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Obama To Reduce Budget Deficit By $262 On "Fewer" Than Expected Bank Failures
Archive this one for the funny pages. It has been leaked by administration officials (and sponged up by Bloomberg), that on August 25, when the CBO releases its updated budget estimate, the 2009 deficit is expected to decline from $1.825 trillion to $1.58 trillion. And, get this, one of the reasons for the reduction is the FDIC spending $78 billion less, presumably due to "fewer bank
failures than the administration anticipated." Pardon us, but last time we checked, not only did the FDIC have no cash left in the FDIC, and was effectively in a debtor position vis-a-vis the administration, but of the top 4 banks pending for blow up, Colonial was under (granted with some arbitrarily optimistic loss expectations), Guaranty was about to be hawked over to a few siesta loving left midfielders, and Corus was about to... well, we are not quite sure what the hell Corus is doing these days.
Furthermore, YTD something like 76 banks have already blown up. But for some odd reason this will now be spun as a positive, and the FDIC will get a commendation for not only letting a staggering number of banks go under (a record, except for the S&L crisis), but for actively mismarking the FMV of the loans carried by these books and thus papering over the full impact from bank failures to the DIF.
The deficit will amount to 11.2 percent of the nation’s
gross domestic product, with spending totaling $3.653 trillion
and revenues amounting to $2.074 trillion, the official said. In
May, the administration had pegged this year’s deficit at $1.84
trillion. The estimate is for the fiscal year ending Sept. 30.
Whether anyone is gullible enough anymore to buy any optimistic budgetary projections is hopefully not debatable: just a week ago the CBO announced that the July deficit was set to grow by $181 billion.
In the grand scheme of things, the budget deficit will likely end up being revised substantially higher in Q4, but by then the economy will likely be reeling by nearly a trillion more in treasury auctions (and don't exhale or the house of treasury cards will collapse, and if we have an auction failure all bets are off), plus the new progressive tax rate will likely already be made effective... The re-revised budget will thus likely end up being swept under the rug at a time when the economy is sure to have much more critical matters to deal with.
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262 billion.
For a second there I thought they were really bragging about reducing it 262 dollars! haha.
I'm sure this means a huge rally tomorrow...I see the words 'less than anticipated', which always means rally!
don't forget as the recesion eases...
Less bank faliures, Obama makes good on promise to reign in budget, as the recession eases.
man I should write for Bloomberg, I'm pretty good at this....
No offence, but it might show what corporate HQ thinks about the US audience.
this bidu stock is way overvalued
good articles; my newest bookmarked finance site ..http://www..
hat tip: finance news & finance opinions
Overpath are you tarded?
otherwise M$M right on cue
http://www.msnbc.msn.com/id/32487193/ns/politics-white_house
Good one.
Actually Obama just took all of the spare change he found in between the couch cushions in the White House to a CoinStar machine.
Or perhaps that "Cash for Gold" plan that The Onion ran gave him an idea.
Obama also saved 86% of jobs. It's all in the presentation.
Yep, the bullshit is stacked high. Do people really buy this stuff? Answer: yes, they love it. Hope and change. I can't believe Americans couldn't see throught that.
Is this a gambit to improve the chances of passing healthcare reform before the fecal material hits the rotary device?
in my view, absolutely yes. the obamas seem to be betting everything on health care reform....and the MSM is certainly portraying it that way. I saw a Jon Stewart show couple of episodes back where he did the clip thing showing thousands of cable news pundits proclaiming that obama is a lame duck if health care does not pass (it was pretty funny).
Without a doubt. They are cooking these numbers for the healthcare debate after the recess so they can claim Obama is doing a much better job on the deficit than previously thought. When you have polls showing the high deficit as being at the top of the list for Americans' concerns, then these new numbers will be waved around like nothing we've seen before.
Last I heard Sheila was saying 500 banks would fail before this crisis ends. I'm no Fields Medal receipient, but 500-76=a lot more failures to come. But hell, they mess with all the econ numbers anyway, whats the harm in messing with a few more.
"and if we have an auction failure all bets are off" Hm.. I'm not sure how we going to have a failed auction? With Primary dealer "have to" pick up the slack, how we fail? And if all fails, I'm sure FED have someway to "make" the indirect bid much higher then it really is...
When the US fights World War III, the economics will
improve, we just need another Hitler, then everything
will be fine.
We already have another Hitler. The problem is, he's our President.
Only if the new Hitler sucks the whole rest of the civilized world into war and leaves us alone for the first five years, so we can export manufactured goods to countries that are too busy making guns and bullets and sending their young men to die. Otherwise a war would only prolong economic suffering.
Um. I'd save that money for the FDIC if I were them. Or is it just going to be night of the living dead banks from here on out?
less QQ more pew pew
Don't worry the budget will decrease due to UBS agreement with the IRS for the 4,500 UBS account holders. That is where the revenue comes from in the potential of 52,000 U.S account holders....LOL
Gents, this is nothing more than a game of hot potato, a shell game, or follow the bouncing ball. They are moving the toxic derivatives and bank losses to another company, vehicle, government backstop - but in a game of musical chairs the music always stops...I can almost hear the faint sound of a fat lady singing a cappella.
