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Republican Kevin McCarthy Says No Debt Deal Likely Today, Or Over Weekend: Treasury Now Projected To Have -$15.5BN Cash Balance On August 15 $31BN Coupon Date
Well, it looks like there will be no debt ceiling hike enacted prior to August 2 at which point the money really does run out. From The Hill: "The No. 3 Republican in the House said Thursday night that he didn’t expect any surprises in the deficit debate over the weekend. “I do not see something springing this weekend,” Republican Whip Kevin McCarthy (Calif.) told conservative radio host Hugh Hewitt. McCarthy pooh-poohed reports that the White House and Republican leadership are closing fast on a deal on the budget deficit and raising the debt ceiling. “There is no deal,” McCarthy said, using the same phrase used by the White House and House Speaker John Boehner (R-Ohio) following reports they were nearing a deal on Thursday. McCarthy said Republicans would not rush to push a bill through in order to meet the Treasury Department’s Aug. 2 deadline. According to McCarthy, House Republicans will seek to follow their own “three-day rule” in order to allow members of Congress to debate the plan.
And the kicker:
“As a member of Congress, I’m going to want to read all the way through it,” McCarthy said. “And if you think this conference is going to go vote on something willy-nilly, they will not.”
McCarthy said he would expect any legislation related to the debt ceiling or deficit to spend those three days in the House and “at least three or five days” in the Senate.
Republicans will not be like the Democrats and “run it right to the floor,” McCarthy said
Now the reason why this is bad is because as Stone McCarthy calculates, "we expect Treasury to have less cash in early August than we thought previously." And here is where it gets very tricky since the money generating machinery won't be in place on time: "we now show Treasury with a negative cash balance of $15.5 billion on August 15, which implies that Treasury wouldn't have the resources to pay $30.6 billion in interest on that day."
SMRA has more:
At this point, we expect Treasury to have less cash in early August than we thought previously.
In mid May, for instance, we thought Treasury would open the day on August 2 with cash of about $85.0 billion. (See Chart of the Day: Imagining an August Without Borrowing, 5/20/11.)The main reason for the lower cash balance is that Treasury has been issuing much less in bills than we had been expecting. In retrospect, we should have paid more attention to our own forecast that Treasury wouldn't be able to settle the July 2-, 5- and 7-year notes on August 1, without violating the debt limit. In late April, for instance, we projected that the settlement of those auctions would cause Treasury to violate the debt limit by about $24.0 billion.
What Treasury has done is to keep bill auction sizes lower than it would have otherwise to accommodate the settlement of those auctions, which were announced today and kept at their recent sizes. We think that explains the $4.0 billion cut in the 52-week bill announced today. Once the debt limit is increased, we think the Treasury will be ramping up bill auction sizes pretty aggressively. We will discuss that in more detail next week in our projections of Treasury borrowing needs for the next two quarters.
The table above summarizes our cash flow projections for the first two weeks of August, assuming that there has been no increase in the debt ceiling. The projections assume that Treasury will be able to at least roll over maturing debt on August 4, 11 and 15. That's probably becoming a more questionable assumption given all of the statements coming from the rating agencies. As the table shows, we now show Treasury with a negative cash balance of $15.5 billion on August 15, which implies that Treasury wouldn't have the resources to pay $30.6 billion in interest on that day.
If our projections are fairly accurate at this point, we still think the Treasury has enough options available to scrape together the extra cash to make the interest payment. Treasury has provided less detailed information than we would like on how much of its extraordinary measures it has used to create borrowing authority. Last Friday, Treasury announced that it would suspend the reinvestment of securities issued to the Exchange Stabilization Fund, and that by doing so, it was using the "last of the four previously announced measures available to keep our nation under the statutory debt limit."
Where can Tim Geithner squeeze a few last pennies from?
Again, Treasury hasn't been all that explicit about how much of each option has been used. But we're going to assume that, by August 2, it will have used all of the borrowing authority created by measures related to the Civil Service Retirement and Disability Fund, the G-Fund, and the Exchange Stabilization Fund. That would leave $5.0 billion that could be created by redeeming the remaining $5.0 billion in bills in the Supplementary Financing Program Account. An announcement regarding SFP could come on Monday.
