Monday, June 27, 2011

A Surge Of Treasury Issuance As Soon As The Debt Ceiling Is Lifted

A Surge Of Treasury Issuance As 
Soon As The Debt Ceiling Is Lifted
News Link  •  Government Debt & Financing

06-27-2011  •  
One of the side effects of the US hitting its debt ceiling in mid-May is that while the components of its total debt have been shifting, with total marketable debt slowly grinding higher, while intragovernmental holdings (i.e., government retirement pension accruals) declining, the total thing has been flat as a pancake at just $25 million below the mandated ceiling. Since May 16 (or 57 working days now), total US debt has been $14.345 billion and not a penny more. Yet the issue is that with the US expected to have a roughly $1.5 trillion budget deficit in the calendar 2011 year, the ongoing contraction in debt issuance is only temporary. Basically when and if the debt ceiling is lifted, the Treasury will not only have to issue as much debt as before, but it will have to issue massively more in the short term to catch up to the ongoing run rate, and also in order to prefund the same retirement accounts it has been plundering for the past 6 months. So here's the math. As the chart below shows, since May 16, the cumulative divergence between where total debt is and where it should be is now a whopping $265 billion. That's right: when the debt ceiling cap is finally lifted, and it will be lifted, with republicans "kicking and screaming", Geithner will suddenly find himself needing to plug a gap of over 2 months worth of accrued treasury issuance. Mathematically, this means the Treasury will have to sell not the $100 billion or so in net debt but well over double that in August and September. And this will happen at a time when there is no QE2 to soak up the excess slack. 
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Venezuela denies Chavez in critical condition

Venezuela denies Chavez in 
critical condition
News Link  •  World News

06-26-2011  •  AFP 
The Venezuelan government rejected reports that President Hugo Chavez is in critical condition following emergency surgery in Cuba, insisting the firebrand leftist leader was "recovering well." 
  Chavez's government said he had an operation for a pelvic abscess on June 10 and continues to mend.
"He is recovering," Information Minister Andres Izarra told AFP in the wake of a report by Miami's El Nuevo Herald citing unnamed US intelligence sources as saying the 56-year-old "is in critical condition - not on the brink of death, but critical indeed."
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New Orleans mayor thought CIA agents were trying to POISON him after Hurricane Katrina

New Orleans mayor thought CIA 
agents were trying to POISON him after Hurricane Katrina
News Link  •  Government

06-27-2011  • 
The former mayor of New Orleans has revealed how he became so paranoid after Hurricane Katrina he was convinced the government was trying to poison him.

Ray Nagin also tells the bizarre story of how heavily-armed men in combat suits allegedly stormed his command centre and attempted to plant bugs, as he led the response to the 2005 disaster.

He makes the revelations in a self-published memoir, Katrina's Secrets: Storms After the Storm.
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Gingrich: Obama "The Food Stamp President" and Blacks to Switch Sides

Republican presidential hopeful Newt Gingrich has joined other conservatives in using high unemployment rates among African-Americans as a bid against President Obama, saying that the president has performed so poorly that blacks will vote Republican in 2012. "No administration in modern times has failed younger blacks more than the Obama administration," said Gingrich during the keynote speech at the Maryland GOP's annual Red, White & Blue banquet in Baltimore.

Gingrich cited high unemployment rates among African-American teenagers and said that the black vote is ripe for the picking.

"Think of the social catastrophe of 41% of a community not being able to find a job. But we have to have the courage to walk into that neighborhood, to talk to that preacher, to visit that small business, to talk to that mother. And we have to have a convincing case that we actually know how to create jobs," he said, as reported on "The morning they believe that, you're going to see margins in percents you never dreamed of decide there's a better future," Gingrich said. "It takes courage, it takes hard work, it takes discipline and it's doable."

Gingrich stepped in it earlier by calling Obama "the food stamp president," but said that if elected he would be a "paycheck president." Gingrich, a former Speaker of the House, invoked the phrase again during Thursday's speech, adding a bit of nuance, suggesting that blacks might have a come-to-Jesus moment this election and distance themselves from the president.

"I will bet you there is not a single precinct in this state in which the majority will pick for their children food stamps over paychecks," he said.

Gingrich's remarks ring similar to those of Rep. Michele Bachmann, who is also running for the Republican presidential nomination and told a group at the Republican Leadership Conference in New Orleans last week that Obama "has failed the African-American community" for not doing more to bolster employment rates.

Gingrich has a long history of making what some have seen as patronizing, bigoted or outright racists remarks about minorities, women and the LGBT communities.

An article last year on chronicled what it called "Newt Gingrich's history of bigoted remarks," from over the years.

Here's just a taste:

In August Gingrich compared the proposed Islamic center near Ground Zero to Nazis erecting a sign near the Holocaust Museum or a Japanese memorial near Pearl Harbor.

In 2007 he said that bilingual education teaches "the language of living in a ghetto."

And in 1995 he said that women were not fit for front line combat in the trenches because "they get infections."

One of the more offensive of Gingrich's comments came in a 1994 interview with The New York Times, in which he proposed that the government should abandon giving poor young mothers welfare and instead start building more orphanages.

And during a radio show earlier this week with host Laura Ingraham, Gingrich criticized First Lady Michelle Obama's trip to Africa, again invoking black unemployment:

"Well you know when you had 45% African-American teenage unemployment in January in the United States, it would have been nice for the president to have focused on bringing that hope and optimism to young Americans as well as young Africans."

By Trymaine Lee

Republican Leaders Must Play Hardball on Debt Ceiling

By Bill Wilson
It is time for congressional Republican leaders, including House Speaker John Boehner, to play hardball on the debt ceiling.

The only way House Republicans’ leverage on the debt ceiling will work is if they’re willing to not increase the debt ceiling. Because, if they are unwilling to go that far, they will achieve exactly zero concessions in exchange for their votes.

That is why Americans for Limited Government is supporting Senator Jim DeMint and House Republican Study Committee Chairman Jim Jordan’s “Cut, Cap, and Balance” Pledge. All members of Congress should be taking this pledge.

Basically, there should be no increase in the nation’s $14.294 trillion borrowing limit unless there are hundreds of billions of immediate spending cuts, statutory spending caps of no more than 18 percent of the Gross Domestic Product, and a balanced budget amendment with strong tax and spending limitations.

Unless all of that is done, the American people will have no assurance that the debt ceiling will not just need to be increased again, again, and again in the future.
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The Team Obama Spotlight: Joe Biden and His Role in Budget Talks

Video by Frank McCaffrey
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Florida Governor Rick Scott Sued for trying to save pensions

By Rick Manning
The past six months have seen public employee unions protesting around the nation attempting to resist attempts by elected representatives to rein in the massive overspending of their predecessors.

Scenes from Wisconsin to Indiana to even California have found those who have been hired by taxpayers to do the government’s business taking to the streets to keep the power, money and pensions that elected officials who they helped elect granted them.

In Wisconsin, the public employee unions even attempted to influence a judicial election in a brazen attempt to overturn the decisions by duly elected officials.

Now, the teachers union in Florida is suing the state over a change that was made in the law which would require their members to pay 3 percent out of their paychecks toward their retirement fund, instead of having that money provided by the taxpayers.

While I can feel some sympathy toward a public employee who entered this past year with one set of economic assumptions and had those assumptions turned on their head. That is exactly what the rest of America has been feeling for the past three years, largely due to government overspending, keeping these very public employees in the high style that they’ve become accustomed.
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