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US Treasury Projects A $13.9 Trillion Debt Balance At December 31, Anticipates Debt Ceiling Breach Some Time In February 2011
The Treasury has just released its most recent quarterly borrowing estimate for fiscal Q4 2010 and Q1 2011 (or the next two quarters in normal speak). The government now anticipates a funding need of $350 billion and $380 billion in the next two quarters. While the $350 billion number is a slight reduction from the prior estimate of $376 billion, historically the Treasury has been unduly and overly optimistic in determining its debt issuance requirements. With the June 30 total debt balance of $13.203 trillion, it means the Treasury itself now anticipates total debt at just under $14 trillion (or $13.93 trillion to be precise). This equates to about $13.88 trillion in debt subject to limit (which at last check was $14.3 trillion). Looks like the Treasury will not need to raise the debt ceiling before the midterm elections after all: perhaps this is what the market is celebrating today: nothing less than the latest and greatest example of news slightly better than a worst-case scenario. We also learn that, "during the April - June 2010 quarter, Treasury issued $344 billion
in net marketable debt, and finished the quarter with a cash balance of
$290 billion, of which $200 billion was attributable to the SFP. In
May, Treasury estimated $340 billion in net marketable borrowing and
assumed an end-of-June cash balance of $280 billion, which included an
SFP balance of $200 billion. The increase in the cash balance related to higher net cash flows and net marketable borrowing." And with every new auction pushing the US debt further higher into "never repayable" territory, the Bid To Cover grows ever higher. And in fact, don't look now, but the last time the market was at 1,125, the 10 Year was just 45 bps higher than the current 2.96%, confirming that all is perfectly illogical with the world.
Additionally, based on the hidden rows (71-76) in the treasury's Sources and Uses excel file, the US will see a financing need of $430 billion in the January-March 2011 quarter: in other words the Debt Ceiling will be breached some time in mid-February 2011.
From the Treasury press release:
Treasury Announces Marketable Borrowing Estimates
To view the Sources and Uses Table, visit link below.
Washington, D.C. -- The U.S.
Department of the Treasury today announced its current estimates of net
marketable borrowing for the July – September 2010 and the October -
December 2010 quarters:
- During the July – September 2010 quarter, Treasury expects to issue
$350 billion in net marketable debt, assuming an end-of-September cash
balance of $270 billion, which includes $200 billion for the
Supplementary Financing Program (SFP). The borrowing estimate is $26 billion lower than announced in May 2010. The decrease in borrowing relates primarily to lower outlays and a higher-than-announced beginning-of-quarter cash balance. - During the October - December 2010 quarter, Treasury expects to
issue $380 billion in net marketable debt, assuming an end-of-December
cash balance of $270 billion, which includes $200 billion for the SFP.
During the April - June 2010 quarter, Treasury issued $344 billion
in net marketable debt, and finished the quarter with a cash balance of
$290 billion, of which $200 billion was attributable to the SFP. In
May, Treasury estimated $340 billion in net marketable borrowing and
assumed an end-of-June cash balance of $280 billion, which included an
SFP balance of $200 billion. The increase in the cash balance related to higher net cash flows and net marketable borrowing.
Additional financing details relating to Treasury's Quarterly Refunding will be released at 9:00 a.m. on Wednesday, August 4.
And here is Goldman's (once again oddly spin-free) take:
MAIN POINTS:
1. The US Treasury Department estimates that its marketable borrowing will total $350bn in the July-September quarter, the last quarter of fiscal year (FY) 2011. Three months ago, this estimate was $376bn. The targeted cash balance at the end of this period remains unchanged at $270bn, of which $200bn is earmarked for the Supplemental Financing Program (SFP). The agency’s preliminary estimate for Q4 borrowing is $380bn, with a continuing cash balance of $270bn.
2. While the Q3 figure is about $75bn less than we expected, the Q4 figure is quite a bit higher (about $150bn). Some of this difference is probably seasonal in nature. Nonetheless, having already cut the issuance of nominal coupons by 10% from its peak rate in May, we think Treasury officials will proceed more cautiously than before along this path. Accordingly, we estimate the May refunding at a gross issuance of $74bn to redeem $37.7bn in maturing debt and raise $36.3bn in new cash. We think this will be divided as follows: $34bn for the 3-year note, $24bn for the 10-year note, and $16bn for the 30-year bond. The 3-year note is $1bn less than was issued a month ago and $4bn below the May offering; the 10- and 30-year issues are the same as in May.
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Pardon the stupid question: Is this all new money needed or is some part of it rolled?
Our crusade against evil depression is now finished. 'R'ecession is beaten. There was no depression and there won't be one. Bears have have been wiped out.
The war against depression is over.
