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Treasury Admits It Underestimated Debt Needs, Predicts Ceiling Breach In 2012; $600 Billion More Debt In Second Half
Back on April 30, when the US Treasury, together with the TBAC chaired by Matt Zames (who as everyone knows is being groomed to take over JPMorgan after Jamie gracefully steps down) sat down put together its latest debt funding needs projection, we openly mocked the numbers when we said "Now obviously we are all for the US needing less debt, however we wonder: did the US discover some magical source of tax revenue: last we checked the companies with $100+ billion in cash were paying virtually zero taxes, and US workers were making less and less courtesy of more and more jobs being converted into temp jobs with lower wages, and less withheld tax as a result." Sure enough, minutes ago the Treasury just admitted what we and our readers knew all along: in its quarterly Treasury refunding appetizer, it noted that during the "September 2012 quarter, Treasury expects to issue $276 billion in net marketable debt, assuming an end-of-September cash balance of $60 billion. This borrowing estimate is $12 billion higher than announced in April 2012. The increase is primarily due to lower receipts, higher outlays, redemptions of portfolio holdings by the Federal Reserve System, and higher issuances of State and Local Government securities." In other words: if only it wasn't for that pesky lack of revenue and excess spending our mocking would have been for nothing. Alas, it was spot on, and as a result instead of needing $253 billion in fiscal Q4, the US will need $272 billion (after having a $5 greater financing need in fiscal Q3, calendar Q1 as also expected).
Finally, in calendar Q4, the Treasury expects to get back to its roots, at which point it will need $331 billion in debt, 21% more than in calendar Q3, and 17% more than in calendar Q4 of 2011.
Alas, as the chart below shows, which forecasts US Treasury debt based on the just released numbers, all these numbers will ultimately need to be revised even higher as it is now inevitable that the debt ceiling will be breached in 2012, only not as the Treasury predicts toward the end of December, but well before that.
Some other factoids:
- Treasury forecasts total debt on September 30, 2012 of $16,132 billion and total debt on December 31, 2012 of $16,448 billion. As a reminder, the debt ceiling is $16,394 billion
- Total debt incurred by the US in the second half of calendar 2012 is estimated to be $592 billion; total financial needs are expected to $603 billion.
- Total debt incurred in calendar Q4 is expected to be $316 billion, higher than both Q3 ($276 billion) and Q4 2011 ($310 billion).
- Total debt incurred by the US in all of calendar 2012 is estimated to be $1.165 trillion
- Total debt incurred by the US in all of calendar 2011 was $1.051 trillion.
- In other words, calendar 2012 will see a 10% increase in total debt, while total US GDP is expected to rise by just under 2% for the full year.
- Assuming the Treasury's numbers are correct, each calendar day in the second half will see the US Treasury issue on average $3.3 billion in debt every day, and $136MM every hour; on a work day basis, this amounts to $4.8 billion in new debt each work day, and $200 million every working hour.
- Assuming 1% sequential growth in GDP, the US will close 2012 with a debt/GDP ratio of 103.4%.
- Keep in mind, all these numbers will be revised worse in 3 months when the next refunding statement is released.
One word: "Sustainable"
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When will this shit ever end?
It ends when we die.
Will we all be dying in 2012?
In debt we trust.
Only those selected for termination. Your notice will be hand delivered by mob rule.
Long rope and guillotines then? Better start organizing your mob now.
Well, here's hoping we all renew at Carousel!
Lock in on those high capacity mags,they are starting to move like hot cakes.
Except for the death thing which is kind of a drawback, I find this all fantastically bullish!
Obama '12 bitchez...they just gotta make it to 11/7 !!
awesome user pic! The only people who die, are those who want to die....
Yes! and we'll be dying in 2013 too!
"This borrowing estimate is $12 billion higher than announced in April 2012"
Isnt that only 3 days worth of borrowing?
Is anybody here surprised?
"It's all George Bush's fault!" -- Barrack Obama
Even more surprising - it does look like they'll manage to avoid the breach until after the elections.
Too bad. One would have hoped the Jaws of Hell would have opened to bite their ass well before.
There's still time, keep those fingers crossed.
Great when a plan comes together.
