oftwominds-Charles Hugh Smith

Saturday Quiz: Truffaut's Last Film

What was French director Francois Truffaut's last film?

Confidentially Yours (French title: Vivement Dimanche!) 1983.

This film is considered an homage to Truffaut's favorite director, Alfred Hitchcock. I recommend it as pure entertainment. In black and white, with subtitles.
Truffaut died in 1984 at 52 of a brain tumor.

At knowledgeable film buff/contributor Don E.'s suggestion, I am adding Truffaut's Shoot the Piano Player to my French Tough Guys list which I reprint below for your viewing pleasure.
A Man Escaped (1956) Robert Bresson
Pickpocket (1963) Robert Bresson
Touchez Pas au Grisbi (Hands Off the Loot)(1953) Jacques Becker
Le Trou (1960) Jacques Becker
The Wages of Fear (1952) Henri-Georges Clouzot
Rififi (1954) Jules Dassin
The Crime of Monsieur Lange (1935) Jean Renoir
Le Samourai (1967) Jean-Pierre Melville

Astute reader Michael S. offered this excellent comment on yesterday's entry Interest Rates and Supply and Demand:

You recent article on “Interest Rates and Supply and Demand” made a lot of sense, talking about how there has been a contraction in credit and a drop in credit spreads. However, near the end of the piece you then claim that demand for US treasury debt is dropping, but this claim doesn’t make sense. You had already pointed out how the intense demand for US t-bills has driven yields to unprecedented lows. If anything, the evidence seems to show that demand for US treasuries is increasing.

Basically, I am just saying that your claim that demand is falling for US sovereign debt seems to come out of the blue, and I would like to know if there is some data you are using to help come to this conclusion. If there is some information that shows people are dumping T-bills at faster rates, that would be very interesting to see (although it would seem to contradict the falling yields).

I responded thusly:

There seems to be high demand for 90-day T-bills because people can't even trust money market funds anymore, but I'm not so sure about the 10-year and up maturities. I have read references to central banks cutting their exposure to dollars (South Korea, etc.) but I didn't note the sources--I'll keep an eye out for that.

I should have distinguished between short and long-term T-bills.

And Michael added these thoughtful points:

Yes, the demand for short-term t-bills is extraordinary, but even the demand for 10 year notes seems to be robust, since yields really haven’t gone up there.

We seem to have some contradictory actions occurring in the market. The US dollar is dropping in value, yet demand for treasuries is robust. Is the dollar decline telling us that interest rates are going to rise, and investors are going to shun US debt? Or is the debt market currently telling us that a flight to safety is going to result in very low interest rates and a rising US dollar?
I would argue that this dichotomy won’t last long (i.e. falling dollar and rising t-bills). At this point, however, I don’t think we have enough evidence to know which way things will go. The unfolding credit crunch tips me a little more to the dollar appreciation camp since a contraction in the money supply (i.e. credit) should lead to a crash in asset prices and a rise in the value of currency. However, I don’t have evidence for this view, and will just have to wait and see how this bifurcated market works itself out.

Either way, I don’t think the outcome will be good for the over-all economy. A rise in the value of the dollar, and t-bills, would be disastrous for debtors, and utterly destroy the financial and housing industry. A collapsing dollar will destroy savers, and the purchasing power of the consumer.

Readers, I apologize for not updating Readers Journal the past few weeks. I have been dragging through my second chest cold of the year--what some call "the 100-day cold" or "100-day flu" and am slowly recovering my usual energy. I will post three new essays and recent comments next week. Thank you for your patience.