Global Financial Crisis (13 Viewers)

Bjerknes

Bjerknes

"Top Economist"
#801
Mar 16, 2004
116,996
#801
This could be trouble. From another forum:

Well, the DTS for June 30th is out, which is a date I was very interested in:

https://www.fms.treas.gov/fmsweb/viewDTS....

They issued a net of about $40B new debt (and $8.5B went to Fannie and/or Freddie, $443M went to the Pension Benefit Guarantee Corp -- it's in trouble, apparently -- and $1.2B went to the Internal Development Association for God knows what. And note Debt Subject to Limit remained at it's holding value of $14.293975T, where it has remained for nearly two months thanks to the accounting tricks.

But what interests me about this date is this is one of the semi-annual interest payments to the trust fund dates. Treasury pays these with more IOUs, of course, not real money. But that causes a huge jump in the intragovernmental holdings component, which couldn't happen as it would blow away the debt ceiling.

So Treasury has technically defaulted, missing a coupon payment to the trust funds. :) That is, if you believe the trust funds are real. But they aren't, of course. Just for fun, I wish someone would ask TurboTimmy about this and watch him hem and haw.

To see how big these coupoun payments really are, check out the archives. Here's June 30th of 2010:

https://www.fms.treas.gov/fmsweb/viewDTS....

You'll note inrtagov jumped by about $90B, which are the coupon payments.
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Yes, they missed a coupon (interest) payment on the "special" non-marketable GAS bonds the trust funds hold, biggest one being the SS trust fund. Every six months, June 30th and Dec. 31th, they make these coupon payments, which come to around $90B or so. The payment is all on paper, and paid with more GAS bonds, IOUs.

And they missed it yesterday, because doing so would increase the intragov debt by about $90B, blowing away the debt ceiling. Doing that would immediately blow away the remaining month's worth of accounting tricks with the civil service G-fund bonds if not exceed it, which they need to keep borrowing real money through July.

Again, note these coupon payments are not real money, just more IOUs issued on paper. No real money changes hand or goes anywhere.

But, if you want to hold to the lie that these trust funds are "money good", as they like to do, then Treasury just defaulted.
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Oopsie.
 

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Bjerknes

Bjerknes

"Top Economist"
#802
Mar 16, 2004
116,996
#802
Yup. Here it is.

http://market-ticker.org/akcs-www?post=189249

Note that the pink line did not move much. In fact, it went down.

It should have gone up - a lot - because the "Trust Funds" (you know, Social Security and Medicare?) that you folks on the left keep bleating about being "money good" and "actual debt" had a coupon payment from Treasury due yesterday.

IT WAS NOT MADE.

IF IT HAD BEEN, IT WOULD HAVE BLOWN THE DEBT LIMIT.

That's a default, and it instantaneously destroys both the claim that such activity is not "selective" or, if you prefer, "strategic" and it also destroys the argument that Medicare and Social Security Trust fund "debt" - not just public debt - is subject to the 14th Amendment and thus is "protected" against the Treasury choosing to blow it off.
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http://market-ticker.org/akcs-www?post=189249
 
IrishZebra

IrishZebra

Western Imperialist
#803
Jun 18, 2006
23,327
#803
Bjerknes said:
But this is the problem with government intervention into markets. They simply allocate taxpayer money or borrowed capital to spend on their bought and paid for interests. The TARP program, sponsored by the US Treasury, bailed out all the largest financial institutions in the country when all of their graduates work for the government and the regulators. Clowns like Hank Paulson talk about the concept of moral hazard in financial markets, but everything the government does in regulating business allows for exactly that... the creation of moral hazard. But only for the benefit of their buddies and subsequently the big guys, of course.

The merger of state and corporate powers is called Fascism.
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Crony Capitalism at it's finest. Of course Ropke (and myself) would disagree abstractly with the repeal of state economic management, infosar as it is to prevent monopoly and all the other common sense tennets out of the Freiburg school but I see where you're coming from. Of course market rules aren't constant, Ireland can't really deviate, only insulate.

Nobody in the white house has the balls to do the shit that can alleviate the debt ceiling problem, cut defence, tax the rich.

20% from Defence - 140 Billion Defence is the worlds biggest social employment scheme
4% Wealth Tax/ forced reinvestment in employment = 16 Billion at least

The corporate elite has fooled the government into ridiculous macro-economic policies in order to further their own financial ends, is there any actual economists in the Fed?
 
Enron

Enron

Tickle Me
Moderator
#804
Oct 11, 2005
75,708
#804
Slightly off topic... but I didn't think the movie thread was proper.

I watched the documentary Inside Job earlier. Thought it was really well done, informative, and paced so that the amount of information your given wasn't overwhelming. Contains interviews with a wide selection of "experts" and is narrated by Matt Damon.
 
Enron

Enron

Tickle Me
Moderator
#806
Oct 11, 2005
75,708
#806
IrishZebra said:
Crony Capitalism at it's finest. Of course Ropke (and myself) would disagree abstractly with the repeal of state economic management, infosar as it is to prevent monopoly and all the other common sense tennets out of the Freiburg school but I see where you're coming from. Of course market rules aren't constant, Ireland can't really deviate, only insulate.

Nobody in the white house has the balls to do the shit that can alleviate the debt ceiling problem, cut defence, tax the rich.

20% from Defence - 140 Billion Defence is the worlds biggest social employment scheme
4% Wealth Tax/ forced reinvestment in employment = 16 Billion at least

The corporate elite has fooled the government into ridiculous macro-economic policies in order to further their own financial ends, is there any actual economists in the Fed?
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Maybe in the lower levels but most of the District Heads and what-not have some sort of corporate ties.
 
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