this comment
#5) On May 17, 2011 at 11:17 AM, Valyooo (99.40) wrote:

Bill Gross also held treasuries up until a month or two ago....what kind of moron was still holding treasuries in early 2011?  Do you think his position on treasuries has been good as of late?

Report this comment
#6) On May 17, 2011 at 11:24 AM, mtf00l (50.17) wrote:

TMFSinchiruna,

We don't usually see shotgun post from you however, thanks for the information!

Report this comment
#7) On May 17, 2011 at 11:42 AM, XMFSinchiruna (27.08) wrote:

Valyooo

When you take from him the title of the world's most successful bond investor, then perhaps you will have a leg to stand on when slinging insults. Until that day, I consider comments like yours above unconstructive.

I have a very small position in TBT, so I too am short treasuries.

mtf00l

What's a shotgun post?

Report this comment
#8) On May 17, 2011 at 11:53 AM, Valyooo (99.40) wrote:

I own PHK, the high yield Pimco fund.  Its just ridiculous that you cherry pick his investments.  I bet when he was heavily invested in treasuries you weren't supporting his decision then, right?

Warren Buffett thinks gold is a bubble, and he is the most sucessful investor of all time...so do you have no leg to stand on?

 

I wasn't trying to pick a fight with you but it doesn't make sense to cherry pick what certain investors say and list their accomplishments only when they agree with you and then call them a fool when they oppose you.

I once read in a book about silver that it was bullish that Buffett invested in silver because it shows a smart investor likes silver.  It then in the next sentence said its bullish that he sold the silver, because all that selling suppressed the price.  That is absurd...everything is bullish for silver.  It was actually a book I bought because you mentioned it in one of your blogs too.

 

That aside, I would rather short TMF than long TBT...just like UNG and VXX, it is a piece of crap vehicle for shorting treasuries.

Report this comment
#9) On May 17, 2011 at 11:53 AM, TMFAleph1 (96.59) wrote:

Bill Gross still owns Treasuries in the Total Return Fund, albeit he is significantly underweight. The short position that everyone has been in a lather about (including me) relates to a much wider bucket of securities than just Treasury bonds:

Bill Gross: PIMCO never 'short' US Treasuries - CNBC, Reuters, May 16, 2011

Alex Dumortier

Report this comment
#10) On May 17, 2011 at 12:37 PM, XMFSinchiruna (27.08) wrote:

Valyooo

You are WAY out of line!

After all I have done for you, answering your every last question on pms while asking nothing in return, I am aghast at the baseless criticism in your comment above.

I read your comment #5 as an insult to Mr. Gross, whom I respect. All I wanted to do was point out how ludicrous it was for you to suggest he was a moron. If that was not the intent of your original comment, then clarify. 

But then you took it a step further. Show me where I have cherry picked Bill Gross comments, or where you have seen me calling him a fool, or anything else you may have to back up that ridiculous accusation.

When I think of all the countless hours I spent answering your ceaseless questions about precious metals, I am both offended and hugely disappointed by the complete lack of respect you have shown me in this post. The original post was all about frustration over wasted time, and now that frustration is compounded by the realization that all the time I spent educating you on the subject of precious metals may have been wasted on an undeserving sort.

Report this comment
#11) On May 17, 2011 at 12:54 PM, Valyooo (99.40) wrote:

...I don't know why you are getting so offended.  I have thanked you probably about 5000 times and told everybody else to stop taking credit for their silver real life gains when it was you who did most of the DD

I own some of Bill Gross's products...obviously I don't think he is a moron...it was just a stupid thing to hold at the time.  I brought up what I thought was a valid point and you basically said "Bill Gross > you so stop talking" which I found insulting, especially when I intended no disrespect.

So, my full apologies. I seriously mean no disrespect, and I thank you again for all you have taught me. Its just that many silver investors (and I will say you do it the least) will take one line of thinking and be EXTREMELY biased with it (As in the buffett example)

So, my original point was Bill Gross, although a very good investor, clearly is not some sort of expert on treasuries (nor am I) which is why I wouldn't listen to him on the subject, just like you don't listen to Buffett on gold.  They are both brillian investors, so if I don't have a leg, neither do you.

Sorry ^3x10.  I just was trying to point out a reason why I wouldn't put much thought into Gross' comments on treasuries, and I felt that you disrespected me.

