Mar 02
0

Mayor Bloomberg: “people do seem willing to lend us an infinite amount of money”

By | Commentary
I just read this at politicker about some interesting comments by New York’s Mayor Bloomberg. He, like pretty much all of the elites seem to be under the impression that the US government can in fact borrow an infinite amount of money. If you believe in fairy tales…just like the Mayor, well, then I would encourage you keep loaning Uncle Sam Money at near zero rates. Get back to me in 10 years and let me know how that works out for you.
About a month ago in “Uncle Madoff’s Trust Fund” I wrote:
“It never ceases to amaze me that we as a nation trust our government, run by universally despised politicians with our personal wellbeing in retirement.”
I think the same needs to be said about US debt. Since my days in college, I can remember being told over and over by professor after professor…. the market assumes that US debt is risk free. This is a fundamental assumption for modern economics and finance….but let’s think about how moronic that is. Who is the US government? It is us…only led by a bunch of morons who can’t even write or pass a budget, much less balance one. The number of budget surplus’s our nation has produced in it’s history could probably be counted on  one hand…for those of us that can count that high. The current debt outstanding, fast approaching $17T, is about $50k per man woman and child. So…take a quick look around and ask yourself…who would you be willing to loan $50k to? Yeah…that’s what I thought. kind of scary huh?
So when you purchase that 10 year “risk free” bond paying 2%…just think about who you are counting on to pay it back in ten years….whatever yokel your fellow citizens have decided is the least biggest moron…or perhaps who will give them the most free stuff….that’s the guy, that’s the congress, that’s the Treasury Secretary you are counting on to return your $100 and change when 2023 rolls around. If you are just cashing in the bond you purchased back in 2002, you may noticed that things have changed a bit. That $100 bill only buys 1/3 of the oil it or 1/4 of the metals it did when you bought it. Of course the official inflation numbers were only like 2% a year, but who are you going to believe, Uncle Sam or your lying eyes? If that pattern continues, in ten years that nice crisp $100 treasury secretary Krugman pays you back with is going to be a rather uncomfortable piece of toilet paper.
So when will we stop believing in fairy tales? I’m not holding my breath.
Mar 01
0

2/27/2013 Daily US Cash Deficit

By | Daily Deficit

The US Daily Cash Deficit for 2/27/2013 was $23.6B bringing the February deficit to $220B with one day to go. Primary drivers for the rather large daily deficit was the last Social Security EFT of the month at $11.7B and $14.2B of refunds. 2/2012, with one additional business day ended up at $249B, and it seems unlikely that mark will be broken in 2013 thanks to an increase in tax revenues, mostly flat outlays, and a slowdown in tax refunds.

2013-02-27 USDD

Feb 28
0

2/26/2013 Daily US Cash Deficit

By | Daily Deficit
The US Daily Deficit for 2/26/2013 was $10.5B bringing the 2/2013 deficit through 26 days to $197B. We are likely to see large deficits for the remaining two days in the $10B+ range, so ending 2/2013 at $225B seems likely but refunds are kind of random right now and could skew that up or down a bit so +/-10B on that seems fair.

2013-02-26 USDD

Feb 28
0

Sarah Palin nails it??

By | Commentary
I’m no Sarah Palin fan. In fact, I am generally disgusted by both of our political parties…maybe I’ll discuss that another day. However, according to this Politico story Palin recently said:

“If we are going to wet our proverbial pants over 0.3% in annual spending cuts  when we’re running up trillion dollar annual deficits, then we’re done. Put a  fork in us. We’re finished. We’re going to default eventually….”

Wow!! Are politicians allowed to say that? She goes on to say:

“If we ARE serious about putting our fiscal house in order, then let’s stop the  hysterics, tighten our belts, and take our medicine”

Not to nitpick, but my math puts it closer to 3%, but I’m gonna give it to her…Palin Nailed it. Not Rand Paul, not Paul Ryan….Sarah Palin is the first person from one of the two parties I’ve heard speak the truth on this issue in a long time. And she’s exactly right. There will be defaults, there will be “haircuts” , there will be hell to pay for our lack of national budgeting skills…. I just don’t know when. Maybe I should just ask Sarah 🙂

 

 

Feb 27
0

2/25/2013 Daily US Cash Deficit

By | Daily Deficit
The US Daily Cash Surplus for 2/25/2013 was $0.6B bringing the February total through 25 days to $186B. With only three business days remaining, it is increasingly unlikely that the 2/2012 deficit will match or exceed the 2/2012 deficit. There are several moving pieces, but the two primary drivers for the improvement are likely to be a bona fide increase in tax revenues of about $$10B-$20B and tax refund delays pushing refunds into March and April of $10B-$20B. The extra business day in 2/2012 will also be a factor. We will have all our answers this Friday 3/1, with a monthly recap to follow.

2013-02-25 USDD