From Porter Stansberry in the S&A Digest:
It's one of those numbers that's so unbelievable you have to actually think about it for a while... Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that's not counting any additional deficit spending, which is estimated to be around $1.5 trillion. Put the two numbers together. Then ask yourself, how in the world can the Treasury borrow $3.5 trillion in only one year? That's an amount equal to nearly 30% of our entire GDP. And we're the world's biggest economy. Where will the money come from?
How did we end up with so much short-term debt? Like most entities that have far too much debt - whether subprime borrowers, GM, Fannie, or GE - the U.S. Treasury has tried to minimize its interest burden by borrowing for short durations and then "rolling over" the loans when they come due. As they say on Wall Street, "a rolling debt collects no moss." What they mean is, as long as you can extend the debt, you have no problem. Unfortunately, that leads folks to take on ever greater amounts of debt… at ever shorter durations… at ever lower interest rates. Sooner or later, the creditors wake up and ask themselves: What are the chances I will ever actually be repaid? And that's when the trouble starts. Interest rates go up dramatically. Funding costs soar. The party is over. Bankruptcy is next.
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Tea Party Losers:
ReplyDeleteHow many of you believe that Obama was born in Kenya?
How many believe that ACORN stole the election?
How many of you believe that Obama is a Nazi?
That kind of stupidity really hurts your cause.
Check out my comment on Government Takeover of the Federal Reserve.
Losers.
Tuesday, November 24, 2009
Where Did All The Money Go? The Fed Must End
http://thecomingdepression.blogspot.com/2009/11/where-did-all-money-go-fed-must-end.html?showComment=1259164610396#c5658785204296704441
Despite DUMB ASS COMMENTS LIKE 8:11's, those of us who live in reality are well aware of this situation. I have read China now has ownership of certain parts of America, as payment of the trillions we owe them.
ReplyDeleteYou see, many of us realized years ago the deficit spending would eventually catch up, which has happened. Its only a matter of time that the usurper president will have to declare the US insolvent, can not pay it's bills. When this scenario occurs, good luck with your cash in the bank & your stock portfolios.
And this scenario is not "MAY" happen, it "WILL" happen, probably in the very near future.
Better prepare, time is short...
Boy, you tea drinkers sure have short memories. Can't wait until you all circle the wagons around Palin and have a national collective IQ drop.
ReplyDeleteOnce upon a time, a guy owed me $500.00. He claimed he could not pay me back. I said "if you don't have any cash, I'll take your .40 cal Glock as payment in full.
ReplyDeleteVery soon, Obama will have to tell China, "we have no money to pay you back". The Chinese will say, "we'll take the Western United States as payment in full".
It's only a matter of time...
Well, this is a bit mis-leading/hyperbole. All of the debt that needs to refinanced is already invested in Federal bonds. The problem is only an issue if the current investors don't roll over their money to purchase the existing bonds that come due. In 2009. the Federal gov't had no problem rolling over the 1.8 Trillion that came due this year. Next year is only another $200 Billion money.
ReplyDeleteI suspect that the amount of debt that needs to roll over will increase as the many investors are avoiding long term bonds (ie 30yr, 10yr) since they know they are over priced. The gov't has to finance its spending using shorter and shorter term bonds, resulting in more and more debt that needs to re-financed each year.
The Federal reserve will make sure that the yields on gov't bonds will remain low. They will continue to buy Gov't bonds, use Currency swaps or bond swaps with the Primary dealers to ensure that the gov't bond yields remain low far into the future. There is no chance that the Federal gov't will default when it controls the printing presses and and simply pay creditors in devalued currency.
524 You and I helped accrue? Are you on Crack? You and I had nothing to do with it, are you a CEO of a Major Bank or Halliburton, if the answer is no, those are who Bankrupted the USA. No Wonder the USA is in such trouble, with idiots like yourself who blame the common people and not the Banksters, Ceo's and Government Officials.
ReplyDelete