The key to your phrase is "look like." I would have been shocked if they didn't find a way to conceal the breach until after the selection.
"Missed it by this much!"
Good quote!
Of course, the Treasury is wrong. As documented by ZH a year ago, the "run-rate" for debt issuance is 30-40% higher than the projected rate (mentioned in this article), because the "off-balance-sheet" liabilities are being forced back onto the balance sheet as cash-flow payments must be made.
The *real* issue is far higher than what is listed here. Governments only fall through cash-flow problems, and those are in the middle of the exponential blowout.
Sounds like we need another unfunded war or two.
Krugman was serious about the Alien Invasion.
We need to have it here.
Keep all the Haliburton contract see ice jobs here. On both sides. This.k of the Krugman approved Keynesian multiplyer effect with all the destruction! Not to mention advertising rights and reality TV show potential!
It's like magic, I think about a subject like this the night before, something I haven't heard about in a while, and the story magically appears on ZH the very next day. I wonder what makes that work.
Ah Michael, it's not like magic, it IS magic!
DavidC
Reply of the day! Kudos.
the amorphous cloud of like minds in surreal slumber awaken always through the 'music of the spheres'
WHAT???????
You mean MSNBC/The Daily Show, and Will&Grace are not the entire economy???
YOU MUST BE A THOUGHT CRIMINAL!!
Will & Grace? How long have you been off the grid?
cut it out Wally...
LOL, yeah, so just shut down the government one day each month for the last three months - problem solved!
:P
"so just shut down the government one day each month for the last three months. problem solved!"
More like: "Just keep the gov't open one day each month, forever. Problem Solved!"
In about 12 months. Maybe nine.
You got that long to get your shit together. After this time next year there won't be any getting together any more shit.
You sound like my husband, who wants to add to our small arms pile. I want to add to my jewlery collection. Who knows, maybe we can do both.
A diamond encrusted shotgun stock would be a good compromise.
Silver bullets come in handy when confronted with the undead.
Haha, the glint would be enought to blind someone. If I get talked onto getting a concealed carry, my weapon of choice will be a thing to behold.
cougar_w. The eternal optimist.
There's no way to predict when. Could be this week. Or in years.
You are mostly correct.
However, not this week they have enough ammo to handle this week and next. And most likely, not many years because they are seriously running out of ammo.
It's not a crap shoot; they are running out of runway. That's a very different kind of call.
During the US War of Independence General George Washington allowed his troops to pillage the poulation to keep the army supplied. They did however, give worthless IOU's to the hapless citizens. Revolution part deux will be very similar.
0.001% = Loyalist
cougar_w said:
Black Cat Moan - BBA Live
"Get my shit together..."
http://www.youtube.com/watch?v=fFHIaCgzCuY
...War, rationing, and likely, martial law.
Will that pre-empt the 3 hour WWE Monday Night Raw broadcast tonight? Sure hope not, I heard they're bringing Gorgeous George back.
DHS gears up for civil unrest prior to presidential elections
http://rt.com/usa/news/dhs-unrest-gear-283/
Ahhh,thee youngsters will again be getting dragged away by those turtle looking people.I really wish they save all that youthful energy for when it counts.stay home election day,or as "Carlin " would do,jack off.
When will this shit ever end?
When the goal is accomplished that it was intended to produce from Day 1.
"When will this shit ever end?"
If I went long - the market would implode in mere seconds. As long as I'm losing my shirt the world economy will be safe.
YOU'RE WELCOME.
HD, you should go long, and the rest of us at ZH will go short. We'll cut you in on our earnings on the market implosion. Deal?
I would, but there is some Italian guy here who says he will "do whatever it takes" not to let that happen. He assures me, "it will be enough"...
did he look at you straight in the eye? that is the TGL test...
Or you could stop playing in someone else's game.
Go buy farmland and learn to farm. Nothing else is real. Nothing.
The national debt is TRILLIONS, not Billions as the author of this article notes in the graph. What's a trillion here and there though?
At some point we might have to sell the Louisana Purchase back to get some money for the interest.
The French are flat broke. Maybe the German's would buy it? No forget that, sell it to the Chinese. They can build malls all along the Mississippi waterfront.
