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Treasury Cuts Its Borrowing Need Estimate By Half, To Suspend State, Local Gov't Funding Due To Upcoming Debt Ceiling Breach

Tyler Durden's picture




 

After announcing it issued $265 billion in marketable debt to fund $445 billion in financing needs (including the wind down of $195 billion in SFP cash management bills), the Treasury has just announced it expects to need just $142 billion in Treasury issuance in the April-June quarter. This ridiculous amount is more than 50% lower than the previous estimate of $299 billion disclosed on January 31, and confirms that the Treasury is now scrambling to appear prudent to Congress with its debt needs. That it will need far, far more at the end of the day is beyond question. The reason for the over 50% plunge in borrowing needs "largely relates to higher receipts and lower outlays." Well, that's great - perhaps the treasury can explain why its preliminary cash need for the July-Sept quarter are $405 billion (compared to $396 billion a year earlier). Altogether, this advance estimate is ludicrous and shows that Geithner has totally lost a grip on reality. Yet on the other hand, in order to make his point, the market needs to crash (just like the May 6th crash killed any hope of an Audit the Fed bill). Looks like risk is duly noting its duty to act appropriately when record 2011 bonuses are at stake.

The sources and uses sheet is presented below:

And the full text of the Treasury's borowing estimate announcement:

 

The U.S. Department of the
Treasury today announced its current estimates of net marketable
borrowing for the April – June 2011 and the July – September 2011
quarters:

  • During
    the April – June 2011 quarter, Treasury expects to issue $142 billion
    in net marketable debt, assuming an end-of-June cash balance of $95
    billion, which includes $5 billion for the Supplementary Financing
    Program (SFP).  This borrowing estimate is $156 billion lower than announced in January 2011.  The decrease in borrowing largely relates to higher receipts and lower outlays.
  • During
    the July – September 2011 quarter, Treasury expects to issue $405
    billion in net marketable debt, assuming an end-of-September cash
    balance of $115 billion, which includes $5 billion for the SFP.
During the January – March 2011 quarter,
Treasury issued $265 billion in net marketable debt, and ended the
quarter with a cash balance of $118 billion, of which $5 billion was
attributable to the SFP.  In January 2011, Treasury
estimated $237 billion in net marketable borrowing and assumed an
end-of-March cash balance of $65 billion, which included an SFP balance
of $5 billion.  The higher cash balance resulted primarily from higher receipts and lower outlays.
And concurrently with the release of the revised borrowing needs, Tim Geithner sent another letter to Boehner reminding him that since the debt limit will be hit at the very latest by May 16, it is now time for the "or else" part. Casualty #1: state and local government debt: "On Friday, May 6, Treasury will suspend until further notice the
issuance of State and Local Government Series (SLGS) Treasury
securities.  SLGS are special-purpose Treasury securities issued to
states and municipalities to help them conform to tax rules that
restrict the investment of proceeds from the issuance of tax-exempt
bonds.
[This action] will deprive state
and local governments of an important tool to manage their outstanding
debt expenses."
The Honorable John A. Boehner
Speaker of the House
U.S. House of Representatives
Washington, DC  20515
 
Dear Mr. Speaker:
 
Further to my letters of January 6 and April 4, 2011, I am writing
again to Members of Congress regarding the importance of protecting
America’s creditworthiness by enacting an increase in the statutory debt
limit.  This letter is to inform you of the extraordinary measures the
Treasury Department will begin taking this week in anticipation of the
date the debt limit will be reached, and to provide an updated estimate
of the Department’s ability to use these measures to preserve lawful
borrowing authority without exceeding the debt limit.  In my last
letter, I described in detail the set of extraordinary measures Treasury
is prepared to take in order to extend temporarily our ability to meet
the Nation’s obligations if an increase is not enacted by May 16, when
we estimate the limit will be reached.  Because it appears that Congress
will not act by May 16, it will be necessary for the Treasury to begin
implementing these extraordinary measures this week.
 
On Friday, May 6, Treasury will suspend until further notice the
issuance of State and Local Government Series (SLGS) Treasury
securities.  SLGS are special-purpose Treasury securities issued to
states and municipalities to help them conform to tax rules that
restrict the investment of proceeds from the issuance of tax-exempt
bonds.
  These bonds are used to fund a variety of expenditures,
including infrastructure improvements across the country.  When Treasury
issues SLGS, they count against the debt limit.  Because the United
States is very close to reaching the debt limit, Treasury must take this
action now.  However, it is not without costs; it will deprive state
and local governments of an important tool to manage their outstanding
debt expenses.
 
