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Treasury Scrambles To Raise $60 Billion Extra Cash Ahead Of Next Debt Ceiling Fight
By now everyone is aware that due to the pick up in tax revenues coupled with a cut in spending, US funding needs have been decreasing over the past year at least until the demographic inflection point hits in 2015 and the old trend reverts. That this is happening to the chagrin of the Fed, which is unable to trim its montly monetization of securities, i.e., taper, without crashing the market and is therefore forced to monetize more than the entire 10 Year equivalent net monthly issuance is also known to all except for the Fed it seems, which instead is forced to gobble up increasingly more high quality collateral.
Which is precisely what the moments ago released marketable borrowing estimates by the Treasury for Fiscal Q1 and Q2 revealed: funding needs for the October-December quarter declined from the prior $230 billion estimate to $204 billion, while the Q1 funding needs were set at $356 billion, in line with last year's number. And yet, the Treasury also announced that despite a lower funding need in the current quarter, it would proceed with issuing $32 billion more in net Treasurys, or $266 billion, than previously estimated. Why? To push the quarter end cash balance from $80 billion to $140 billion at December 31, 2013. This is the highest quarter-ending cash balance since 2010.
Why is the Treasury scrambling to build up cash ahead of calendar 2014? Simple: as is well-known, the debt ceiling drama comes back with a vengeance in late January and early February, and this one promises to be just as theatrical and protracted as all prior ones. Which means that in order to push back the ultimate day of reckoning, the infamous X-Date, beyond which the Treasury truly has no cash, it is now stocking up on as much cash as it can get its hands on.
Based on rough estimates, the additional $60 billion in cash means the Treasury may have just bought itself at least 1 month of additional wiggle room before it runs out of emergency measures. And since the Treasury is indicating it will have that much extra cash going into 2014, it virtually assures that the theatrics surrounding this latest upcoming debt target hike, when Boehner again huffs and puffs before folding in a lawn chair of epic humiliation, will be on par with all prior such soap opera episodes.
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please, there is no "struggle" when you have a printer and are allowed to counterfeit...
85 billion to become 150 billion per month shortly...
And Bitcoin is breaking out.. hm.. www.ounce.me shows weighted average between all exchanges is approaching all time highs.
Why raise when you can simply print. Something is wrong with this story. What are they lying about now.
Anytime their filthy lips are moving...
Need I say more? Of course it is to raise $$$ to fund the impasse that is sure to follow come winter!! Got copier will print!
Come on, plus one for Palladin reference!
What am I missing? I thought the Congress just granted the President the authority to basically increase the debt ceiling as needed (which means forever.)
It was something like that but quite that... kinda thing.
I recall that the deal was that the ceiling gets raised in January, unless Congress enacts new legislation to the contrary, which would be subject to veto, and so the next debt ceiling lift can only be prevented by a veto-override supermajority. But that's a one-time thing, if my understanding is correct.
Everyone realizes the QE/month is going much higher.
The Fed is boxed in and must keep increasing the monthly QE.
Otherwise Wall STreet cries and threatens.
Wall Street is the puppet master.
Remove the brakes! If we slow down, we crash! Still plenty of room on the tach before the red line. This new driver is just crazy enough to REALLY floor it too.....
They just need a sideshow to distract the peasants while the Senate confirms Mr. Yellen.
Or is that production slated for December time frame when everybody's busy not shopping.
I guess they believe if they drop the price of gas 30 cents a gallon we'll all head out and spend like druken sailors, or Congress Critters.
I heard Barry O placed a large bet on the Redskins yesterday to cover this.
Boehner needs to go in 2014...Any Zher in his district willing to run??
There are plenty of good tea party candidates in Butler and Warren counties.
I dont think they have the millions in funding needed to run against him, though.
I'll do my best and keep an eye out for the pussy. My Audi might have to do some unintentional acceleation.
Look, Lew can do his thing after the refill on reversing the "extraordinary adventures" (sic). That gives them a lot of time.
It's cute how they still pretend it's a struggle. Or perhaps I mean duplicituous.
This is the Treasury's way of "saving" for a rainy day.