If more money was withdrawn than invested in US equity products during 2009,
coincident with record new and secondary stock offerings,
amid the least amount of corporate stock buybacks
and the most insider selling in recent history, where did the assets needed
to recover trillions of US stock market capitalization
and borrowings by the US Treasury come from?
“We cannot identify the source of the new money
that pushed stock prices up so far so fast,"
[TrimTabs Investment Research CEO] Charles Biderman said…
The source of approximately $600 billion net new cash
necessary to lift the market's overall capitalization by $6 trillion last year,
could not be identified by TrimTabs…
The money, he said, didn't come from traditional players
such as companies, retail investors, foreign investors, hedge funds or pension funds."
MarketWatch, January 5, 2010
“The majority buyers of Treasury securities in 2009 were:
[Source: US Treasury, Flows and Outstandings, 3rd Quarter, 2009]
1. Foreign and International buyers who purchased $697.5 billion.
2. The Federal Reserve who bought $286 billion.
3. The Household Sector who bought $528 billion to Q3
– which puts them on track purchase $704 billion for…2009.
…we were surprised to discover that "Households"
had bought so many Treasuries in 2009.
They bought 35 times more government debt than they did in 2008.
…This enormous “Household” investment
was made outside of Money Market Funds, Mutual Funds, ETF’s,
Life Insurance Companies, Pension and Retirement funds
and Closed-End Funds, which are all separate reporting categories.
…2009 has been witness to spectacular government intervention
in almost all levels of the economy.
This support requires outside capital to facilitate, and relies heavily
on the US government’s ability to raise money in the debt market…
…the regular buyers of US debt are no longer buying…”
Eric Sprott & David Franklin