If Congress does not increase the debt limit by May 16, the
Treasury Department will be forced to employ further extraordinary
measures on that date to provide headroom under the limit.  Therefore,
on May 16, I will (1) declare a “debt issuance suspension period” under
the statute governing the Civil Service Retirement and Disability Fund,
permitting us to redeem existing Treasury securities held by that fund
as investments, and to suspend issuance of new Treasury securities to
that fund as investments and (2) suspend the daily reinvestment of
Treasury securities held as investments by the Government Securities
Investment Fund of the Federal Employees’ Retirement System Thrift
Savings Plan.  (Under the law, Federal employees are protected by a
requirement that both funds be made whole after a debt limit increase is
enacted.)
 
In addition, it may become necessary, at a time to be determined,
to suspend the daily reinvestment of Treasury securities held as
investments by the Exchange Stabilization Fund.
 
Largely as a result of stronger than expected tax receipts, we now
estimate that these extraordinary measures would allow the Treasury to
extend borrowing authority until about August 2, 2011, approximately
three weeks later than was forecast last month.  This is a projection
and is subject to change based on government receipts and other factors
during the next three months.  While this updated estimate in theory
gives Congress additional time to complete work on increasing the debt
limit, I caution strongly against delaying action.  The economy is still
in the early stages of recovery, and financial markets here and around
the world are watching the United States closely.  Delaying action risks
a loss of confidence and accompanying negative economic effects.
 
As I have written previously, default by the United States on its
obligations would have a catastrophic economic impact that would be felt
by every American.  A broad range of government payments would have to
be stopped, limited or delayed, including military salaries, Social
Security and Medicare payments, interest on debt, unemployment benefits
and tax refunds.  A default on the Nation’s legal obligations would lead
to sharply higher interest rates and borrowing costs, declining home
values and reduced retirement savings for Americans.  Default would
cause a financial crisis potentially more severe than the crisis from
which we are only now starting to recover.
 
I want to emphasize that, contrary to a common misperception, the
debt limit has never served as a constraint on future spending, nor
would refusing to increase the debt limit reduce the obligations the
country has already incurred.  Increasing the debt limit merely permits
payment of obligations Congress has already approved to citizens,
servicemen and women, businesses and investors.  In order to honor those
obligations, increasing the debt limit is unavoidable.  In fact, under
both the President’s budget and the House-passed Republican budget, the
debt limit would need to be raised by roughly the same amount in order
to fund the government through the end of FY2012.
 
Protecting America’s creditworthiness and our economic leadership
position in the world is a duty to our country that is shared by
policymakers in both parties, in the Legislative Branch as well as the
Executive Branch.  Therefore any attempt by either party to use the full
faith and credit of the United States as a bargaining chip to advance
partisan policy agendas would be irresponsible.
 
President Obama is strongly committed to restoring fiscal
responsibility to our government, and he has put forward a specific
framework and set in motion a process to work with both parties to
accomplish this critically important objective.  As that process moves
forward, I again urge Congress to act to protect America’s economic
interests by approving an increase in the debt limit as soon as
possible.
 
Sincerely,
 
 
 
Timothy F. Geithner
 
Identical letter sent to:
            The Honorable Nancy Pelosi, House Democratic Leader
            The Honorable Harry Reid, Senate Democratic Leader
            The Honorable Mitch McConnell, Senate Republican Leader
 
cc:        The Honorable Dave Camp, Chairman, House Committee on Ways and Means
            The Honorable Sander M. Levin, Ranking Member, House Committee on Ways and Means
            The Honorable Max Baucus, Chairman, Senate Committee on Finance
            The Honorable Orrin Hatch, Ranking Member, Senate Committee on Finance
            All other Members of the 112th Congress
Posted in:
 Debt Limit
 

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Mon, 05/02/2011 - 15:34 | 1231182 carbonmutant
carbonmutant's picture

Paging Meredith Whitney...

Mon, 05/02/2011 - 15:47 | 1231213 hedgeless_horseman
hedgeless_horseman's picture

...it will deprive state and local governments of an important tool to manage their outstanding debt expenses.

Congress needs to subpoena the traitor that wrote this, too!