Treasury could also replace some Treasuries held by the Civil Service fund with debt of the Federal Financing Bank, which would create about $4.8 billion in borrowing authority. Treasury has given short shrift in various statements about using the Federal Financing Bank, saying it wouldn't create a significant amount of borrowing authority. But if you're trying to scrape together $15.5 billion to make an interest payment, $4.8 billion gets you 30% of the way there.
Finally, if Congress hasn't increased the debt limit by August 2, Treasury Secretary Geithner would be on solid ground in extending the length of the Debt Issuance Suspension Period (DISP), which would allow Treasury to make further use of the CSRDF. Declaring that he expected the DISP to last another month, for instance, would provide Treasury immediately with another $6.0 billion in borrowing authority.
In sum, Treasury is going to start August with less cash than we thought previously. We still think Treasury could probably pay its obligations through August 15, but it's become a much closer call.
Bottom line: if there really is no debt deal today, the August 15 coupon payment is looking increasingly shaky.
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There is not "your reality" or "my reality". Let's start with the basis that the world is round, and there is gravity. Newton laws apply. Are we still on the same page? Ok, let's continue then. Defaulting is bad for the economy. Worse that going in debt. Simply because one can default at any point, this is not something that's contingent on something else. Pushing country into abyss is treason!
Loco gonna give ya a pearl........not a pear............Reality is that fucking lung full of air in you RIGHT NOW............everything else is just a wish or a dream.......Fuck this shit what theyre doing and saying......Fuck America, Fuck the Banks Fuck China, Fuck Russia and OPEC...........Fuck them all. There are no Fucking accidents......just fucking INTENDED Consequences...........You aint in control, those fuckers aint in control......just worry about your lung full of fucking air right now
and if you dont like that pearl.......well Fuck You too:) or :(
Loco say "Dont that feel goot?".......BWHAHAHAHHAHAHHA
Indeed "loco". A rant of a 16-year old teenager. Grow up.
16 year old gottie more sense than to worry about this BS, you WallStreetAssHat............so Fuck You............BWHAHAHAHHAHAHHA
A 16 year old whose blood boils in hormone and overuses the word fuck is not yet done well enough to function in society.
That is why we keep Colts in the Barn away from the Fillies and Mares.
Defaulting bad for the economy? worse than going into debt? BWAHAHAHAHAHA...so if you already have a debt load you can in no way EVER pay back, and unfunded liabilities conveniently off the books that you can NEVER pay out, exactly how can you not default? That is reality plain and simple there is no other argument here to make. Do zombies know they are dead? That is the proper argument. The system is already dead. Feeding it more brains to keep it walking (debt ceiling increase) will only work until decomposition finally makes it fall apart. What is treasonous is hitching the people to debt servitude for the rest of their life. That's reality. Your talking points are not reality. They are fantasy we need debt to continue to 'prosper' because we already have too much debt so lets get some more debt and we promise we will pay it all back. Sounds like a kids argument on having more cookies before dinner, even though it will ruin his dinner he promises it won't. Well it's dinner time no more cookies, time to eat your peas bitchez!
So what. Eliminate all corporate subsidies, all non-essential personnel (that would be a lot), give the rest a paycut - problem solved.
It's unbelievable that we are talking about something like this...
Let the Bank Runs Begin--- It's my Money and I Need it Now !
Fuck it............as Loco sits at the Black Eyed Rooster Cafe whistling "Lets Dance"
BWHAHAHAHHAHAHAHHAHA
This whole thing is about power. This has been the endgame all along:
http://www.nationalmemo.com/article/exclusive-former-president-bill-clinton-says-he-would-use-constitutional-option-raise-debt
picer,
Unconstitutional.............not passing muster.
Oblameuh, has already run this by his legal teams.
0"In an unsurprisingly dirty trick to avoid the optics of making his Democratic caucus vote to filibuster a bill supported by two thirds of Americans and that includes a balanced budget amendment they previously supported, Senate Majority Leader Harry Reid called a vote this morning to simply table the House plan to raise the debt ceiling and cut spending in order to avoid a historic default.
The party line vote was 51 to 46 in favor of tabling. While I didn’t expect the twenty Senate Democrats that were previously on the record in support of a balanced budget amendment to keep their word, I did expect a handful of moderate Democrats to at least allow the plan to be debated and amended (if not out of principle, at least out of a recognition of the electoral consequences of opposing fiscal responsibility)."
"The Senate, on a motion to table brought by Harry Reid, just killed the Cut, Cap & Balance Bill passed in the House without any floor debate.