If the Chinese bought LA, they'd be pumping oil left and right and pay us back with what used to be our own oil, and they'd probably get it done in less than 5 years. :-O
I blame Turbo Tax.
gubmint cheeeeez
I don't understand the problem here. Can't they just print whatever they need? /s
From a practical standpoint yes. The debt ceiling is a political crisis that Congress likes to regularly spring on itself.
The overall debt is more of a frog-in-slowly-warming-water type of crisis.
That's what Geithner is asking at this very moment, cougar.
Win the Future!
"The increase is primarily due to lower receipts, higher outlays"
Pardon my ignorance, but what else in seven hells of blue blazes could be the reason?
unexpected outlays.
Could be:
higher receipts and much much much higher outlays...
OR
much much much lower receipts and lower outlays
OR
higher receipts and lower outlays but there was an accounting error
OR
we got some receipts and we cashed some checks but who the heck knows
OR
do you really want me to continue?
Luckily we have economists schooled in the best of institutions to illuminate the cause of the problem.
Phew, this makes me feel all better. More agencies to control debt are needed, at least 99% of GDP should be spent on agencies if not 150%.
I love debt brother. He steals anything he wants without hands.
But notice, he is really vulnerable to deflation.
And is filled with hot-air!
Come on, people. Who would junk a brother who looks like the frontman for The Ohio Players ?
http://unique74mag.files.wordpress.com/2011/07/ohio-players.jpg
I don't think he's a brother.
Looks like he's missing some junk down there.
Hmm, I was thinking more P-Funk circa late 70's myself. After Clinton and George Dubya, a George Clintonesque figurehead is somehow appropriate.
HOPEY-CHANGEY, SUCKAZ!!!
Solyndra powered compressors!
oh. wait.
Elections plus debt ceiling bust equals perfect timing!
Just like every ZHer with a head has said for just about a year now.
Let the games begin!
Timmah had to break the news now, so they can pull a rabbit out of the hat in time for November elections. Waiting too long would have given the Repubs a new toy to play with.
Nah, the debt ceiling "issue" is no longer a lefty-righty faux divide, but a real statist vs. non-statist one.
They'll just steal the money back from the pre-funded USPS healthcare account.
Very true, the lefty-righty thing is all for looks. But both parties will absolutely play it that way, to the hilt, 24x7, as November looms near. Watch, they'll all start sounding like Ron Paul and "audit the Fed" and "defend the current sea" and "real wages for real work" but it won't count for shit the day after the winner is named. Whoever the fuck that is. Whoever the fuck really cares.
If Romney had a brain instead of a Manchurian computer chip programmed by bankers, he would just run ads of Krugman, Obama, and every other Keynesian talking head saying more debt is the answer for slow growth. Then show how for every $1 of growth the federal government spent $3.
You then end with, "If you spent $3 for every $1 you made, how long would you last?"
Of course Romney needs to pay the masters as much as Obama does.
Of course you are correct. However, the problem is that few of the sheeple understand the math or care.
Oh I care very much, in fact....wait isn't a Khardashian going to be on Dancing with American Idols tonight? Must Watch TV
Clueless Economist
Mispelled Khardashian, it Khardoucheian.
yea romney has some low hangin fruit to pick but he doesnt seem too bright in my world. Thats why i say no QE. he could just call the fed is influencing. Im so sick of this qe or no qe garbage.
None of us had a clue that a member of the Muslim Brotherhood would ever atain such power,and destroy the Western worlds economies.
An economic Jihad.
Romney hasn't won the election yet so there is still time.
It is just too damn bad that the debt ceiling breach couldn't happen in late October, about a week or two before the election. What a sideshow that would be.
Sustainable... I must be exactly as stupid as I always thought I am. Damn, I had hoped they would start exhaustingly to print...
We've got something for you Geithner....it's an "anti-Banana disguise"
Can a 911 attack on the US treasury building would result Fed to collapse?
I am sick of this long and stinking bullshit.
Nah.
Remember the Fed is divided into 7 zones and each have at least one reserve city plus any number of hot backups.
Geithner can't leave fast enough.
Right, like his replacement will be scads better.
Besides, I still have lots of Eraserhead jokes I haven't used yet.
