Those teabaggers; etc.

By stoat on July 26, 2011.

Misc stuff. I think I'll press "publish" now to distract you. Oh look, there's a badger...

Early Warning with some interesting speculation and pointers re the possible US default. The "only someone batshit crazy would do that; oh f*ck, these teabaggers *are* batshit crazy" is fun. But I like the idea that even a brief default - assuming they came to their senses and caved afterwards - would add some tiny amount to US interest rates forever after. Are they really that crazy? Or will the big money have a quiet word in the right ears?

Timmy again, this time pointing out (well, it was the point of interest to me, you might care for the wider point) just how mind-bogglingly tiny the tradeable economies of some countries are. A graph of this would be nice, I think.

Mr. Gore Finds the Link by mt and (just to provoke) Mencken on crowdsourcing by a man of many names.

Eli has a new idea for betting on sea ice (which I see is looking better just now).

Newspapers follow bias not cause it - not quite true but fairly true. Certainly, an unwelcome idea all too rarely considered. Just as a people gets the politicians they deserve, they also get the press they deserve. Not me, of course, because I get none of them; but you plebs, yes.

Refs

Pic added per comments; see-also here

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Well, USA is fuc*ed regardless of the debt ceiling result, which is going to go up inevitably. USA is regarded as "save heaven" compared to Europe, being hammer by debt-deflation.

Aaah, and anybody who think USA can pay all ist debt and obligations etc, should check this debt visualistation at www.WTFnoway.com ,

cheers,

Alex

Ahh, thanks J Bowers, interesting news. Markets are almost never rational..., since the "energy" balance and thus the financial balance of the UK is more than tragic (though maybe not more than that of US :-). Declining oil production, housing bubble bursting, trade deficit, slow or no growth, and all that...

so I am waiting what will be the next heaven for investors? Japan? :-)

Cheers,

Alex

That $1 billion bond futures trade.

It's a very weird description of it. He doesn't even tell us if it's long or short (are they betting that bond prices will fall or rise?).

He also seems very confused as to what margin actually is. An $850 million trade. Is that the nominal amount covered by the futures?

He says that the transaction was some 8,500 futures (The trade was for block trades of 5,370 10-year Treasury futures executed at 124-03 and 3,100 Treasury bond futures executed at 125-01.) and each treasury bond future covers 100,000 $ nominal of bonds.

So the total amount of nominal bonds covered by the trade is that $850 million (ish, ish, because the futures were not bought or sold at par).

In the context of the $14 trillion or so of outstanding Treasuries this is very small beer indeed.

And in the context of 600,000 Sept 2011 Treasury 30 year futures, 1.4 million open 5 year note futures, 1.8 million open 10 year note futures.......small beer again.

And to margin: the speculator has not put in $850 million: that's the nominal amount he's exposed to. On a 10% margin (which is what he assumes) then the speculator has plonked down $85 million.

It might well be a fairly large futures trade (I don't really know) buty it's absolutely nothing like what he's saying it is.

Tim Worstall -- "He doesn't even tell us if it's long or short "

He does. Short.

>"sea ice (which I see is looking better just now)"

It is looking even better now. Intrade's last price was 93! However I think that seems a little extreme and I am glad to have been on the selling side of that transaction. Current range is back down to 76-84.

[It will be interesting. In should get into Intrade sometime -W]