3 Days Into The Month = $169 Billion Of Debt Redeemed (U.S. is rapidly becoming insolvent alert)

Zero Hedge ^ | June 6, 2010 | Tyler Durden

[Zakeet]

Three days into the month, and the Treasury has already redeemed $169 billion in debt, of which $137 billion in Bills. Run-rated (for Bills alone) this is about $5.5 trillion annually, or basically 63% of all marketable US debt. And somehow the Treasury is lowering the amount of new bond issuance beginning next week. We wonder just where Tim Geithner will get the much needed cash to plug not only the increasing daily deficit spending (today alone the US burned $21 billion net of debt transfers, gross the number was even worse), as well as to fund daily rolls once rates start eventually increasing. This is financial suicide, although the Treasury knows that all too well. It is now stuck in a corner and has no way out than to hope for the best.

Total US debt today was $13.06 trillion. Total debt on March 6, 2009 was $10.95 trillion. The government has spent $2.1 trillion dollars to create a bear market rally which has now fizzled, and to fund a fiscal stimulus that is now dancing its death rattle. GDP will now gradually roll over, the unemployment rate will once again start increasing, diffusion indices, manufacturing and all other economic output will begin declining, but not before the bill is in. It cost Americans $2.1 trillion in debt to generate a 14 months sugar high (for which all will promptly receive a much higher tax bill). Luckily, we will never pay this debt off, so perhaps "the joke is on them" after all.

[Zakeet]

It is impossible for this country to sustain the current level of spending, let alone mandated increases for entitlements (e.g. COLA), let alone likely additions to the public debt (e.g. pension bailouts), let alone increases in interest costs (each 1 percent adds $140 billion in burden), let alone assist with state and municipal obligations, let alone repay principal. We are currently rolling about $400 billion month to month (which means a lot can go wrong fast if investor confidence wanes) and this number is rapidly growing (because few want to loan money to the U.S. long term).

Bottom line: Expect repayment default in the reasonably near future followed by inflationary (and probably hyperinflationary) default shortly thereafter. The U.S. economy is screwed for the next several decades.

[GOPJ]

We are currently rolling about $400 billion month to month (which means a lot can go wrong fast if investor confidence wanes...)

IF it starts to go - it'll be quick...

[boycott]

Good bye, currency.

A nickel ain’t worth a dime anymore ..... well, something like that.

[hinckley buzzard]

Nice dog. Cute kitty. Broke owner. Bad gubbermint.

[Thermalseeker]

And somehow the Treasury is lowering the amount of new bond issuance beginning next week.

Likely being done so that it won't look so bad when no one buys our debt (again).....

[American Constitutionalist]

" It is impossible for this country to sustain the current level of spending, let alone mandated increases for entitlements (e.g. COLA), let alone likely additions to the public debt (e.g. pension bailouts), let alone increases in interest costs (each 1 percent adds $140 billion in burden), let alone assist with state and municipal obligations, let alone repay principal. We are currently rolling about $400 billion month to month (which means a lot can go wrong fast if investor confidence wanes) and this number is rapidly growing (because few want to loan money to the U.S. long term). "

Let alone the Health Care Scam..

That picture says it all.

[Nick Danger]

The history of voting in this country since the 1930's tells us that the only way to save the Constitution is for the socialists to finally run out of other people's money. There is no other way to get the voting public to understand that the freebies aren't really free.

Let's just eat our spinach and get it over with.

[American Constitutionalist]

Hope & Changey the Obama way.


Humans, Dogs, and Cats suffer.

[Zakeet]

The Austrian School’s Seven Commandments: *

• You cannot spend your way out of a recession.
• You cannot regulate the economy into oblivion and expect it to function.
• You cannot tax people and businesses to the point of near slavery and
  expect them to keep producing.
• You cannot create an abundance of money out of thin air without making
  all that paper worthless.
• The government cannot make up for rising unemployment by just hiring
  all the out of work people to be bureaucrats or send them unemployment
  checks forever.
• You cannot live beyond your means indefinitely.
• The economy must actually produce something others are willing to buy.

* This is worth clipping, saving and distributing, IMHO

[umgud]

Expect repayment default in the reasonably near future followed by inflationary (and probably hyperinflationary) default shortly thereafter.

Ah, but I'll be able to pay off my house and all my bills with inflated dollars. Of course, a loaf of bread may cost me a $100 bill.

[pingman]

The whole game of debt fueled expansion will come to a screeching halt when the Fed is forced to increase interest rates paid on our bonds to keep the illusion going.

Many mega-companies, such as GE, are walking a razor-thin line keeping up with debt payments. Even a slight increase in interest rates will be uber-punishing to their bottom lines.

[peeps36]

We are drowning in debt but that means nothing to the democrats. They are in power now and they're not going to let this opportunity slip past them. They will force through their poisonous agenda even if it kills the country.

[Diggity]

I thought they Muslim praying to Allah. lol

[alexander_busek]

Three days into the month, and the Treasury has already redeemed $169 billion in debt, of which $137 billion in Bills.

Pardon my ignorance, but shouldn't redeeming debt (as opposed to incurring additional debt) be viewed as a good thing?

Regards,

[Toddsterpatriot]

The whole game of debt fueled expansion will come to a screeching halt when the Fed is forced to increase interest rates paid on our bonds

The Fed doesn't set the interest rate on bonds.

[blam]

"A nickel ain’t worth a dime anymore ..... well, something like that."

The Nickel Is Worth 5 Cents Again

Along with all the other 'stuff' I've been saving, I've saved a lot of nickels too.

[blam]

Trending Towards The Inflationary Economic Depression

[glennaro]

Read Rush’s interview with Peter Schiff of Euro Pacific Capital in this month’s Limbaugh Letter for a preview of what is to come in the near future.

[blam]

What’s happened to $165 billion bill in congress that will take your money and bail-out the UNION pension funds?

[Zakeet]

Pardon my ignorance, but shouldn't redeeming debt (as opposed to incurring additional debt) be viewed as a good thing?

It would be a wonderful thing if we were actually paying the debt off.

But we're not.

We don't have the funds to pay back that much debt. As a result, we are indeed effectively incurring additional debt (in the vernacular borrowing from Peter to pay Paul) and printing money.

The author of the article is rightfully concerned about the short term nature of the debt (i.e. the amount which rolled from month to month) as well as the magnitude of our obligations.