Same formula, GOV rallies on less than expected loss. What companies may have done is actually recorded larger losses in excess of actual and kicked it into their reserves knowing everyone would miss. Then can then dip into the cookie jar for a few quarters and reduce their accruals to report earnings.
They all think they are being clever, but eventually we will all turn our backs on them due to a lack of trust, withdraw the cash from our banks, and keep it in our house or buy gold. This would actually benefit us all, since the bankers are paying 0% interest and they are using our deposits to lever up 50 to 1 purchasing stocks and driving our commodities up - to quote the Fly - "You don't eat a $100 tomato, a $100 tomato eats you".
These days there is no single entity, rather there are 6 large hedge funds located in the Reston Virginia, and DC area who are the commercial accounts.
The commercial accounts take their direction from either the Treasury or Fed depending on which branch has the lead. These hedge funds are the ones placing large orders to GS, JPM, etc... Market moving orders. So when you hear that 'paper is buying' large quantities on the floor you cannot really tell who it is and all you can do is speculate. It looks like it's coming from GS but they are just executing an order for a client. There is no trail back to Uncle Sam.
Do you really think the government would go directly to GS or JPM to place orders? That is laughable. Anyway the end result is the same, you are all getting gamed.
And our hero Tyler is the only one who is exposing the `real` truth so stay tuned to Zero Hedge.
(Here is an aerial photo of PJM Capital near Reston, Va. Possibly a front operation for the President's Working Group according to the commenter.)
http://fofoa.blogspot.com/2009/04/covert-market-operations.html
I'd be interested to hear more about the Reston 6.
I would too -- looking for more info now.
I posted this question on another post, but could it be possible that China in keeping with their stated goal to buy companies and commodities and diversify out of US debt be in fact buying up our equities through the dark pools?
It serves a few purposes for them, it diversifies them into commodities, stocks, and bonds (already have this) with more influence over all of those and the idea was probably sold to them that it increases US consumer confidence - so that we start buying their crap again and save their economy. The US may have seen this move, and raised them a few billion in this poker game by buying into their over-bloated chinese stock market. These finance war games can be fun, now either party could pull the rug out.
They would probably buy through dark pools, and Goldman Sachs is an advisor to China, so China is also being front run.
I think this is possible if not probable. Paulson made 60+ trips to China as CEO of Goldman Sachs. Geithner grew up in Asia and worked for Kissinger and Associates, speaks fluent Chinese, etc.
absolutely is possible and I think likely. if i were the king of china, i'd sure as hell be doing that.
g "wherewithal",he put "where within"(the only possible word to be used in that space was wherewithal). I mean the guy dosn't even care to use his spellchecker.
this bidu stock is way overvalued
good articles; my newest bookmarked finance site ..http://www..
hat tip: finance news & finance opinions
I've been wondering if they were using Social Security funds or their own to buy indexes. Several months ago an econ blog I read said that there are two LLC's owned by the Fed that have not disclosed what they own. It is confidential.
Maiden Lane I was created to take on Bear Stearns' bad exposure so JPM would buy them. The FED had to create what is essentially a SPV because they can't buy asets by law. Maiden Lane II and II grew out of the Maiden Lane I experince and are the FED's LLC true blackboxes (related to AIG).
"This was all exposed at today's hearing. And despite repeated requests from Senators on both sides - Dodd, Shelby, Corker, Warner - the Fed is still refusing to say who it bailed out through Maiden Lane II and III."
http://www.campaignforliberty.com/blog.php?view=12674
http://www.newyorkfed.org/markets/maidenlane3.html
Surprised as you may be to know this, but there ain't no funds in Social Security. BTW, who needs any "funds" when you got a printing press instead?
Like I said before - it's all easy to figure out once you realize/accept that US Government is nothing but a mafia organization.
a gang of thieves, writ large.
Or just wait until "the populist uprising demanding that taxpayer money stop being pledged against the bankster losses" is deemed to have reached critical mass (just so happening to match the time where the vast majority of toxic crap has been purged from the chosen banks onto the Treasury/loss-sharing). Then the big contraction happens, and the crap really hits the fan - making all the deflation and anti-interventionists happy.
If (more like 'when', but you didn't hear it from me) there is a Treasury auction failure, there will subsequently be (paradoxically) a inflow into Treasuries and the dollar. You ask yourself, 'but how can this be?!'. Because an auction failure would trigger a crisis of valuation confidence in riskier asset classes.
Doesn't make sense? That's alright. You'll see what I mean when (er, I mean 'if') it happens. This scenario may indeed not occur, as an inflow to Treasuries and the dollar will already be underway as QE comes to it's (presumed) conclusion.
"...as an inflow to Treasuries and the dollar will already be underway as QE comes to it's (presumed) conclusion"
That's an interesting thought. Pump the market until QE is going to end, then tank it to drive people towards treasuries once the Fed isn't buying any more.