Unlike a motion for closure, which would have required a day of floor debate, Harry Reid managed to kill the bill without any television clips of Senators staking out their positions.
Since there is no other plan proposed by anyone, including Senate Democrats and Obama, this leaves the nation with no plan to deal with the debt ceiling.
Mark Knoller of CBS News tweets that having killed the bill, Harry Reid has decided that the Senate should take the weekend off:
http://legalinsurrection.com/wp-content/uploads/2011/07/Twitter-Mark-Kno...
And just remember - according the the MSM and several OfA hacks in this thread O'bummer, Reid and Pelosi are "the adults" in this debate.
+1, Obama's running a $1.6 trillion deficit but it's "the Republicans" fault for not upping the credit limit.
I hope the House sends the same bill up again next week. Harry the Parry Reid. It is obviously all about politics for him. Not a care about the country or what he is helping do to future generations. Good new nickname for him 'Harry the Parry'.
They should up budget cuts a trillion before sending it back. And then another trillion the next time... and the next time... in a few weeks there might actually be real money on the table.
Ya know, if the house voted again on a slightly edited version to generate a new bill by 9 AM monday... the Senate will have to do this all over again.
Oh yes and the Cspan 2 showed the Senators talking well past bedtime last night.
You do realize that even if the Senate debated the measure, the call for a constitutional amendment would have essentially killed the effectiveness of any measure and would still not have addressed the fact that Congress hasn't approved a budget for the past two years!
And our elected reps want a weekend off......
It is simple. Do not raise the debt ceiling. Cut spending!
They got it and are gone already.
im sure the accounting wizardry is being put in full effect and will make quick work of this problem. All this “no deal” talk is only setting up the rally even more.
Hate to break the bad news to ya, but Turbo Tax Tim doesn't know how to count;)
Also, so if at the slight wiff of a deal yesterday the market fuckin almost blew it's load in a matter of minutes, why is that today when it doesnt look like a deal is coming we're just moseying along with a mixed session?
retarded.
Is it just me or did anyone else see "Kevin McCarthy" and immediately think of "The Invasion of the Body-Snatchers?" Wait, this is beginning to make sense....
I thought it too. Is it the same dude?
hmmm...markets fly like an eagle when 'maybe yes' debt deal, but only drop 1/3% with no deal...who says the NYORKFED aint a POS
Nah... Not so soon. They have a countless number of accounts to loot before it comes to the old shoulder shrug...
Maybe they could sell GM??? ;)
I saw yesterday Challenger space shuttle last mission. + 3,000 engineers fired. How can you raise the debt ceiling if you don't have any astronaut on the payroll ??
Make that 9000 total so far and counting.
Not counting the impact to local small businesses closing down in the area.
Astroman gets shipped to Russia so they can light the big Soyuz and cart USA man to space. On our money.
well, that means mon-tues
riiiight
We know whats gonna happen, at the last minute they will annouce a large amount of BACK-ENDED "budget reducing" that take effect 5yrs down the road and they will never happen, either because their estimates as usual prove to be too aggressive or like the expiration of the Bush tax cuts, no politician will have the balls to actually let them happen. NONE OF THIS MATTERS. UNDERSTAND THIS...WE WILL NEVER, AND I REPEAT NEVER STOP BORROWING/SPENDING UNTIL THE MARKET(whatever that is, does IT even exist anymore?)CUTS US OFF!! THEN ITS TOO LATE!!
If that is the case then the result is simple; the pols will have just legislated their own term limits.
Politicians don't care about any future beyond the next election.
wow! we may have to cut spending in order to pay a coupon!! what an amazing concept!!
Yeah! ...... Nah.
i know! it seems so simple!
if only this huge juggernaut weren't totally outa contol...
that's the "if frog's had wings" one, isn't it?
the best way to regain control of the country's sanity is D-fault.
now is the time, BiCheZ. just do it.
"The Federal Reserve has announced thru it's purple and green trumpet with the pinwheels that they are preparing for default (by intalling new bearings and rollers on the presses and keyboards w/ the new Print Now & Deposit To _____ buttons to match the new, hi-speed freekware)."
shut that FED fuker down, too!
Will we still be making foreign aid payments?
Bluff called. All-in.
Mr President, call or fold.
The Fed can always transfer some typed up bank reserves into the Treasury's checking account. That's what they've done several times to cover Treasury checks in the past. Wait and see.