Mon, 05/02/2011 - 16:10 | 1231360 Bastiat
Bastiat's picture

Why?  SLGS are custom issued securites to allow advance refunding of muni bonds. The municipality sells new bonds to get cash which it pays the US Trasury cash for these securities (SLGS).  The SLGS are then used to fund an escrow to make the payments on the refunded (defeased) bonds including the principal and premium, if any, at the first call date.  The statement you object to is true and fair.

Such refundings take place in the vast majority of cases in a falling rate environment in order to get existing higher yeilding bonds off the books, replacing it with lower yielding, new bonds.   Same idea as refunding your mortgage but without the ability to call in the mortgage until a certain date.

Not many of these are going on these days as rate are flat and the escrows are inefficient -- ie. the yield on the SLGS or, alternatively market UST paper, are much lower than the interest rates on any new issued refunding bonds.

 

Mon, 05/02/2011 - 15:51 | 1231273 SilverRhino
SilverRhino's picture

Yet another building block in the manipulation of PM's ... in 6 months this week will be looked at like a giant speed bump on the way up.

 

Mon, 05/02/2011 - 17:24 | 1231730 km4
km4's picture

Geithner wants to protect America’s creditworthiness ;)

 

Mon, 05/02/2011 - 20:30 | 1232355 bankonzhongguo
bankonzhongguo's picture

Its really just goes to show the absolute contempt the federal government has for the States and that they will do whatever they can to usurp State's rights and power.

Let the Feds abandon the States. 

We will be better off without those debt issuing free lunch whores.

Mon, 05/02/2011 - 15:34 | 1231186 Misean
Misean's picture

I think Timmah! is confuzzled...

Mon, 05/02/2011 - 16:19 | 1231393 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

"Timmah!"  Timmah quipped with a smile on his face as he played his 8 bit PPT video game on his Nintendo.  "Timmah, Timmah, Timmah!"

He was enjoying his morning Jolt soda as he took the market for a ride.  He was pleased to sell all the miners he had accumulated during the Fall of '08.  He wanted to show all those gold bugs who was boss.

"Timmah, bitchez!"  He drooled as he slurped his Jolt from a beer helmet.  Just then BS Bernanke walked into the room.

"Good work this morning Timmah.  We are going to use the proceeds from SLW to buy AMZN.  Got it?"

"Timmah!"

"And make sure to cut funding to everything except US."  BS licked his chops.  "Next we will cut spending to SS and then once the dollar hits DXY 66 we will steal the pensions."  He made a weird face as he began to talk to himself.  "Oh, you are going to move out of the dollar?  But who will protect the world from the bad guys?  Who will fight al qaeda?"  He laughed to himself and pulled a cigar out of his coat pocket.  "I will be in my den.  Daddy has some dollars to print."

Timmah didn't hear him.  He was busy pulling buy bids and selling the moves.  Bernanke walked into his den and closed the door.

Mon, 05/02/2011 - 15:39 | 1231195 1100-TACTICAL-12
1100-TACTICAL-12's picture

Smoke & mirrors, shell game. But sufficient to not startle the sleeping sheep..

Mon, 05/02/2011 - 15:46 | 1231197 NOTW777
NOTW777's picture

good grief - the jp morgan guy just said on national tv that bin ladens death with give americans new confidence in their government and in particular - to fix the economy

Mon, 05/02/2011 - 15:51 | 1231256 wang
wang's picture

guess what he's probably correct, see this video of the celebrations at the WH from last night... those are the people he is talking about

http://www.youtube.com/watch?v=X5lf2lOk2pY

Mon, 05/02/2011 - 15:54 | 1231282 NOTW777
NOTW777's picture

surreal - sorry, but they look like bused in actors

who would cheer like that?

Mon, 05/02/2011 - 16:10 | 1231349 NOTW777
NOTW777's picture

obama and holder would like to remind everyone there is no "war on terror" and no "war" in libya

Mon, 05/02/2011 - 17:54 | 1231844 Bicycle Repairman
Bicycle Repairman's picture

This is why Obama's speech was delayed.  The buses hadn't arrived on time.

Mon, 05/02/2011 - 16:27 | 1231427 angmikey
angmikey's picture

No need to worry about the people hearing that, they are sleeping well now that the mastermind of all things evil has been terminated. As a plus, JPM can continue doing what it does best.....hey where is my wallet!

Mon, 05/02/2011 - 15:42 | 1231202 TruthInSunshine
TruthInSunshine's picture

Good.

Shut it down.

Lay millions off.

I am serious.