Report this comment
#12) On May 17, 2011 at 1:03 PM, Gonzhouse (24.34) wrote:

Follow-up to Tyhee note;  this is from their 1Q2011 report:

"The Developer’s Assessment Report (DAR) is being prepared and is anticipated to be submitted in May 2011 [complete]. This will be followed by a review of the project by the MVEIRB that is expected to take from twelve to sixteen months. Following a positive recommendation and ministerial approvals, Tyhee would anticipate obtaining its licenses to commence construction and operation of its proposed mine and mill."

Report this comment
#13) On May 17, 2011 at 1:09 PM, XMFSinchiruna (27.08) wrote:

Valyooo

Clearly we got our wires crossed somewhere in there. Holy crap.

I thought you were calling Bill Gross a moron, which was what prompted me to defend his name. That's where the miscommunication strarted. If you were not calling him a moron, then the "leg to stand on" thing is moot, and I take it back.

I do differ with you on your above point, though. I do indeed consider Bill Gross a qualified expert on Treasuries, and I consider his insights on the bond market important to consider ... whether he were bullish or bearish would not change my desire to consider his perspective carefully. 

Mr. Buffett, meanwhile, although certainly a qualified expert in value investing, is clearly no expert in gold or silver.

Report this comment
#14) On May 17, 2011 at 1:17 PM, Valyooo (99.40) wrote:

Definitely not calling him a moron....pimco bond funds are the only bond funds i have/will ever buy

Lets forget this conversation ever happened.

What conversation?

Report this comment
#15) On May 17, 2011 at 1:25 PM, XMFSinchiruna (27.08) wrote:

:) fine by me. Sorry. :)

Report this comment
#16) On May 17, 2011 at 1:44 PM, TMFAleph1 (96.59) wrote:

One thing we know about Buffett is that the last time he speculated on silver, he was very successful.

Normally, it would be absurd to attribute skill/ knowledge to someone on the basis of a single successful trade, but when you consider it in in the context of his demonstrated, consistent success investing across multiple asset classes, it may be unwise to dismiss his opinion on gold or silver.

Alex Dumortier

Report this comment
#17) On May 17, 2011 at 2:03 PM, XMFSinchiruna (27.08) wrote:

TMFBullnBear

I don't dismiss it ... I just interpret it within its proper context.

The question was asked, "Did you sell your silver position to the banks that started the Silver backed ETF?"
Buffett's answer, "I don't know who bought it from me, but they are smarter than I was about it."

Report this comment
#18) On May 17, 2011 at 2:21 PM, TMFAleph1 (96.59) wrote:

Buffett's answer, "I don't know who bought it from me, but they are smarter than I was about it."

I'd be very careful about reading too much into one of Buffett's self-deprecating comments.

Report this comment
#19) On May 17, 2011 at 2:40 PM, XMFSinchiruna (27.08) wrote:

TMFBullnBear

I'd be very careful about being very concerned about what you think I read too much into, and I'd be extremely careful about reading too much into Warren Buffett's silver trade.

Report this comment
#20) On May 17, 2011 at 2:46 PM, XMFSinchiruna (27.08) wrote:

Sigh ... does no one have any thoughts or response relating to the original post above?

Is no one the slightest bit concerned that Treasury purportedly missed its initial estimate of the UK's exposure to U.S. debt in June 2010 by 74%?

Report this comment
#21) On May 17, 2011 at 2:57 PM, rfaramir (29.31) wrote:

My takeaway from the Buffett silver episode is this: bullish on both ends, so the pumper/bug that made Valyooo see red was right but didn't express it well.

Silver may have been on the edge of Buffett's large-but-not-infinite circle of competency, but he had the right instinct and did well. What made him sell (IIRC), was government-type pressure, since he was making PMs look like a better deal than the dollar. He backed down, still made money, but the reason he sold is *also* bullish. He wouldn't have, on his own. So not only did the rest of us get a better price due to his large sell, but we knew it was still a good investment since he didn't sell on conviction but pressure.

Were he still holding, he'd be even richer. So the bullish sentiment was correct. I won't defend any particular pumper/bug out there, though, especially not knowing exactly who they are or what they said that Valyooo caught. (silverminer is no mere bug and absolutely not a pumper, BTW. He's awesome!)

