The Treasury Department auctioned $56 billion in new debt Tuesday and Wednesday, enough to take the U.S. over its federal debt ceiling when the three- and 10-year notes settle on Monday.
Treasury officials last month flagged May 16 as the day the government would hit the $14.294 trillion debt limit.
The U.S. is selling $72 billion in new debt over three days this week. The Treasury auctioned $32 billion in three-year notes Tuesday and $24 billion in 10-year notes Wednesday, and will sell $16 billion in 30-year bonds Thursday. All of the auctions will settle Monday.
As of Tuesday, total debt subject to the limit was $14.274 trillion, according to the Treasury Department.
The Obama administration has asked Congress to raise the limit, warning that failure to act could lead the government to default by Aug. 2--and could spook investors even before then.
http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201105111542dowjonesdjonline000477&title=treasury-auctions-to-take-us-over-debt-ceiling-on-monday
US Constitution and Flag
Saturday, May 14, 2011
Roubini: Jobless Rate Will Jump to Near 10 Percent as Economy Slows
Expect unemployment to return to nearly 10 percent within a year and for the economy to hit the brakes, slowing to 2 percent, says NYU economist Nouriel Roubini.
The U.S. economy faltered to 1.8 percent growth in the first quarter, although some Federal Reserve members still expect growth on the order of 3 percent or higher in 2011.
“Things are going to be much more difficult than they’ve been so far,” Roubini said at a panel debate on alternative investments taking place in Las Vegas, reported CNBC. The error being made is not taking into account the seriousness of the Europe’s debt problems, Roubini said.
http://www.moneynews.com/StreetTalk/Roubini-us-economy-fed/2011/05/12/id/396131
The U.S. economy faltered to 1.8 percent growth in the first quarter, although some Federal Reserve members still expect growth on the order of 3 percent or higher in 2011.
“Things are going to be much more difficult than they’ve been so far,” Roubini said at a panel debate on alternative investments taking place in Las Vegas, reported CNBC. The error being made is not taking into account the seriousness of the Europe’s debt problems, Roubini said.
http://www.moneynews.com/StreetTalk/Roubini-us-economy-fed/2011/05/12/id/396131
Friday, May 13, 2011
Housing crash is getting worse
Average home prices are down 8% from a year ago, 3% over the quarter, and are falling at about 1% every month, according to Zillow.
And the percentage of homeowners in negative-equity positions — with a home worth less than its mortgage — has rocketed to 28%, a new crisis high.
Zillow now predicts prices will fall about 8% this year and says it no longer expects the market to bottom before 2012.
http://www.marketwatch.com/story/housing-crash-is-getting-worse-2011-05-09?link=MW_latest_news
And the percentage of homeowners in negative-equity positions — with a home worth less than its mortgage — has rocketed to 28%, a new crisis high.
Zillow now predicts prices will fall about 8% this year and says it no longer expects the market to bottom before 2012.
http://www.marketwatch.com/story/housing-crash-is-getting-worse-2011-05-09?link=MW_latest_news
Smithfield CEO: Higher Food Prices Are Here to Stay
The CEO of Smithfield Farms, the largest pork producer in the US. Among other things he said:
“Maybe to someone in the upper incomes it doesn’t matter what the price of a pound of bacon is, or what the price of a ham, or the price of a pound of pork chops is,” he says. “But for many of the customers we sell to, it really does matter.” Workers can share cars when the price of oil rises, he quips, but “you can’t share your food.”
Mr. Pope also worries about the impact on farmers, who are leveraging up operations to afford the ever-rising price of land and fertilizer that has resulted from the increased corn demand. “There are record prices for livestock but farmers are exiting the business!” he exclaims. “Why? Farmers know they won’t make money.”
Weather is a factor, too. “We’ve had the luxury for the last three years of extremely good corn crops, with high yields and good growing conditions. We are just one bad weather event away from potentially $10 corn, which once again is another 50% increase in the input cost to our live production.”