It's the best thing for the Republic in the long term. It will remind people that government doesn't produce much of value, and certainly what it does produce is done at an incredibly inefficient rate and cost, and that more often than not, government gets in the way of and impedes the market and the choices and freedoms of average Americans, while it picks their pockets to fund the kleptocracy of Crony Capitalism.

And if we're really serious about returning to liberty and opportunity based on merit, send that SEAL team in to the lair of The Bernank to neuralize forever the threat that is the Federal Reserve Bank.

Mon, 05/02/2011 - 16:34 | 1231473 nmewn
nmewn's picture

Exactamundo!

"Therefore, on May 16, I will (1) declare a “debt issuance suspension period” under the statute governing the Civil Service Retirement and Disability Fund, permitting us to redeem existing Treasury securities held by that fund as investments, and to suspend issuance of new Treasury securities to that fund as investments and (2) suspend the daily reinvestment of Treasury securities held as investments by the Government Securities Investment Fund of the Federal Employees’ Retirement System Thrift Savings Plan.  >>>(Under the law, Federal employees are protected by a requirement that both funds be >>>made whole<<< after a debt limit increase is enacted.)<<<

OMG!!!...not the dreaded "debt issuance suspension period"!!!

Hey honey come here, just look at this pile of bills...we're going to have stop using those damn credit cards, a kind of "debt issuance suspension period"...ROTFL!

Mon, 05/02/2011 - 15:41 | 1231206 Duuude
Duuude's picture

 

Paging Chuck Jones...

Paging Chuck Jones...

We have a call for you from Rod...

 

Mon, 05/02/2011 - 15:40 | 1231208 Cleanclog
Cleanclog's picture

  In order to honor those obligations, increasing the debt limit is unavoidable.  

But not honoring those obligations is actually what some people want.  Then what Timmy?

Mon, 05/02/2011 - 15:42 | 1231209 medicalstudent
medicalstudent's picture

less than they expected... to borrow.

 

you know, as in interest payments are now not part of the debt..

 

did they update all those accounting textbooks yet.

Mon, 05/02/2011 - 15:54 | 1231285 Cleanclog
Cleanclog's picture

Good point!  They will need to make interest payments or they will actually default - so just not paying bills to employees and vendors is what they'll do first.  Do not provide services or goods to the US of A until debt ceiling raised. Federal employees can take a page from California state employees.

Mon, 05/02/2011 - 15:43 | 1231211 Blagio
Blagio's picture

It's called living paycheck to paycheck. Deal with it Timmay!

Mon, 05/02/2011 - 15:53 | 1231268 Dr. Richard Head
Dr. Richard Head's picture

True, but instead of stalling on the elctric bill so the gas gets paid during the winter, Timmay wants to rob Peter to pay Lloyd.  Cock gobblers.

Mon, 05/02/2011 - 15:41 | 1231216 trav7777
trav7777's picture

where are the silver pimps today?  PMs getting crushed. 

Mon, 05/02/2011 - 15:45 | 1231223 hedgeless_horseman
hedgeless_horseman's picture

Buying low to sell high?

Mon, 05/02/2011 - 15:51 | 1231255 penisouraus erecti
penisouraus erecti's picture

++

Nice opportunity again as it dips below 44 just before the close

Mon, 05/02/2011 - 16:45 | 1231470 Pegasus Muse
Pegasus Muse's picture

Trav and other PM-bashing irritants only show up on down days.   Boringly predictable.

As TF pointed out so well the other day:

"I wish to remind you again that none of the fundamentals have changed. In fact, they've only moved further in our favor.

Has the U.S. government discovered spending restraint and is moving toward a balanced budget?

Are California, Illinois, New York, Michigan and about 30 other states suddenly solvent and prosperous?

Did the TBTF banks suddenly become solvent, their CDOs and loan portfolios truly valued at par?

Has the Comex opened a hidden vault containing 1,000,000,000 ounces of physical silver, tested and ready for immediate delivery?

Have peace, love and harmony suddenly broken out all over the MENA region as well as the entire world?

If you answered NO to any (all) of these questions, why do you care what the fiat prices of silver and gold are this morning? The prices may not recover to new highs today or even this week but recover they will. Sit back, relax, gaze at your physical holdings and smile."

http://tfmetalsreport.blogspot.com/2011/05/was-it-really-just-week-ago-20.html 

I bought more ounces of Ag this morning on the Bankster orchestrated slam-down.  Thanks JPM.  Thanks Blythe.  Thanks Jaime. Appreciate the discount.