Report this comment
#22) On May 17, 2011 at 3:11 PM, XMFSinchiruna (27.08) wrote:

rfaramir

Thanks rfaramir, did you see my response to your comments about Gammon?

http://www.fool.com/investing/general/2011/05/12/gammon-basks-in-the-glow-of-silver-and-gold.aspx

Report this comment
#23) On May 17, 2011 at 3:20 PM, reinman60 (< 20) wrote:

Chris,

 I haven't really researched this in the detail that you have, but I've also read from several other sources that China is transacting through the UK.

In a March article in the FT, the interest rate strategist at Barclay's Capital offers this explanation:


"The monthly Treasury purchase data released by the US Treasury only records where transactions take place and does not identify the true buyer. Given London’s status as a financial centre, many in the bond market had suspected that the rapid rise in buying out of London last year may have been from China."

I don't know where they get the data to reallocate the bonds to China at a later date.

Report this comment
#24) On May 17, 2011 at 3:35 PM, XMFSinchiruna (27.08) wrote:

reinman60

Interesting, thank you.

I'm still amazed at how little confidence we can have in the data as a result. Under the circumstances, no reliable conclusions can be drawn from the data. It is also incredible how much wiggle room this would seem to afford Treasury in tweaking bond-market perceptions during such a potentially tumultuous period.

 

Report this comment
#25) On May 17, 2011 at 3:49 PM, BlackSwanCapital (64.26) wrote:

First of all, you can PM on TMF???  How?

Report this comment
#26) On May 17, 2011 at 3:55 PM, XMFSinchiruna (27.08) wrote:

pm = precious metals  :)

Report this comment
#27) On May 17, 2011 at 3:57 PM, mtf00l (50.17) wrote:

TMFSinchiruna,

Shotgun post; posting the original article and then posting the first three comments.  Slow your roll...this is not criticising you, you usually get your thoughts out in your original articles.  Clearly, this is something you're passionate about.  I respect that.

If you haven't realized yet, I'm a skeptic or a pessimist waiting to be pleasantly surprised.  It actually happens from time to time.

We, the people, will likely never know the truth of things unless we are directly involved.  Typically, "we", are not.

I'll go one step further and say this is not the only "duping" that has been done.  The question is will we find out about the others?

Report this comment
#28) On May 17, 2011 at 3:58 PM, Jbay76 (< 20) wrote:

While not as big as the UK, Luxemburg also got rid of a significant portion of their US debt holding.  If the data is true that UK and Luxemburg unloaded, then it seems likely that China picked it all up. 

Report this comment
#29) On May 17, 2011 at 3:58 PM, reinman60 (< 20) wrote:

"Perception" is a key word.  This administration, as well as the Fed, are all about managing economic perceptions and expectations.

Since the size of Chinese Treasury holdings has become such a political hot potato lately,they are certainly motivated to shade  reality at given points in time to suit their agenda.

Ultimately, they are between a rock and a hard place. Playing down the size of Chinese holdings deflects attention from how beholden we are to China to finance our deficits.  On the other hand, the perception that Chinese participation at  auctions is waning creates the worry that there will be a stampede for the exits in the bond market.

Interesting that this restatement comes on the heels of the incresingly bearish and critical Bill Gross.  If I was at all conspiracy minded, I might think there was a connection.

Report this comment
#30) On May 17, 2011 at 4:03 PM, BillyTG (29.24) wrote:

As the resident conspiracy theorist, is it too "out to lunch" to suggest the possibility that the Fed disperses money overseas to then hold US Treasury debt? 

We know that many hundreds of billions were sent to foreign financial institutions as part of TARP, and that the specific receivers and amounts were not publicly disclosed.  Is is that inconeivable that the Fed would print and export money, to then be used to hold US debt, all to bolster confidence (which is a stated aim of the Fed) in the dollar and economy.  

Report this comment
#31) On May 17, 2011 at 4:23 PM, rfaramir (29.31) wrote:

Similarly, can you 'follow' articles you've commented on like you can blog posts?

TMFSinchiruna, because of that, no, I missed your explanation. I'll duplicate my answer here (I normally wouldn't want to do that):

That IS amazing. Negative cash costs, whether calculating the cost of gold minus silver by-product credits, or cost of silver minus gold by-product credits.

And that's why you could mention both in one sentence which made me think that there was some double-counting going on with gold included in SEOs  (or silver included in GEOs) and by-product cash cost subtraction. The AND was you could do it *right* either way. Very cool!

