Archive - Jan 2, 2010 - Story

Zero Hedge recently wrote about the dramatic transformation in the supply/demand landscape in US fixed income issuance, where courtesy of the Federal Reserve, marginal buyers needed to fill a demand hole of just over $200 billion. This number skyrockets elevenfold in the coming 12 months, all else being equal. And already the US Government is lining up the very first offering for 2010: in the first half of January we will likely see the following being offered, likely in increments of tens of billions:

* 28-Day Bills - January 7

* 91-Day Bills - January 14

* 182-Day Bills - January 14

* 364-Day Bills - January 14

* 3-Year Notes - January 15

* 10-Year Notes - January 15

* 30-Year Notes - January 15

Yesterday's post on documented Treasury outlays for unemployment insurance benefits, spurred various questions which we wanted to shed some light on. To recap: the gist of the post was that the divergence of average monthly premia paid by the Federal government, superimposed with actual changes in the population of those collecting unemployment insurance (per the government's data) has diverged dramatically. The key premise in the analysis is that average monthly "allowance" paycheck has been relatively flat, and while there have been marginal changes ($25 dollar increases to a fraction of the population eligible for such increase), the core of the problem is captured by the chart below. As one can see, the average monthly payment since the beginning of Fiscal 2008 has been $1,207. If one excludes the divergent period since March of 2009, the average was just $1,109 per month. Yet the most recent data indicates that in December, according to the government's data, the actual outlay came down to $1,536, 21% higher to the total average, and 28% to the narrower average payment of $1,109. Is the government engaged in another, stealth stimulus by gradually padding unemployment insurance benefits? After all the money printer is on, and with banks not lending, what easier way to get the money straight to the (unemployed) population.

California was counting on $2 billion dollars or so in cost savings generated by Governor Arnold Schwarzenegger's mandatory 3 day a month furlough program for state workers. The Service Employees International Union was having none of that sort of thing on its watch, so they sued. In the process, the SEIU managed to have the program declared "illegal" by Alameda County Superior Court Judge Frank Roesch primarily because, near as we can tell, savings wasn't coming out of the general fund, but separate state funds designed for the relevant agencies. Off-budget savings, it seems, don't count. We are fairly sure this will dim ever-so-slightly the brightly glowing esteem in which Zero Hedge readers hold unions generally. Still, resort to the courts to lock in the porky bits in state budgets is not just a time honored tradition, it is a political tool with teeth, and it could mean fiscal doom for more municipalities than just California.