permaculture

[Marjory <forestgarden@gvtc.com>]

As you might already know, most foreign investors are no longer buying 
US debt, and it is primarily the Federal Reserve supporting the dollar 
now. I didn't realize that the Fed was going to end its bond purchases 
in June (see below).  No wonder Bill Gross is actively *shorting* the 
treasuries...  The rich make money in good markets and bad. 

If the Fed stops buying treasuries what will the US Gov't use to pay?  
They will strip Gov't retirement funds for sure, and whatever is left in 
social security, but just how many days or weeks after that will the US 
Gov't start to default on its debt?  That is definitely the beginning of 
TEOTWAWKI.

June also looks like it is going to be a really rough month for the 
stock market as the earnings reports are going to very bad for all those 
companies affected by lack of Japanese parts.

Buckle up.

*Marjory


*


 PIMCO goes short US government debt, raises cash holdings

SINGAPORE, April 11 | Mon Apr 11, 2011 2:51am EDT

SINGAPORE, April 11 (Reuters) - PIMCO has shifted to a short position in 
U.S. government-related debt in the world's largest bond fund, while 
also raising cash holdings in a sign of the asset manager's serious 
concerns about the U.S. fiscal outlook.

The portion of PIMCO's $236 billion Total Return Fund held in U.S. 
government debt, including U.S. Treasuries, was -3 percent of total 
assets in the fund as of March, down from zero in February, the firm's 
website showed.

Cash equivalents, securities with maturities of less than a year, rose 
to 31 percent of the fund's assets compared with 24 percent in February.

* PIMCO and its outspoken co-chief investment officer Bill Gross have 
been raising alarm this year about who will support Treasuries once the 
Federal Reserve ends its bond purchase program as scheduled in June.*

The Newport, California-based fund manager shed all its U.S. 
government-related debt holdings earlier this year and has begun to 
wager against the asset class.

Washington narrowly averted a government shutdown on Saturday after 
Democrats and Republicans agreed on cutting $38 billion in spending for 
the fiscal year. [ID:nN09197615]

The 11th hour compromise probably had little impact on the investment 
strategies of Gross, who said in an April newsletter that the U.S. 
government was "out-Greeking the Greeks."

The entire U.S. yield curve has moved higher since the Fed began its 
second quantitative easing program in November 2010. Yields on 10-year 
notes have risen 80 basis points since then to 3.59 percent. (Reporting 
by Kevin Plumberg 
<http://blogs.reuters.com/search/journalist.php?edition=us&n=kevin.plumberg&;>)