Thursday, February 2, 2012

Government continues to borrow and spend like drunken sailors

It didn't take long for the White House to put pen to paper after the debt ceiling was raised last Friday.  In just five days, the government borrowed $120 billion in new debt, and like a drunken sailor on his last night before going out to sea again, the intoxication of no fiscal responsibility makes Washington very dangerous to your economic future.

Well, two days later, the dry powder is less than $1.1 trillion. In other words, in the past two days, total US debt increased by $120 billion, along the lines of our expectations, as the Treasury filled up all the G-fund cash it had pillaged to continue issuing debt throughout the month of January even though it was formally above the debt ceiling. What is more concerning, is that as the chart below shows, the trendline of US debt since the beginning of 2011 is no longer a straight line, but has slowly transformed into a parabola, the very same word used as the root in such other infamous words as, for example, parabolic.

It gets worse: even according to the drastically, and very unrealistically, downward revised borrowing expectations of the Treasury released yesterday, the US will issue $444 billion in debt in this quarter. Today's number means that in February and March alone Tim Geithner will raise another $310 billion, which will send total debt to $15.7 trillion as of March 31. What is the final debt ceiling? Just under $16.4 trillion. So the US will have $700 billion in debt issuance capacity for the 7 months leading into the presidential election (and 9 until the end of the year). - Zerohedge

So drink up America!  The Titanic is going down, and the band continues to play.


Post a Comment