We have won the war.
It's time we put our faith back into our government.
Let's start working for a better future and for a better new world!
I like to read alternative views on ZH. Lots of bears, including me. But a couple of points in your e-mail bugged me:
1. The investor alert was sponsored by Schwab. No skin in that game?
2. Please don't quote MW as being the "truth". Nor, BB. You obviously would not agree, but he's a gasbag who will say anything that people might be able to use to buy stocks. Where will the income come from? Why should consumers even spend when their debt levels are so high? Is consumer spending really the ticket to happiness, or more indentured servitude?
3. Faith in government - hahahaha! You must be one of the elites/PTB's that are enjoying their raping of the middle class.
4. Better future - as in a New World Order?
Sounds like a CAPbot. Shill from the Center for American Progress.
No, this is so over the top that it's obviously tongue-in-cheek. The only question is whether SuperBull is satirising official/establishment optimism, trolling ZH readers, or both.
Off a 200 point push, the brokers are instructed to call clients and sell, sell, sell you on buy, buy, buying.
My call came at 1:34 p.m. PST.....right on schedule.
But the racoons are still with us. whew!
- Ned
[Ed. and we hope tiny piglets, too]
When used by the treasury, the term "New Money" represents fresh, additional borrowing, unassociated with refinancing or rolls. Obviously with the vast sources and uses of finds, such is essentially and accounting term of art. Think of it this way, the dollar amount of the deficit would remain the same (not rise) without "new money" debt sales.
"Son of helicopter", Jim Rickards in reference to Bullard's recent paper has an excellent interview here. http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/8/2_Jim_Rickards_files/Jim%20Rickards%208:2:2010.mp3
This all ends in tears.
$13.9 trillion is less than $14 trillion.....Market Soars!
Why anyone pays attention to projected statistics lie guestimates and the liars who tell them is baffling.
And face it, sweetheart, that's the way it's gonna stay as long as college-educated unemployment in the U.S. remains at about 10% (see below). NOTHING will be allowed to spook this class, which wants nothing more than NOT TO BE SPOOKED. Don't you understand the game? Then you know NOTHING about Mellonesque liquidation. The unemployment figure (see below) means this is still a chicken which can be plucked. Are you really going to be Andrew Mellon, seated at the Treasury, and NOT pluck this chicken?
Tell me, what do you think would interfere with plucking this chicken? That's right: SPOOKING IT. So cook any books you please, until it comes time to cook the chicken itself.
If you're so smart, tell me the month/day/year on which college-educated unemployment will reach 40% (or, 20% going by BLS' lying figures). You've never even given that a thought.
Odd, that's all they think about in Washington.
This is quarter by quarter (see link) to June 2010.
June 2010: 4.4%!!!!! You're telling me imminent collapse with 4.4 college-educated unemployment? or 8.8%? or 13.2%
GROW UP! GET A LIFE!
Bachelor's degree and higher(2)
Civilian labor force
45,242 45,573 45,911 45,525 45,694 45,800 45,879 45,718 46,246Participation rate
77.3 77.0 76.7 77.7 77.0 77.2 77.3 77.3 77.3Employed
43,048 43,561 43,868 43,367 43,418 43,549 43,642 43,581 44,200Employment-population ratio
73.5 73.6 73.3 74.1 73.1 73.4 73.5 73.6 73.8Unemployed
2,194 2,012 2,043 2,158 2,276 2,251 2,237 2,136 2,046Unemployment rate
4.8 4.4 4.5 4.7 5.0 4.9 4.9 4.7 4.4I responded to your copy-and-paste job on another thread and will not respond in kind.
IMHO, you can't take one unemployment metric and suggest that the country isn't fucked. Sure the suburbs might be relatively better off, but that's a myopic view of the world. What about the inner city? 40-50% unemployment for minority young-adults. Is that a society you think is successful? How about teen unemployment (20%+)? Unemployment for recent graduates? Both of these elevated measures will have a significant impact on the long-term progression of standards of living.
How about the average duration of unemployment surging?
So your narrow version of prosperity - I'm not buying it.
The people you're talking about are politically unimportant. If they do anything politically, it will be to usher in an even more corrupt group to FURTHER LOOT. Politically, it is irrelevant how long the duration of unemployment.
Mine is not a version of prosperity, narrow or otherwise. I'm trying to be realistic, and to understand what the oligarchs are doing.
They look at 10% college-educated unemployment. They turn over. They sleep well. That's ALL.
So if you have a broader view, then tell me
day/month/year
college-educated unemployment goes to 40% (or 20% BLS).
You haven't the slightest idea, you've never even thought about it, you're vanity does not allow you to consider anything except your own ridiculous ideas, you will refuse--for reasons of vanity--to learn anything new.
