uesday, October 19, 2004 By Jonathan Weisman and Ben White The Washington Post

NEW YORK . On Sept. 9, as it must frequently do, the U.S. government turned to Wall Street to raise a little cash, and Paul Calvetti bet that demand for $9 billion worth of long-term Treasury bonds would be "huge."

But at 1 p.m., as the auction opened and the numbers began streaming across his flat-panel screens, the head of Treasury trading at Barclays Capital Inc. slumped in his chair. Foreign investors, who had been voraciously buying Treasury bonds, failed to show up. Bond prices cascaded downward, interest rates rose, and in five minutes, Calvetti, 38, who makes money by bidding on bonds at one price and hoping market demand lets him quickly resell them at a profit, had lost $1.5 million.

"It's amazing," he gasped, after the Treasury Department announced that Wall Street traders, not foreigners, had been left to buy virtually the entire auction. "I don"t think I.ve ever seen this before."

The most recent auction of 10-year Treasury notes may have been a fluke, a momentary downturn in one aspect of the massive world market for U.S. government and private-sector bonds, stocks and other securities . a market so large and diverse that it has long been the world.s safe haven. But a rash of new data, including Treasury Department figures released Monday showing a net sell- off by foreigners of U.S. bonds in August, has stoked debate over whether overseas investors . private individuals, institutions and government central banks . are growingly dangerously bearish on the U.S. economy.