Physical Silver.  No paper for me.  

 

Mon, 05/02/2011 - 15:46 | 1231247 LawsofPhysics
LawsofPhysics's picture

Gold is still at 1556 and silver is at 45.  Oh wait, that is right this is the up is down, down is up bad is good mantra.  Got it.  Just glad I got out of PMs (except physical) in November.

Mon, 05/02/2011 - 16:00 | 1231317 slow_roast
slow_roast's picture

Yeah, because you clearly sold at the top right? 

Mon, 05/02/2011 - 16:13 | 1231366 TruthInSunshine
TruthInSunshine's picture

Gold and silver have already recovered most of last night's raid.

Nice.

Very bullish. Hugely so.

Mon, 05/02/2011 - 16:01 | 1231324 tmosley
tmosley's picture

Where are the oil pimps?

Oh yeah, where they normally are, being butthurt.

Mon, 05/02/2011 - 16:25 | 1231422 CH1
CH1's picture

Puh-leeze... I'm holding till the bag boy at Wal-Mart recommends a mining stock.

Tue, 05/03/2011 - 02:15 | 1233031 StychoKiller
StychoKiller's picture

Until I see silver dimes and other coins in my change, I see no reason to bail out!

Mon, 05/02/2011 - 16:29 | 1231441 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Staring at my coins. 

Mon, 05/02/2011 - 15:49 | 1231217 Mercury
Mercury's picture

I want to emphasize that, contrary to a common misperception, the debt limit has never served as a constraint on future spending, nor would refusing to increase the debt limit reduce the obligations the country has already incurred.

In other words it's just another silly stage prop (as this letter is) in the never-ending story of self-aggrandizing government expansion.

Mon, 05/02/2011 - 15:42 | 1231222 lolmao500
lolmao500's picture

Crash it all !

Mon, 05/02/2011 - 15:43 | 1231225 LawsofPhysics
LawsofPhysics's picture

Awesome.  Fuck the states who can not get their fiscal house in order.  I love it.

Mon, 05/02/2011 - 15:43 | 1231226 falak pema
falak pema's picture

silver is a fickle queen. My story of ancient egypt said it all...

Mon, 05/02/2011 - 15:46 | 1231227 Cognitive Dissonance
Cognitive Dissonance's picture

Before you know it they will be checking for loose change behind the sofa cushions at the Fed and Treasury.

"I found a quarter over here Timmy. Will that help?"

Mon, 05/02/2011 - 15:45 | 1231236 TruthInSunshine
TruthInSunshine's picture

The government is rolling out a new security screening device; the Upside Down Citizen Shaker 8000.

It's hit rate of anyone carrying pre-1964 quarters is 100% in elaborate testing.

Mon, 05/02/2011 - 16:33 | 1231447 Cognitive Dissonance
Cognitive Dissonance's picture

Below is a photo that was smuggled out of the Homeland Security test site of a successful test of the Upside Down Citizen Shaker 8000. It is being manufactured by GE and will be sold to the TSA for $7 million per.

 

Mon, 05/02/2011 - 22:15 | 1232595 TruthInSunshine
TruthInSunshine's picture

Thanks, CD. Very nice, too.

I envision there will be a stainless steel grate underneath the 'pocket content fall area' to collect the valuables, and a sophisticated sorter to separate the coins by denomination and silver/copper/etc. content, too.

Tue, 05/03/2011 - 02:17 | 1233034 StychoKiller
StychoKiller's picture

Comes complete with "cattle" prod to get lazy citizens to wrigglin'! :>D

Tue, 05/03/2011 - 05:02 | 1233137 medicalstudent
medicalstudent's picture

an ealier arnie gunderson...

 

nahhhh, not risky enough... so he left to study nuclear energy.

 

(reverse osmosis. hepa. polimaster.)

 

 

Mon, 05/02/2011 - 15:56 | 1231304 I Got Worms
I Got Worms's picture

Timmah: "Was it minted before 1965?"

Mon, 05/02/2011 - 15:43 | 1231228 NOTW777
NOTW777's picture

re-elect barack hussein obama - go to: cnbc.com for info

for questions or donations contact: john harwood

Mon, 05/02/2011 - 16:12 | 1231356 NOTW777
NOTW777's picture

hilarious - hear that. bill griffeth says it was thought there would be a rally when they caught obama.