I wish your comment was clear enough to understand in order to learn from. And to end in an insult which ironically suggests that you are closed off to alternative views...well I'll save my time in the future in responding to your posts.
Clear enough imo.
Bringing up raw unemployment figures is useless when it comes to social unrest or troubles generally associated with unemployment.
You have to distinguish between different unemployed populations.
Stating that a 30 pc unemployment rate could lead to a certain kind of outcomes (including uprisings and stuff like that) is inaccurate.
It might be as well that the current system of governance is resilient to a 40 pc unemployment if the majority of it comes from lower income sectors but fragile to a 20pc unemployment only composed with post college jobs.
The Western governments have a long tradition of experimenting in other countries where the unemployment rate is over 50 pc, all in the lowest income side. It might be they have learned a lot there...
That is a well-articulated point. And I do enjoy that sort of discussion. I don't agree with the premise though. Banks still have substantial lending in non-suburbs, muni's/Feds have substantial welfare-type obligations to blow up expenditures, overall tax revenues will be down, etc. It's clear that each segment of the population can have different impacts on the overall economy and that they do have different political clouts. But unemployment in one sector will have an impact on unemployment in the other sectors, over time. And in another post, the previous author suggested that because the Greek gas truck drivers were not college educated, they would not have a long term impact on the country. Well, didn't they shut down tourism for a week? Isn't that an uprising?
I've read somewhere that there are 800,000 vacant buildings in Detroit. Seems high, but I did find a site which said 33k vacant homes. You can buy a home for $5k that was perhaps $200-300k 5 years ago. I realize that it's an extreme example and not completely on point, but it's an example of how extreme unemployment in "non-college" educated manufacturing jobs for a town to be decimated.
I havent followed the Greek situation so I can only rely on your depiction.
But I wont describe shutting down tourism (even for a country like Greece) like a long term impact. A on the spot action which was dealt in a way I dont know.
Uprising, even less.
Your last point is misinterpretated. It is good consequences for the US.
A guy is in charge of a population. He offers this population the life term project to work to be able to buy a house. This buys social peace. But it happens that a sizeable part of the population does not earn enough in a life to be able to buy a house as housing estate is more and more expensive due to the place getting richer and richer.
So a bubble is created in order to deceive on the reality of the offer. World resources are directed to this population as the prices are appealing.
The bubble explodes. People are naked and everyone in the world see they cant pay for the houses.
That is what happens in the US.
But in the end, the houses are in the US to be bought by US citizens in priority due to socialistic protection on house ownership, the houses were built by workers who got their wages, the banks which lent were bailed out. Bottom line, houses supposedly worth 200k are available for 5k (or lets say 50k) Of course, for that price, these kind of houses could not have been built in the US in the first place, they should have been built elsewhere in the world where there was a solvent demand for them but a much less appealing demand (they offered to pay 70k for the house)
Have some US citizens got burned in the process? Absolutely. And the usual suspects. Shows that indeed these people are irrelevant in the political process as they keep being elected to be on the loser side when a scheme that will benefit the others is implemented.
Extreme unemployment was then not damaging for the US economy but instrumentalized, a well played card.
IMO, the oligarchy cares about a small subset of the college educated individuals in this country. The correct question is when will Ivy League educated people have unemployment greater than or equal to 10%? Until that happens, the oligarchs will sleep soundly at night even if the unemployment rate for college educated individuals rises north of 20%.
Your figures make no sense to me. "imminent collapse with 4.4 college-educated unemployment" is gobbledegook to me. As is, "
2,1942,0122,0432,1582,2762,2512,2372,1362,046 !"
Your whole post is Greek to me.
That is because the numbers are "Arabic". So you do actually understand that they are, well, ...
My old boss used to say "BS is our most important product, let's not waste it on each other."
I sense waste here, as do you.
- Ned
Do not worry, buying equities will cure this and every other ill according to The Maestro.
October 31 is more realistic
....yeah, mischief night would be good.
Can't help but believe the Feb '11 is a date rape planned for the new GOP controlled Congress.
I'm going to make the bold prediction that no one will give two shits about this.
Who buys all of this debt, is my question.
That has been my question for the past 18 months. We are a broke country (consumers) and globally yet we can incrementally buy trillions in new bonds around the world while stocks come roaring back???
Read someone recently who opined the Fed and its proxies are buying up to 80% of all our debt. Would not be surprised. Everything out of Washington & Wall Street is all smoke and mirrors.
Nice try Tyler. You said $14 trillion breached by the election. Way the fuk off. CNBC headline: Double Dip, Doesnt matter. I fucking swear. I'm going back over there to get some more laughs, you guys are bumming me out.
See ya!