Yeah exactly Dave, there are no laws on the books binding the fed, a private institution, to any kind of ceiling to speak of. That is where this all is probably heading is some creative financing scheme by the fed. It will give all these stupid politicians cover (including McCarthy who allegedly represents my district), but will only reveal to more of the masses that the fed is neither federal nor is it a reserve. I hope that is the way it goes so more people will know more about the awesome powers our masters have imparted on the bernank and his cronies in hope they will see the need for the end of the fed as well. Where the hell is Andy Jackson when you need him?
as it turns out, wait and see didn't take very long.
In the Fed's just issued balance sheet for the week ending July 20, we have confirmation, and a rather large one, of what I predicted.
The Treasury's checking account got a healthy $57 bn boost. From under $40 bn to &96 bn.
And where, oh where, did the money come from?
Perhaps from the reduction of bank reserves of $60 bn.
At this rate, the Treasury can tap another $1.6 trillion from the bank reserves, which were typed up in the first place.
What the Fed's typist giveth, the Fed's typist taketh away.
McCarthy and Hewitt make Rush Limbaugh look like a pasty faced Socialist. It does seem to be that if the government needs revenue they could sell bonds, and not just to their surrogates, but to real people, and if they sold enough bonds everything would be okay? In order to sell those bonds (to real people) they need to offer a decent rate of return? SO if they just got their thumb off the button and floated enough paper at a high enough yield, they could cover their ass for a few months? Of course money might rotate out of stocks, and into bonds, and surely as day turns to night, (why do we fight this?). So just go to market Mr Treasury Sec, with enough bonds to fill the gap and then some, and figure out what yield that might take? Is that all there is to it?
Someone still has to pay that rate of return to those real people. Your tax dollars at work.
Of course they won't get anything done this weekend... their out of session this weekend aren't they?
Wow, everyone at my work just had their pay cut 20% and we're all going to work harder to reach some goals so we can bring our pay back up.
These fooking azzhats in D.C. should have their pay stopped until they can establish a balanced budget, reduce spending and figure out a way to stop raising the debt ceiling.
I frankly have gotten to the point where I don't care if we default. A strong dose of reality and pain would probably be good medicine for us.
Unfortunately, the GOP will probably cave and we'll forego the pain of withdrawls from the addiction to free money.
Defaultor no default is completely irrelevant.Willonly matterfor afewdays either way. Interest rates will be unaffected even if a default happens - after it is cleared up.Literally no one cares. Geithner and his scare tactics - it would be nice to have him shon as complete liar.Him and GW are like two peas in a pod (the government was responsible for 9/11 right GW you coward).
"Default" is not the essential issue. Just as a Madoff-style Ponzi needs endless sucker money to be fed in at the bottom of the pyramid, a debt-Ponzi needs more and more fake money fed in at the top of the pyramid...at the moment, another 2.5 trillion. This is TARP for the Gov't itself, w/o which the wars cannot continue, the votes cannot be bought, and the while rotten structure comes down.
"...let's evolve, let the chips fall where they may..."-TD
So at the latest, if there's enough money to pay August 15... a default will occur on August 18?
Congress has way enough time to reach a deal...
Reading the entire legislation, before voting, is a good change for the House Republicans.
Gold and guns are okay as a strategy for storing and defending wealth but what is more important but often neglected are tools for they are the handmaidens of creativity and that is the source of wealth.
Just waiting on the final list of States and resources the Chinese will want in swap as part of the inevitable BK proceeding.
When my money runs out i stop spending. Barry, Pelosi, Larry, Timmy, Boner, et al need to learn the same imo.
Actually, if the Nation Defaults, we default too right? So Solly no more money for the student loan or credit card.
Oh I seriously doubt it, fucking nukes will be raining and your goddamn phone will be ringing of the fucking hook with citibank on the other end. Fuck 'em all.
What phone?
If things are that bad... it does not matter anymore.
Curiously though, regarding all this talk about states leaving the union, if that happened then what happens to our nations millitary? Does that mean we'll be sitting ducks while the chinese are crawling under their nukes and lighting the fuse? It might sound like a good thing at first but im not so sure about all that. One thing I am sure about.....you can stick a fork in the US.
Secession is not just for the old Confederate States -- The Second Vermont Republic.
http://vermontrepublic.org/