Mon, 05/02/2011 - 15:47 | 1231232 falak pema
falak pema's picture

Why does Meredith have such a bad image with MSM? I find her very courageous and on the button...

Tue, 05/03/2011 - 02:19 | 1233035 StychoKiller
StychoKiller's picture

TPTB always shoots the bearer of bad news.

Mon, 05/02/2011 - 15:45 | 1231239 Ruffcut
Ruffcut's picture

Holy shit batman.

This is where the rubber meets the road.

This is not going to end well.

Perfect showing how the Hill, of critters, support their sheeples. DC, district of criminals bastards,

Sell the silver and rollover to lead, food and those piddly things.

Mon, 05/02/2011 - 17:08 | 1231651 hidingfromhelis
hidingfromhelis's picture

This is where the rubber stamp hits the road.

(Fixed it for ya.)

Mon, 05/02/2011 - 15:46 | 1231242 falak pema
falak pema's picture

The only way O'b will get re-elected is if he offers Michelle as bait...

Mon, 05/02/2011 - 15:58 | 1231290 Dr. Richard Head
Dr. Richard Head's picture

No fan of Obama, but carting out the story of OBL's death pretty much took the cake at this point.  Now the Republicans and Democrats can celebrate war together and are charged to go kill some more brown people.

Weeeeee win!  Not only did we kill the Ace of Spades in the terrorist deck, but we have lost our liberties.  Perhaps the terrorists will like us more now that we are out of the closet slaves. 

Mon, 05/02/2011 - 15:46 | 1231243 buzzsaw99
buzzsaw99's picture

Turbo Timmy is on it bitchez!

Mon, 05/02/2011 - 15:48 | 1231244 AldoHux_IV
AldoHux_IV's picture

Down with the fed, down with Geithner!

Mon, 05/02/2011 - 15:46 | 1231248 Ese Pinche
Ese Pinche's picture

Silver getting a Behind the Shed, ass raping, Bubba style... wowzers...10% in the face

 

Mon, 05/02/2011 - 15:58 | 1231295 Dr. Richard Head
Dr. Richard Head's picture

That was the "money shot" Bennie was looking for. 

Mon, 05/02/2011 - 15:50 | 1231252 DeweyLeon
DeweyLeon's picture

I just recieved a 1978 penny with my change at the store, it's the small things in life that make it worth living.

Mon, 05/02/2011 - 15:54 | 1231276 falak pema
falak pema's picture

in 1978-1979 your penny was going down inflation street faster than you could have said..."wow"...Talk of Speedy Gonzales and the bimbo who had her butt covered by her lover's hand as protection, except that buzzy-fuzzy flea made him scratch his nose...Mamma mia! that's when she started to holler!

Mon, 05/02/2011 - 15:52 | 1231260 lolmao500
lolmao500's picture

 

            The Honorable Nancy Pelosi, House Democratic Leader             The Honorable Harry Reid, Senate Democratic Leader This is proof Timmy has lost his mind.
Mon, 05/02/2011 - 16:42 | 1231262 hedgeless_horseman
hedgeless_horseman's picture

"President Obama is strongly committed to restoring fiscal responsibility to our government, and he has put forward a specific framework and set in motion a process to work with both parties to accomplish this critically important objective." 

 

                       -Turbo Tax Timmy

 

"Lord, make me chaste, but not yet."

                                 -Saint Augustine.

Mon, 05/02/2011 - 15:50 | 1231267 Bazooka
Bazooka's picture

S&P 1370 was a major fib level, we are turning

Nikkei has turned since early March and leading the down draft like before led the global markets

Silver plunged and normal retrace, but will plunge again. Silver is leading gold down.

Adding more to VXX, FAZ, UUP

Mon, 05/02/2011 - 15:54 | 1231271 Henry Chinaski
Henry Chinaski's picture

Killing slugs will get their attention back in the home district.

Mon, 05/02/2011 - 15:53 | 1231280 Bazooka
Bazooka's picture

Watch the Yen as it might turn as well. Having been raped for 30 years by deflationary pressures, Yen has strengthened against the dollar over the past twenty years.

The Yen should also go below 80 and later pass the low 70s

Mon, 05/02/2011 - 15:56 | 1231299 falak pema
falak pema's picture

That's when fuku will really gasp for breath as the yen will have pushed japan into the no zen zone!

