2 ms·
How is it possible to sell U.S. Treasuries in secret or in a dark market while still providing an ostensibly transparent market for Treasuries? Those two things
by sailfast 10y ago
How is it possible to sell U.S. Treasuries in secret or in a dark market while still providing an ostensibly transparent market for Treasuries? Those two things seems counter to each other.
A deal with this structure as a preference seem extremely misguided, and I'm not sure if the secrecy was requested by the Saudis or by the Nixon / Kissinger NSC / Cabinet which was prone to secrecy for no reason. Either way, one more crazed "feather" in their cap that greatly influenced the future of the country for better or worse.
- PhantomGremlin 10y agoHow is it possible to sell U.S. Treasuries in secret or in a dark market while still providing an ostensibly transparent market for Treasuries? Those two things seems counter to each other. Let's consider equities first. A huge amount of invested money is indexed, which basically means not doing active investing but simply tagging along with the price discovery done by more active market participants. That seems to work out pretty well. Not perfect, but good enough. Why can't treasuries be the same? There's such a thing as a "noncompetitive bid"[1], which means you agree to purchase Treasuries at the same price that the smarter money chose to purchase at. Right now there are low limits on how much can be bought by noncompetitive bids. But perhaps the Saudi's just get that price for however much they want to buy? The treasury market is huge huge huge. It probably remains reasonably "transparent" regardless of what the Saudis buy. [1] https://www.treasurydirect.gov/instit/auctfund/work/work.htm https://www.treasurydirect.gov/instit/auctfund/work/work.htm