 

And let me add that that makes glad to be adding to my GRS position. Wish I could do more, as always.

 

Regarding a 'shotgun' blog post, see TMFUltraLong for that approach ;-) Hard-hitting but very scattery.

Regarding the Bill Gross's "four ways" to default, the last three ways are all the same thing: fraudulently debasing the dollar by increasing the supply. If he'd read some Austrian economics (free online at mises.org), he'd know that. (Won't call him names, though. :-) Here's how they're the same:

Pushing "policy rates and Treasury yields" lower is done by creating more dollars. Plain and simple: when the Feds buy up Treasuries (with funny money) it appears as if there is 'demand' for them, which lets the Treasury 'sell' them at a lower interest rate. (I put 'sell' in parentheses because of the left-hand/right-hand manipulation that it really is: the debt is being inflated away fraudulently, not 'sold' properly.)

"a declining dollar" is a measure of how much debasement we are doing versus how much debasement 6 other countries are doing to their fiat currencies. The USDX is a *relative* measure of fraud, not absolute. I could hardly care less if we are in front of the pack or trailing it, we're all going to hell in a handbasket with current policies! It's only relevance is when other economic actors look at it and make decisions based on it.

"accelerating and unexpectedly higher inflation" (of prices generally paid by consumers) is how we 'feel' the effects of the inflation of the money supply. Other things being equal (same quantity and quality of goods), the more cash the buyers have, the higher they will bid the prices. Giving them more cash is not the same thing as giving them more prosperity. And consumers aren't "given cash" anyway. The new money enters at the other end, far away from consumers. Banks, speculators, government employees, and government contractors and their employees are all in line before anyone else. As they spend it, prices rise. As the sellers of the (many different) things they buy get the money, they spend it, causing the prices of those things to go up. When normal consumers finally get some, they've been paying higher prices for most goods for quite some time. People on fixed incomes are hurt most, of course, as their incomes do not rise at all, at least not until their bonds are repurchased at higher interest rate levels, which is well after most of the damage is done.

Report this comment
#32) On May 17, 2011 at 4:58 PM, Gonzhouse (24.34) wrote:

Sinch,

 In answer to your original post (before all hell broke loose), I found this article explaining the revision upward.

http://www.zerohedge.com/article/chinese-treasury-holdings-revised-268-billion-higher-112-trillion-fed-still-top-holder-us-de

Bottom Line (from their article) "It should be noted that in many cases it is not possible to accurately determine the country of residence of the beneficial owner of U.S. securities. Securities are often held in custody in countries other than the beneficial owner's country of residence. Respondents on this survey, in turn, may only know where the securities are held in custody. Thus, excessive foreign holdings may be attributed to countries that are major custodial centers, such as the United Kingdom, Switzerland, Belgium, and Luxembourg. "

The scary thought you were trying to get across:  we can't be sure who owns our debt at what time.

Report this comment
#33) On May 17, 2011 at 4:58 PM, rfaramir (29.31) wrote:

@BillyTG, the Fed printing and exporting dollars to foreign entities who then buy up Treasuries, which weakens the dollar (by printing) while giving the impression of a strengthening dollar (by Treasury purchases). I wouldn't put it past them. We really need to Audit the Fed!

Regarding the original article (finally!), I was looking at the chart, trying to get a feel for the overall flows and trends... Some restatements are higher, some lower, some trends are more purchases, some are slowly dumping Treasuries. Some have a lot of ups and downs but little change at year end, some have a significant final movement but no large changes at any point...

Then I realized, these are all peanuts compared to the restatements: the movements are mostly 1-5% each, whereas most restatements are much larger, 5-10-20-74%. Like you, I was disgusted at the waste of time even looking at it all. It is fascinating to 'see' huge flows of money across the world in a little chart; then you realize you're the little critter fascinated by the fake display meant to keep you distracted from the facts that are destroying our economic lives.

"Blind guides, straining out a gnat and swallowing a camel" indeed. (http://bible.cc/matthew/23-24.htm)

Report this comment
#34) On May 17, 2011 at 5:33 PM, outoffocus (23.43) wrote:

Theres nothing to fear Chris.  This data is only "transitory". Move along.  Nothing to see here.