Mon, 05/02/2011 - 15:56 | 1231300 TruthInSunshine
TruthInSunshine's picture

Not so sure of that.

The Bernank is still trying to find out what digital fiat printing technology the BOJ has deployed.

Mon, 05/02/2011 - 15:57 | 1231286 SOLnow
SOLnow's picture

How many years do we have to hear "We are just starting to recover"?

Mon, 05/02/2011 - 15:55 | 1231287 NOTW777
NOTW777's picture

take away the punch bowl and this is what happens

Mon, 05/02/2011 - 15:59 | 1231302 NOTW777
NOTW777's picture

P-SLaVe - to the tool shed

Mon, 05/02/2011 - 15:58 | 1231289 earnulf
earnulf's picture

The sad part is Geithner is serious about causing hurt to everyone but himself, he has Ben for that.    Meanwhile the accounting tricks are beyound anything ENRON could have come up with, legally or illegally.    I mean, it's one thing to live as one poster put it, "paycheck to paycheck", but there is no way that they can cut 40% of their spending so that they can live "paycheck to paycheck"      Our Government is spending $1.62 cents for every $1 we bring in, whether that is "larger than expected" or no.

So where does Timmy find the extra 40% to cut?   Why in a place that will cause the most pain for others (States and Local Municipalities) and not for himself, he's keeping within the statues while haranging those nasty politicians who haven't yet bowed down before the Great Bernake and raised that insignificant debt limit already.

Mon, 05/02/2011 - 15:58 | 1231297 Bazooka
Bazooka's picture

Silver has started it's Wave 3 down....today's retrace was a beautiful ABC to $47.39 and from there started Wave 3 down.....

Mon, 05/02/2011 - 15:59 | 1231315 Catallaxative
Catallaxative's picture

"nor would refusing to increase the debt limit reduce the obligations the country has already incurred"

so we should increase the debt to pay the interest that grows with increasing the debt. Such brilliant reasoning, the logic is superb! Good job, Hack Geithner!

 

Mon, 05/02/2011 - 16:00 | 1231319 penisouraus erecti
penisouraus erecti's picture

asshats

Mon, 05/02/2011 - 16:01 | 1231322 sbenard
sbenard's picture

This is a "confuzzlement" call to the market. The wind is shifting!

Mon, 05/02/2011 - 16:01 | 1231326 MrBinkeyWhat
MrBinkeyWhat's picture

Unicorn $hit and fairy dust or

Physical silver bitchez!

You can still choose. For a little while. Then we get to farm land, guns, ammo, stored food, and silver bitchez.

Next.

Mon, 05/02/2011 - 16:05 | 1231330 Greater Fool
Greater Fool's picture

Dear Mr. Speaker:

Since you haven't yet acted on the needed increase to the debt limit, Treasury has taken the unprecedented and historical step of putting all of your office equipment, and one or two of your more appealing staff, up for auction on e*Bay.

Regards,

T T Timmay

P.S. We left your smokes on the bookshelves by the east windows. Hope you found 'em.

Mon, 05/02/2011 - 16:06 | 1231335 bob_dabolina
bob_dabolina's picture

I like this debt ceiling issue. It really gets me all hot n' bothered.

Mon, 05/02/2011 - 16:10 | 1231348 Wynn
Wynn's picture

Next up: pension fund raids

Mon, 05/02/2011 - 16:08 | 1231351 Hondo
Hondo's picture

If true that we don't need the additional debt to fund the boondoggles then it proves that most of the trillions that have been spent and wasted were in fact boondoggles by not only the administration but also the flunky congress of both parties.

Mon, 05/02/2011 - 16:22 | 1231411 slewie the pi-rat
slewie the pi-rat's picture

cc:        The Honorable Dave Camp, Chairman, House Committee on Ways and Means

this guy gets his mail @ camp david, i think, timmah...

Mon, 05/02/2011 - 16:25 | 1231421 ivana
ivana's picture

Sounds like cash scarcity. Contraction in local gov administration. New, more efficient, local private-public services later.
One of foundation stones for new local businesses. But on contrary side, gov taxes may go even higher later to sweep profits instead.
In any case, pain first.

Mon, 05/02/2011 - 16:27 | 1231430 gkm
gkm's picture

OR is the Treasury looking at dumping a bunch of equity holdings?