I'm sure you'll get plenty of chance to use them in whatever bomb-triggering job he gets next.
Maybe him and Hillary will run the IMF.
Does Mitt Romney Have a Secret Economic Plan?
http://www.bloomberg.com/news/2012-07-27/does-mitt-romney-have-a-secret-economic-plan-.html
Same for bernanke at least Romney would get rid of those two douche bags
Yep, boomberg has all of the inside skinny. - Ned
Why do they persist in calling it a debt ceiling when in fact they are digging a bigger and bigger hole?
The ceiling looks higher as you dig down deeper.
raising the roof what what???!!! :D :D :D
Debt Target is more accurate. Good news, we're right on target! USA! USA! USA!
Lower receipts=less folks employed!
Hmmm. Hmmm.
This falll is going to be superfragilisticexpialidocious!
You forgot "cala" after "super" or is that a bit of austerity creeping in? LOL.
But you are right, they don't seem to make the connection between employment and the budget. Employment only seems to matter when elections approach and even then it is just talk.
Wow, Thats a lot of money.
The Krugs would say nowhere near enough money!
- The POTUS, Barrack Obama, June 2012
Capital Strike; capital on strike...
25 Million small business owners revolt;//
Send a message....shut down, in october as a surprise...
1099 everybody.....
that 'll crater it; and stop it ....
"WE DID DAT.....NOT YOU, WE DID DAT...."
That guy who mowed down all those people in the theater . . . he didn't do that. Government did that. Govt made the roads he drove on to get to the theater. Gov't helped that theater get built.
Govt does everything. It's amazing.
I need more power Scotie!
We're doing warp 9 captain, I'm giving her all she's got.
If we go any faster she'll break up captain.
more power Scotie we need more power.
Scottie rigs a stun gun/taser out of the guts of his engineering console and nukes Captian Kirk.
There is your goddamn power you son of a bitch!
Sassenach son of a bitch.
Fixed.
http://www.theglobeandmail.com/globe-investor/investment-ideas/streetwise/tarp-was-abysmal-failure-former-head/article4448989/
TARP Failure yada yada yada.
Unfunded liabilities hit $120 trillion on Wednesday. Richard Fisher of the Dallas Fed used to highlight this number before 2008. Now there is a conspiracy of silence about this number.
They're not "liabilities" like REAL liabilities. The gummit can always just decide not to pay, and there's no way to try to make them.
Given that the spending problem is all non-discretionary anyway, nothing's going to change with regards to the deficit until someone gets serious about cutting SS, Medicare, and/or military spending.
It will definitely make some folks richer.
Welcome to the recovery.
Well, Golly!
More Debt. Who woulda thunk?
+1 Tylers,
Please keep hammering away at these assclowns like Matt Zames and the other Bankster criminals.
ZH Full Court Press...
Argentina inflation running approx 35% now and currency controls are in place to block people investors move out of the rapidly devaluing peso:
From Daniel Politi:
BUENOS AIRES — Earlier this month, Argentina’s Central Bank officially banned the purchase of U.S. dollars for savings, making official what had already been a de facto government policy following months of tightening controls on the foreign-exchange market as a way of protecting foreign reserves. Now only those traveling abroad are allowed to buy foreign currency provided they get permission from the government tax agency first.
Currency control's will be here soon step by step this will likely be step one
What If There Was No Cash?http://seekingalpha.com/article/760001-what-if-there-was-no-cash
Related
Fed Weighs Cutting Interest On Banks’ Reserves After ECB Move
http://www.bloomberg.com/news/2012-07-30/fed-weighs-cutting-interest-on-banks-reserves-after-ecb-move.html
And what's Geithner doing in Germany?
http://www.economicpolicyjournal.com/2012/07/why-is-geithner-in-germany.html
I'm sure it's transitory
The penalty for such misjudgment should be the death penaly- The Code of Hammurabi.
Not to mention the death penalty in Europe for hundreds of years.
I think that was before the Enlightenment.
QE has been delayed in order to print massive cash to finance our unpayable debt... are those printing presses warranteed? What? made in China? shit. I'm buying Drachmas.
Yes but how does this impact QE3?