Report this comment
#35) On May 17, 2011 at 5:45 PM, TMFAleph1 (96.59) wrote:

Guys, the general limitations of TIC data and the uncertainty relating to the UK aggregate, specifically, has been common knowledge for a while.

Here is a 2010 article from the FT's Alphaville blog that highlights the problem:

China and the Missing Treasuries, Oct. 19, 2010

You can go back and find earlier articles that refer to the same problem.

Alex Dumortier

 

 

Report this comment
#36) On May 17, 2011 at 5:59 PM, mtf00l (50.17) wrote:

I'll prognosticate that any transaction involving money in the sums we're talking about is documented.  That that information is not "public" is another matter.

Report this comment
#37) On May 17, 2011 at 7:35 PM, XMFSinchiruna (27.08) wrote:

TMFBullnBear

Okay, that's all well and fine, and the articles I came across while looking into it this morning all confirmed same, but have the revisions ever resulted in such massive percentage revisions before? Do you not concede that a 74% swing for the UK figure is alarming even given the UKs role as a market hub? Does not a UK citizen concerned about his/her currency's exposure to U.S. debt deserve access to a figure with better than a 74% margin of error? Does not a U.S. citizen concerned about fatigue in foreign demand for U.S. debt as QEII comes to a close deserve access to figures that have some meaningful basis in reality? Do you not also concede that the figures are virtually useless if they can not be confirmed as accurate in any sense of the word? 

Also, while the issue may have been addressed publicly on several occasions and in various fora over time, I think it might be a bit of overkill to refer to it as "common knowledge". Perhaps if you are referring to the microcosm of global bond market analysts, then perhaps it can be considered common knowledge. I would argue that among investors as a community, a scant few have ever paid an iota of attention to this data set, and among them, a scarce very few are likely to have been aware of the procedural limnitations of TIC data.

Report this comment
#38) On May 17, 2011 at 9:24 PM, jesusfreakinco (28.97) wrote:

I always aim to take government-reported data with a boulder-sized grain of salt

Chris - enough said...  does truth really matter any longer?  Just look what the Fed and their cronies at the CFTC are doing with the silver market?  Our government is losing / has lost all credibility across the globe.  If we didn't have such a 'strong' military, we'd already be experiencing hyperinflation.  I love my country, but I fear my government...

 

Report this comment
#39) On May 17, 2011 at 9:24 PM, jesusfreakinco (28.97) wrote:

Another phrase that comes to mind is "Lies, damned lies, and statistics"

Report this comment
#40) On May 17, 2011 at 10:49 PM, FleaBagger (28.07) wrote:

Sorry to keep feeding the trolls, but rfaramir makes a good point: why wouldn't Buffett sell his silver well before the top, considering the last people to publicly make hundreds of millions of dollars in unrealized capital gains in the silver market were consequently beaten and robbed by the feds, with only paper-thin excuses for their shameful, shameless criminal attack on innocent, patriotic American citizens. If I had such a huge fortune, I'd be careful to sell my silver at the first hint of federal interest.

Report this comment
#41) On May 18, 2011 at 1:32 AM, reinman60 (< 20) wrote:

 Chris,

I certainly share your concerns.

Bear with me. At the risk of going off on a tangent and sounding way too academic and pompous (I've been accused of that before), I'll offer these comments.

Your pleas for recognition of the problems surrounding the transparency of the reporting of foreign Treasury holdings seem to be falling on deaf ears. There's a distinct silence (more like willfull deafness) regarding this issue, but some of us want to hear about what's going on.

One of my favorite quotes about this issue, trying to hear something through the silence, comes from British poet John Dryden in one of his essays, written in 1668.

He writes about the hush that's descended over London as a great naval battle with the Dutch fleet rages just off shore, but out of sight.

It was that memorable day, in the first Summer of the late War, when our Navy ingag'd the Dutch: a day wherein the two most mighty and best appointed Fleets which any age had ever seen, disputed the command of the greater half of the Globe, the commerce of Nations, and the riches of the Universe. While these vast floating bodies, on either side, mov'd against each other in parallel lines, and our Country men, under the happy conduct of his Royal Highness, went breaking, by little and little, into the line of the Enemies; the noise of the Cannon from both Navies reach'd our ears about the City: so that all men, being alarm'd with it, and in a dreadful suspence of the event, which we knew was then deciding, every one went following the sound as his fancy led him; and leaving the Town almost empty, some took towards the Park, some cross the River, others down it; all seeking the noise in the depth of silence.