Dude, lock up the weapons, have another toke, laugh your tail off with a bannana creme pie, then come back -- Please lay off the LSD, bummers are so bad.
- Ned
you gotta be kidding - this IS a simple spreadsheet.
I had that number 3 weeks ago
My take is that the current spend rate will continue until end of the Fiscal Year - Oct 1. Spending will take off again right after the elections and before the new congress takes office. Statutory limit will be exceeded and new limit established before new congress takes office in January.
Checkmate
I think the Fed and maybe the government are interested in whether the stock-market will go up,...or down, rather than anything else. I think the economy is going to have to sort itself out. And secondly, since US$ debt is being quite sufficiently distributed, I don't know whehter QE2.0 is even necessary for economic collapse, the US public borrowing seems to be funding the liquidity requirement. I'm wrong about that, surely?
ZH best post is the combined FED/State/Local debt in the US as % of GDP (which is comparable to the EU) is approaching that of Greece. BDI shipping rates have dropped by 50% this year and SPX is down less than 10% from its peak this year. Again all the data points make sense.
Goldman's take:
"Some of this difference [debt estimate] is probably seasonal in nature."
What a great example of saying absolutely nothing.
Fuck me!
That's Great!
I'll just tell the bill collector next time he calls; "Bugger off ya' nancy twat, 'cus some o' dat shite yer lookin' fo's Goldman says is jus' seasonal. Seasonal, mate! 'Ear me, seasonal!Piss off."
Here, be set up as next Secretary of the Treasury, just in time to explain the Bloody Well Default and Restructuring Package. "'Ere now, listen up lads', shut yo yaps n' take a break or ave a spot o' bother, eh? Get to ya when we can."
Ahh the con game goes ever on, so I yet again have to appeal to the ZH community to take Village Idiot's inspiration and my idea, and take up arms by:
Visiting your local ATM and pulling the max possible out on August 12. This goes for anyone outside the USA as well (assuming of course that you are pissed off at your local oligarchy as well). Get there early! Hope to see you there in long lines! :>)
What happens if the Congress gets some balls and does not raise the debt ceiling? Anything?
Congress get some balls??? LOL
They raised it last time, they'll raise it next time. The question is why do they call it a "ceiling"?
It's a retractable roof!
The question is how much they raise it next time. If it's enough to drive a QE 2.0 brian peppers rape van through, then we're getting an answer... if it's enough to bail out some states, but force some budget cuts all around, then... we have a different answer. My guess is no QE 2.0 remotely as large as 1.0... no political apetite for it. We get further controlled destruction while the old rape van is still backed up to the bank, throwing money in hand over fist.
Everyone knows QE doesn't work now... they'll fund any deficit with a flight to safety... and that solution will be short lived... and then, dun dun dun, a balanced budget. I'd put some novacaine on the back of your throats and prepare for the cock of austerity... your choices are spit or swallow.
There is a reason Greenspan believes rising stock market will solve all our problems. Stocks are owned primarily by the wealthy investor class, and their spending is all that matters. It takes about 10,000 Wal-mart clerks to equal the discretionary spending power of a single hedge-fund trader.
Market goes up, unemployment stays up, politicians do some kabuki-theatre hand-wringing about "putting people back to work", the rich get richer. God bless America.
One way or another the taxpayer will buy "his" (Governments) own debt,whether he pays it or his son,or his sons son,or his sons sons son pays is another story.It is quite clear that most Governments of the Western World see themselves as immune and untouchable empires that favour their own,the last thing they seem able to do is address or work in their voters or national interests.What we see now is not only immoral it is disgrace to a so called civilized society..................................................The danger is that the mainstream of society who keep the wheels turning become more disenfranchised and marginalised as the machinery of the state becomes more untouchable and less democratic, how the anger this generates comes to the surface remains to be seen.
'shyeah. Note that from the point of view of the administration the February breach is now beautifully placed to landmine the Republican fiscal-rectitude bandwagon as soon as it enters Congress in triumph. Many Tea Party hearts will be broken as Republican senators spontaneously change their minds about raising the ceiling further.
Strangelove:
Well, that would not be necessary Mr. President. It could easily be accomplished with a computer. And a computer could be set and programmed to accept factors from youth, health, sexual fertility, intelligence, and a cross section of necessary skills. Of course it would be absolutely vital that our top government and military men be included to foster and impart the required principles of leadership and tradition. Slams down left fist. Right arm rises in stiff Nazi salute. Arrrrr! Restrains right arm with left. Naturally, they would breed prodigiously, eh? There would be much time, and little to do. But ah with the proper breeding techniques and a ratio of say, ten females to each male, I would guess that they could then work their way back to the present gross national product within say, twenty years.