Cheney, Rummy and Bush #2 have to be laughing so hard they are playing their colostomy bags like bagpipes. The last presidency before the collapse and they knew it when they worked for Bush the Spy.
We get drowned in this shit, man, and it keeps coming.
Who cares just spend more! The world is going bankrup anyway.
I just did. I bought the new Mac book pro with Retina display. Expensive fucker...
Alex Jones, a journalist who claims Peak Oil Thoery is hogwash because the oilgarchs advertise peak oil prominantly, should be aware not only is this not the case, but deducing "If A then not B" is fallacious logic. Here is a great example of an oil chief saying oil production will never drop:
And with that, just as many other oil Exes, not to mention all economists, believe oil will never peak production (or rather the EROEI of oil) so there is no need to ready ourselves for a future with less of it around.
Monbiot's Peak Oil U-Turn:
http://www.davidstrahan.com/blog/?p=1576
CMON Turbo Tax Tim. Get with the program. You're the US Government! 600 Billion is a rounding error you TWIT.....
Soon the wealthy will own every acre, every house and business, every ounce of precious metals, and everything under the sun. THEN AND ONLY THEN will they announce the dollar is worthless.
Right, after the acquire all these real things with the minimum amount of worthless dollars.
Bernanke would endlessly print right now if it weren't for the elections. He doesn't want to appear helping O'fishizzle get re-elected. Not that I agree, but this administration will pump any amount necessary to get homeowners out from underwater, where they can immediately refi student debt, credit cards, car loans, all at 2-3%. To be caught without hard assets, chiefly a house, will quickly separate locked-in debtors versus no-debt and reloadable spenders. My banking contacts tell me this is the reason they are dribbling out the shadow inventory as slow as possible - they want to be holding property when the ramping starts.
Housing is being taken off the market at rapid pace, something is up. Builder new house inventory (sans the very misleading multi-family stats) is at a 50 year low.
http://ml-explode.com/2012/04/bernanke-successfully-re-inflating-housing...
In my county this year:
January - July 2011: 1371 foreclosed; 354 bid and won by Plaintiff @ balance (bank); 25.8% cover
January - July 2012: 1703 foreclosed; 1433 bid and won by Plaintiff @ balance (bank); 84.1% cover
Bid to cover has increased almost 60% since last year. Outside bidder numbers reduced from 96 to 14.
I gather from this: Banks are still adding to shadow inventory, in fact increasing almost 60%. Of course, this may not be true in every county, but why else would banks bid-to-cover when sales are still sinking? Mark-to-market aside, this presents incredible risk for the banks, especially the regionals. I went short Regions, BancorpSouth, and SunTrust. I was also chasing some houses that foreclosed and now are bank owned. They aren't listing their inventory - they don't want anybody counting houses they have on market. If you can get a deal, this time may represent an outstanding time to buy a house, get good financing, and wait for the bubble (again).
Won't be much of a housing market if there are only sellers.
50% of the population hasn't got a pot to piss in--with no income, buying a house isn't a high priority, not that they'd qualify for a mortgage anyway. How many houses can any one family use?
I'm sure there's never been a better time to buy...
Regions is a hard one. If they could get into the Funeral Home Business to process your body, they will do so.
There are thousands of students in college now with barely any property to speak of. And they are encumbered with debt to the point of not being approved for anything.
Therefore the prices MUST fall.
We won't refinance, simply sell and go somewhere else. But not just yet and probably never.
The key word you used was "a"...buy "a" house. A lot of people forget houses (save those profitably used as rentals) are liabilities, not assets. Buying a house in the hopes the housing market turns and a greater fool will buy it is a mistake, in my opinion.
If it makes money, it's an asset...if it takes money, it's a liability. <---Something every school should teach...but of course, they won't.
To each their own, though.
>>>>>I went short Regions, BancorpSouth, and SunTrust.
Diebold dropped 9% today blaming the regionals for a decline in ATM's. Good luck with ur shorts.
Its planned. Obama's tactitians are looking to force a debate. They feel the debate can be won for some reason.
What's up for debate? Congress is the only branch that can change non-discretionary spending, and it's pretty clear they're not about to do anything.
The Presidency is just going to be a hot-potato until global conflagration.