Every inhabitant of London went down to the waterfront, and in the hush that fell over the city, strained to hear the sound of the guns,and the battle that raged out of sight, trying to determine the outcome of the battle that would decide the fate of England.

Dryden is quite explicit about what's at stake, "the commerce of Nations, and the riches of the Universe".  He notes "a dreadful suspense of the event".  These days, most people just don't seem to care, or to even be aware of the issues.

Currently. the battles that truly determine the fate of empires aren't fought with guns, but with bonds.  Dryden notes that "all [were] seeking noise in the depth of the silence."  Whle there's plenty of silence regarding the issue you've raised, unlike in John Dryden's day, few seem interested enough to seek the noise.

Report this comment
#42) On May 18, 2011 at 8:28 AM, XMFSinchiruna (27.08) wrote:

reinman60

Thanks for a very interesting set of comments! I enjoyed the literary parallel, and you reminded me of another past event involving bonds where decisive actions may have transpired amid a haze of silence.

http://caps.fool.com/Blogs/the-surreal-life-of-the-us/217067

 

Report this comment
#43) On May 18, 2011 at 1:37 PM, ikkyu2 (99.17) wrote:

Sinchy,

Regarding your frustration at soi-disant "data":  I think that Ben Bernanke, among others, has actively telegraphed his general intention when he notes, as he has done repeatedly, that "managing expectations" and "managing investor sentiment" are key elements of his policy toolbox (which he uses to meet the dual mandate yadda yadda etc.)

If everyone knew exactly what actions the Fed were taking and what they were going to take - if they had, for instance, perfect telepathy into Ben Bernanke's brain and the brains of the other Fed governors - then the market could nullify the ability of the Fed to make meaningful changes in fiscal policy, by "pricing in" all the Fed's moves before they happen.  We do not have such telepathy and Ben and the Fed make a large point of denying the market any such perfect information. 

After observing that kind of informational denial - which is part of how the Fed distorts markets, in other word, how it achieves its mandate - why is it such a stretch to believe that the Fed and cronies also "manage expectations" by releasing distorted or falsified data - data that will be used by well-meaning people like you to make decisions: decisions which if you were in possession of the full facts, you would make differently?  This is in fact the Fed's most potent policy weapon; to name it or to be transparent about it would undercut it completely.

I think I first cottoned onto this strategy in 1994, when Hillary Clinton gave a lecture about healthcare to a graduating Wellesley class.  She talked about the "politics of meaning" as a skillset that the graduating Wellesley elite would have to master if they wanted to influence the world.  This is not a new idea or even phrase - it originated with Michel Foucault.  Along with "it takes a village," the message is clear: a small group of elite can, given power, define their own terms, define their own meanings, and therefore define, alter and change reality to suit their own purposes.  This is how the Fed, and the BLS, the Treasury, and the GAO all behave.

To me, the only surprising thing is the repetitive expressions of surprise, dismay or feelings of betrayal from well-meaning folks like you.  Dude, your "expectations" are being "managed."  You were told so from the get-go.  It's disingenuous to pretend you didn't know that!

Report this comment
#44) On May 18, 2011 at 1:44 PM, ikkyu2 (99.17) wrote:

You know, Sinchy, I wrote a much longer post than I intended. Let's summarize, practically:

1.  Conspiracy theory, one, standard-issue.

2.  If you are interested in facts and in reality, ignore government-supplied information.

Hope it's OK that I call you "Sinchy."  I have trouble keeping you TMFer's real names straight.  Mentally I think of you as "Sinchy the gold bug," not by your real name!

Report this comment
#45) On May 18, 2011 at 2:59 PM, silverminer (30.48) wrote:

ikkyu2

For a post that began with a whole lot of noise, it sure is winding up as a showpiece of the sort of fierce intellects we count among our numbers here on the CAPS blogs. It's not every investment community where you'll find members citing 17th century British poets and Foucault in a single post.  :)

Thank you for sharing your thoughts!

Report this comment
#46) On May 18, 2011 at 4:05 PM, mtf00l (50.17) wrote:

ikkyu2,

What silverminer said.

I tend to fight the urge to write long posts myself.  I forget that we're not all at the same place. By your contrasting posts you've shown that longer can be better.

Report this comment

Featured Broker Partners


Advertisement