It’s official! As of today the U. S. federal government has hit the ceiling for federal debt:
The federal government hits the $14.3 trillion debt ceiling today, the Obama administration announced, requiring extraordinary measures that can stave off a default for a few more months.
In a letter to Congress, Treasury Secretary Timothy Geithner told Congress he will halt investments in two big government pension plans Monday.
or, said another way, the federal employee pension system will be even less solvent than it was before.
In other cheery news China sold U. S. Treasuries in March, reducing its holdings for the fifth straight month:
WASHINGTON—China sold U.S. Treasury securities in March, reducing its holdings for the fifth straight month while remaining the largest foreign holder, the Treasury Department said Monday.
Overall, foreigners were net buyers of long-term U.S. financial assets in March, according to the monthly Treasury International Capital report, known as TIC.
China’s holdings fell $9.20 billion to $1.145 trillion, following net selling of $600 million in February.
Meanwhile, Japan has been a heavy net buyer in recent months, accumulating Treasurys at record levels. Japan remained the second-largest holder of Treasurys, lifting its holdings to $907.9 billion from $890.3 billion in February.
Among all foreign investors, net purchases of U.S. Treasury notes and bonds totaled $26.78 billion, compared with net buying of $30.58 billion in February. Private foreign investors bought a net $19.54 billion Treasury notes and bonds, after buying a net of $14.72 billion the previous month.
IIRC the largest buyer of treasuries is the Federal Reserve, which has the good fortune of being able to conjure money out of thin air. The days when the Social Security Trust Fund bought treasuries (it was required to do so by law) are gone, probably never to return again.
Dave, you’re sounding slap-happy. Step away from the media devices for a day and go smell the flowers.
Greetings from the great city of Austin, TX.
Icepick – I’m not sure I understand where you are coming from on that.
In this post Dave is sounding about as bitter and defeated as I usually do. It’s not too dissimilar in tone to this old post of mine. (Minus the drug reference and Superfly soundtrack, of course.) I recommended that he step away from the madness incapsulated in the daily news and dispensed via various and sundry media, and go do something more sensorially pleasing and rewarding.
“In this post Dave is sounding about as bitter and defeated as I usually do.”
I suppose we all look at the world through our own personal prism. I try to see through other’s, but its difficult at times. As an LBO guy I see our national finances through the prism of reaching – over a 50 year period – the end of our debt capacity. In a corporate setting it gets ugly, the banks close in. In a political setting, well, YOU ARE THE BANK, so you can rig the deal. But not without consequences.
I’m never bitter or defeated, but I am very concerned and disheartened. The US (and local) government will have a Hobson’s choice. They inflate their way out, or they attempt to tax their way out. The economic outcome for the Average Joe will not be good in either case. Been to Detroit lately?? Favored groups will do OK – transfer payment recipients, politically favored and subsidized entities, those who can afford to go to friendlier economic climates etc.
I’ve railed about this for 30 years, and you can see how effective I’ve been. But the proverbial shixt is about to hit the fan; we have reached an end point, and it will be the average guys and gals who get hurt the most. So unneccessary. And the very people who created the problem, the politicians and their government “solutions” will be at the ready with yet more “solutions” – taxing and spending for votes – …………..and unfortunately, I think, the electorate will grasp at straws and get suckered once again. They did with Obama. What’s changed?