Well, it's not that there is a directed 'tank it' operation, rather, it is a matter of liquidity (QE) evaporating. (Unless one is guided by the (unlikely) premise that issuance of credit from the financial sector will increase markedly as QE concludes.)
Owebama can :best Cartman voice: SUCK MY BALLZ
is that a percentage of pre-crisis GDP or post-crisis GDP?
These games are getting tiresome. When are the lies gonna get exposed, so we can get the real truth? When will everything collapse? Please tell!
I think by October / November. There's alot of factors converging soon.
Oh i get it. Instead of hiding 90 percent of the bad news they are going to hide 99 percent of it. This is going to work. I have a good feeling about this.
Fooling some of the people all the time.
Does this mean that the proposal to Geithner's "critically important" request that congress increase the national debt limit wasn't well received?
This probably means that Corus and Guaranty won't be closed before October 2 and that only a few banks with assets under 100 Million will be closed the next 6 Friday nights.
BTW Did anybody notice that the FDIC lied when their press release estimated the cost of Colonial's closure at $2.8 Billion. The FDIC assumed: (1) the worst $3 Billion of Colonial's assets (2) 95% of any losses from the next 5 Billion of assets (3) 80% of losses from the next 10 Billion of assets and (4) losses resulting from all litigation on CNB's mortgage fraud.
Even under BBT's overly optimistic scenario (which assumes that their losses will be limited to the 1st 5 Billion of transferred assets), the FDIC will lose $7.7 Billion on this deal. - without counting the litigation costs.
Even if the deficit this year is $1.58 trillion, it's still an absolute travesty. The worst deficit in history was last year at $455 billion.
we fail? And if all fails, I'm sure FED have someway to "make" the indirect bid much higher then it really is...
this bidu stock is way overvalued
good articles; my newest bookmarked finance site ..http://www..
hat tip: finance news & finance opinions
This better than expected number was pretty obvious around a month ago when we had just barely passed $1trillion. There was no way they were going to spend $800 billionin 10 weeks.
I think they might be including the returned TARP money in this calculation. Dirty pool. The money has been borrowed, just not spent, technically. It's sitting in an account at the Fed. I don't know how they did it but in Feb there was supposedly less than $130 billion left of the 700 of TARP funds and as of a couple of weeks ago it was over $300billion. Or so said the Treasury guy at a hearing.
The FDIC has a $500 billion 'line' of credit so they are not broke. Treasury can borrow it any time they want.
The stimulus money was only 10% spent a couple of weeks ago. More grist for the better than expected mill.
Tyler, I would not have expected you to fall for the whole "reduced" deficit media meme.
Yeah, the deficit is by far the highest ever and you are going to let the media get away with "Obama reduced the deficit".
I don't know what to believe anymore. This is insane the amount of b.s. that can be spun is enough to drive me to drinking a lot. WTF!
"This is insane the amount of b.s. that can be spun is enough to drive me to drinking a lot"
Welcome to my world hahaha
It'll rewind and come out clean in 14 days.
Word out of one of the Graduate Schools of Banking is that 500 to 1000 banks have yet to fail. I was told that 50% of the institutions in a west coast state could fail on CRE exposures alone.
I have a hard time determining who the government believes is reading these reports by these agencies. 85% of the population has no idea what GDP is. 2/3 of the population cannot find Iowa on a map. It is though they think no one is reading the reports so they print anything they wish.
The amount of useless information floating in the printed world is staggering. The amount of time we waste reading a small portion of it is even more staggering.
None of my buddies care about budgetary reports.
Who is reading and believing these reports?
Can an auction fail? The primary dealers have to make a bid. This is something the FED does not have to worry about
They may be obligated to make a bid, but what happens when that bid is below expectations? Repeatedly?
How many months subsistence is obligatory? 6? 12? better be self-sufficient???
Obama To Reduce Budget Deficit By $262 On "Fewer" Than Expected Bank Failures.....?
They said that it could not be done,
He said "Just let me try."
They said, "Other men have tried and failed,"
He answered, "But not I."
They said, "It is impossible,"
He said, "There's no such word."
He closed his mind, he closed his heart...
To everything he heard.
He said, "Within the heart of man,
There is a tiny seed.
It grows until it blossoms,
It's called the will to succeed.
Its roots are strength, its stem is hope,
Its petals inspiration,
Its thorns protect its strong green leaves,
With grim determination.
Its stamens are its skills
Which help to shape each plan,
For there's nothing in the universe
Beyond the scope of man."
They thought that it could not be done,
Some even said they knew it,
But he faced up to what could not be done...
AND HE COULDN'T BLOODY DO IT....!
Benny Hill
Becky in Europe just read this story on CNBC and almost choked because she was like trying to make sense of this as she was saying it. LOL
"pushing back" the deficit till 2010.
the more positive spin i hear, the more fidgety i become. how machiavellian to claim that order is being restored - calamity has been averted - only to have said order derailed by some "unexpected" natural disaster or terrorist attack. despite the herculean efforts of our trusted government... alas, to no avail!
when bush-in-blackface spoke of "change," he really meant it.