Whichever party is in the WH is going to be clobbered for spending by the party that's not.
It'd be funnier if any good could come of it.
Fed budget: about $3.7T
Discretionary spending: about $1.4T
Budget deficit: about $1.6T
Notice what's going on there?
"US Treasury issue on average $3.3 billion in debt every day"
That's about 4K every year for each person in America (I'm assuming a population of 300,000,000).
Apples Cash and Income. Look over a basic Income statement and you'll see a the so called after tax income. Go to the cash flow statement and you'll see this nifty column called Adjustments To Net Income. This is where cash is adjusted upwards and presumably where the bullshit on the taxes paid starts.
Example. In 2011 they showed a "provison" for income taxes at 8.2B
Then in adjustments to net Income we see a + 4.0B .
All is cool as far as Apple being perceived as a good corporate citizen with a tax rate of around 24% .
The reality is that it's 12% which is why their cash flow statement is the key to finding out true earnings.
in fiscal 2011 the net earnings where 25B. Instead it should have been 29B. That's nice to know until one looks at the Balance sheet and find that the cash present in the US + Receivables is less than Payables+Current portion of long term liabilities . Someone calculated that there was 75b Sequestered offshore to escape US Taxes. Add to that the 11B in earnings adjustments they have hidden off shore and they have 86B in cash in off shore accounts. Obviously they have a tremendous borrowing capacity at super low rates that would make sense if cash flow fell off somewhat. Their biggest problem with this cash horde is the absolute refusal to pay US taxes on it which limits it's effectiveness especially in a ZIRP environment. Hell if this was back in the good old days of 6%-7% yeilds on REAL triple AAA rates investments , they would be earning 7-8b a year just on their cash holdings. Alas they have decided to offshore the cash as most other Cash Have Corporations which tend to limit receipts. The offshore 86B may have a 25B liability bomb in their that no one can see.
Beware of Corporations who use top brands ("beloved" as some Apple analysts call it) as a sledge hammer to beat their suppliers, employees, customers and shareholders with to the benefit of only top management. Example A is MSFT stock performance since 2000 who practiced Brand beatings regularly in the 90s as shareholders suffered mightily for it if it's stock was purchased around it's 2000 High.
...... then the flight attendant said, "Place it over your nose and mouth and breathe normally"
to which I responded, "I'll take some of that, come over here and place that thing you have over my nose and mouth" ..
The Treasury is using the same technique except they're using chloroform, hoping we won't notice.
Unfortunately, it looks like they'll squeek past November elections without it being an issue. December is perfect timing if you're a politician - they do another debt ceiling hike at 11:30pm on Christmas Eve by unanimous consent, home in time for cookies and egg nog. Even if the debt ceiling hit today, they'd still be able to steal, er "borrow", from all the usual places to get past November.
We talk about these numbers as if it was just passing conversation. But few seem to care so far. And not one in Congress advises pay cuts, benefit cuts, medical changes. Not one. A bunch of useless selfish morons.
And I never hear the annual debt service on this mamouth moutain of IOUs. It is nearly $600 billion, correct?
Economic treason. No other way to say. People need to hang or the American Republic will perish.
Save your cute fucking snarky comments. Shit is serious now.
$454 billion last FY, $375 so far this one with 3 months to go.
http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm
Shit has been serious for some time, nothing wrong with a bit of gallows humor among the condemned/damned.
How does the Fed get $600,000,000,000.00 wrong? I can understand folks at the local trailer park getting zeros and periods a bit mixed up when counting beer bottles.... but the Fed???
This is a complete sham. The Fed has legions of bright people who have studied economic history and they know that they are entering the end game. History repeats itself, they just can't say so because the system would collapse.
For a very succinct understanding of whats going on, read Ray Dalio
’s paper Why Countries Succeed and Fail Economically (June 2011). You'll need to go into the Bridgewater website and look up research that is free to the general public. Its all there in black and white (and Dalio is a financial Einstein). http://www.bwater.com/home/research--press/how-the-economic-machine-work...
They know it's game over... they're just doing what they can to prevent the system from crashing down. And yes - we are royally #ucked.
"This is a complete sham. The Fed has legions of bright people who have studied economic history..."
The FED has legions of assholes.