US Treasury Burns $90 Billion In Cash In Under Two Weeks +$500 Billion Rolling Debt Ticking Timebomb

[stockholmer]

http://www.zerohedge.com/article/us-treasury-burns-90-billion-cash-two-weeks

Now that's what one calls prudent fiscal planning...

source:https://www.fms.treas.gov/fmsweb/viewDTSFiles?dir=w&fname=11071300.pdf


Now granted this is mostly due to paying off maturing Bills, which Geithner can't roll due to the debt ceiling being breached. But keep in mind that as we pointed out in T-Minus Two Months Until The $500 Billion Rolling Debt Ticking Timebomb Goes Off that there is nearly $500 billion in maturing short and long-term debt in the next month and a half which there will be no money to fund unless a debt ceiling decision is reached, but not by August 2, but July 22... or a week from today. And with Boehner refusing the Camp David dance invitation today, one can see why for the first time this afternoon we saw a coordinated sell off in bonds and stocks as the market is finally asking "what if..."

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http://www.zerohedge.com/article/t-minus-two-months-500-billion-ticking-timebomb


Ever since the famous Stanley Druckenmiller Op Ed http://www.zerohedge.com/article/druckenmiller-calls-out-treasury-ponzi-scheme-its-not-free-market-its-not-clean-market-ident published in early May, which called for an outright default of the US, saying it would not be the end of the world, and in fact the US would emerge stronger as a result of finally taking the first steps to getting its fiscal house in order, there has been a visible shift regarding the US debt ceiling discussion, with republicans (so far) digging in and refusing to budge on the issue. After all, on the surface Druckenmiller is absolutely correct: with interest rates near record lows for the past 3 years, interest payments would be manageable for a long time even if general rates were to surge due to the Treasury's fixing of low cash coupons over the past 3-4 years, amounting to about 20-30% of all annual tax receipts. There is however one very big problem with this argument, one which we pointed out back in April 2010 when we said http://www.zerohedge.com/article/us-treasury-pays-down-over-484-billion-bills-april-debt-roll-concerns-becomes-acute that "What people don't realize is that...unless the UST can roll its debt not on a monthly but now weekly basis in greater and greater amounts, the interest rate doesn't matter. All it takes is one semi-failed auction and it's game over as hundreds of billions in bills become payable." Enter the always forgotten maturing debt argument. And as a just released presentation by the Bipartisan Policy Center titled "Debt Limit Analysis" reminds us, aside from the actual deficit funding math, which is that in August there is a $134.3 billion cash shortfall that has to be funded with debt, there is a far greater risk. Or, put numerically, 467.4 billion far greater risks. This is the amount of debt that matures through August 31, and has to be rolled over or the US is bankrupt... in every sense of the word. Once again, America's politicians and media get broadsided by the definition of gross versus net. Because, in reality, the inability to issue more debt post August 3 means a halt to all new debt issuance. Which, unfortunately because it means Geithner's scaremongering is actually correct, would imply the end for the debt ponzi.



And their commentary, which recaps what we said 14 months ago:
•Treasury must “roll over” almost $500 b in debt that matures during August 2011
◦New debt is issued and the proceeds are used to repay the maturing debt plus interest due
◦Treasury will require market access throughout August to avoid defaulting on maturing debt

•About $380 b in short-term T-Bills maturing, plus $90 b in long-term securities
◦Quarterly refunding auction on August 15


And that's not it. On a Net basis, there is in addition another $134.3 billion in deficit that must be satisfied somehow. Alas, after August 3rd it will become impossible to plunder savings accounts going forward which means a game over in the kick the can down the road game:

Below is the maturity schedule in August from the BPC:




snip



full presentation link : http://www.bipartisanpolicy.org/sites/default/files/Debt%20Ceiling%20Analysis.pdf

debt ceiling analysis : http://www.scribd.com/doc/59140801/Debt-Ceiling-Analysis

[Demeter]

1. The Administration Made Their Bed of Nails

and they can lie in it. They've been lying all along, anyway.

Hope they are all comfy, and have sweet dreams...

:nopity:

[alcibiades_mystery]

2. Which means what?

:shrug:

[banned from Kos]

3. Obama has been lying? And you base this on comments from a

teabagger site like ZeroHedge? A site who promotes total economic destruction so that a pure capitalist system emerges?

That is why they promote US debt default in the link.

[Demeter]

4. So sorry to hear about your closed head injury