Mon, 05/02/2011 - 16:47 | 1231538 max2205
max2205's picture

Perfect time for states to raise taxes and crush the consumers even more

MD even wants to raise the gas tax. Lol

Mon, 05/02/2011 - 16:47 | 1231542 davepowers
davepowers's picture

what might account for reduced Treasury borrowing needs?

well, in the last two weeks something new occurred in the Fed's balance sheet.

during that period, $80 billion in bank reserves (accumulated during the FED's QE ventures and covering the FED's repayment of debt under the Supplemental Finance Program Tyler mentions above) were transferred to the Treasury's checking account with the FED.

There is no clue w/n the balance sheet as to what the banks received for this transfer, but it replenished the Treasury's checking account, providing it wherewithal to pay more bills and perhaps delay or reduce future debt issuance.

Many have speculated that the 'just sitting there' bank reserves won't threaten to unleash price inflationary impact until the banks convert the reserves and start making more loans therewith. But, if the reserves are simply converted to the Treaasury's checking account, then the 'unleashing' can occur whenever the Treasury starts writing checks.

Bank reserves are just under $1.5 trillion, so there is a lot of potential govt. spending there.

Mon, 05/02/2011 - 17:06 | 1231653 overmedicatedun...
overmedicatedundersexed's picture

 Government Securities Investment Fund of the Federal Employees’ Retirement System Thrift Savings Plan.  (Under the law, Federal employees are protected by a requirement that both funds be made whole after a debt limit increase is enacted.) ..

OH no not the fed emplyees retirements..this cannot stand..think of the old IRS agents sitting in the dark cold rooms ,hunger at the door..

Mon, 05/02/2011 - 19:11 | 1232134 Things that go bump
Things that go bump's picture

They might have to give up that second house in Belize.  

Mon, 05/02/2011 - 19:13 | 1232135 Things that go bump
Things that go bump's picture

They might have to give up that second house in Belize.  

Mon, 05/02/2011 - 17:00 | 1231620 blunderdog
blunderdog's picture

So the Jeethner thinks a default could potentially cause a serious financial crisis?

That would suck.  Things were going so well.

Mon, 05/02/2011 - 17:46 | 1231825 Cocopele
Cocopele's picture

lots of noise....Just a move to inspire those reluctant house and senate members that are not willing to raise the debt ceiling... lets see what happens when their retirement (as well as that of their constituents back home)  is on the line!   Headline should read Gangsta Timmah puts a gun to heads of congress to loosen govt pursestrings.

 

Predicition... Debt ceiling raised in less than 2 weeks

Mon, 05/02/2011 - 17:56 | 1231859 aerojet
aerojet's picture

They talk about legal obligations while at the same time murdering people in foreign countries at will.  WTF?

Mon, 05/02/2011 - 19:29 | 1232193 mberry8870
mberry8870's picture

An absolute political hack. Just another way of pressuring Congress to bend to his demands.

Mon, 05/02/2011 - 19:42 | 1232218 live free
live free's picture

Anybody else seeing this as more police off the streets type thing.  I"ve been reading articles from zerohedge and other sites about the militarization of police force.... More and more police are being laid off and cities are becoming ganglands... less money means less police and the citizens will demand more "protection".  I see more of this coming and more and more military taking over the role.

As soon as I start to see this becoming more prevalent, my family and I are out of here.... no matter what the cost. 

B

Mon, 05/02/2011 - 22:50 | 1232682 Forgiven
Forgiven's picture

This will be amusing to watch unfold.  I can just see Cuomo and Bloomberg up in arms over not getting enough of the teet.

Mon, 05/02/2011 - 22:49 | 1232683 ebworthen
ebworthen's picture

 

Debt limit?

What?

There is not debt.

A computer database untethered to anything other than 0's and 1's has no limitations beyond the imagination of the human mind.

The database is in the hands of the likes of Timmy and Ben.

 

Mon, 05/02/2011 - 23:21 | 1232743 Die Weiße Rose
Die Weiße Rose's picture

As the US Congress shuts off the Money supply due to Tim's hole in his Treasury box,

Ben will have to start throwing out 50% less confetti from his Helicopter. But then again, hardly anybody will ever know the difference, except a few states and municipalities, some people in the Civil Service Retirement and Disability Fund, and a few Federal Employees with a Retirement System Thrift Savings Plan. That will teach 'em indulging in Thrift Savings Plans, they should have given all their money to Wall Street instead,

as Ben had so wisely planed, to help with his Helicopter Recovery Plan.

Meanwhile they will start importing more confetti from China,

because in China they print confetti at half the price ;)

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