…Not all companies will survive this economic whirlwind. Mr. Pope recalls what happened the last time there was a surge in corn prices, in 2008: “The largest chicken processor in the United States, Pilgrim’s Pride, filed for bankruptcy.” They “couldn’t raise prices, so their cost of production went up dramatically.” Could it happen again? “It darn well could!” Mr. Pope exclaims.
…Mr. Pope says the “losers” here “are the consumer, who’s going to have to pay more for the product, and the livestock farmer who’s going to have to buy high-priced grain that he can’t afford because he’s stretching his own lines of credit. The hog farmer . . . is in jeopardy of simply going out of business ’cause he doesn’t have the cash liquidity to even pay for the corn to pay for the input to raise the hog. It’s a dynamic that we can’t sustain.”
http://gainspainscapital.com/?p=309
“Maybe to someone in the upper incomes it doesn’t matter what the price of a pound of bacon is, or what the price of a ham, or the price of a pound of pork chops is,” he says. “But for many of the customers we sell to, it really does matter.” Workers can share cars when the price of oil rises, he quips, but “you can’t share your food.”
Mr. Pope also worries about the impact on farmers, who are leveraging up operations to afford the ever-rising price of land and fertilizer that has resulted from the increased corn demand. “There are record prices for livestock but farmers are exiting the business!” he exclaims. “Why? Farmers know they won’t make money.”
Weather is a factor, too. “We’ve had the luxury for the last three years of extremely good corn crops, with high yields and good growing conditions. We are just one bad weather event away from potentially $10 corn, which once again is another 50% increase in the input cost to our live production.”
…Not all companies will survive this economic whirlwind. Mr. Pope recalls what happened the last time there was a surge in corn prices, in 2008: “The largest chicken processor in the United States, Pilgrim’s Pride, filed for bankruptcy.” They “couldn’t raise prices, so their cost of production went up dramatically.” Could it happen again? “It darn well could!” Mr. Pope exclaims.
…Mr. Pope says the “losers” here “are the consumer, who’s going to have to pay more for the product, and the livestock farmer who’s going to have to buy high-priced grain that he can’t afford because he’s stretching his own lines of credit. The hog farmer . . . is in jeopardy of simply going out of business ’cause he doesn’t have the cash liquidity to even pay for the corn to pay for the input to raise the hog. It’s a dynamic that we can’t sustain.”
http://gainspainscapital.com/?p=309
Government Raids PRIVATE Pensions To Pay For Spending
The Irish government plans to institute a tax on private pensions to drive jobs growth, according to its jobs program strategy, delivered today.
Without the ability sell debt due to soaring interest rates, and with severe spending rules in place due to its EU-IMF bailout, Ireland has few ways of spending to stimulate the economy. Today's jobs program includes specific tax increases, including the tax on pensions, aimed at keeping government jobs spending from adding to the national debt.
The tax on private pensions will be 0.6%, and last for four years, according to the report.
Read more: http://www.businessinsider.com/irish-bombshell-government-raids-private-pensions-to-pay-for-jobs-program-2011-5#ixzz1MIT8sFjP
http://www.businessinsider.com/irish-bombshell-government-raids-private-pensions-to-pay-for-jobs-program-2011-5
Without the ability sell debt due to soaring interest rates, and with severe spending rules in place due to its EU-IMF bailout, Ireland has few ways of spending to stimulate the economy. Today's jobs program includes specific tax increases, including the tax on pensions, aimed at keeping government jobs spending from adding to the national debt.
The tax on private pensions will be 0.6%, and last for four years, according to the report.
Read more: http://www.businessinsider.com/irish-bombshell-government-raids-private-pensions-to-pay-for-jobs-program-2011-5#ixzz1MIT8sFjP
http://www.businessinsider.com/irish-bombshell-government-raids-private-pensions-to-pay-for-jobs-program-2011-5
PIMCO raises bet against U.S. government debt
The increase, albeit small, follows Gross' move to ratchet up his bearishness in March by taking his initial short position in U.S. government-related debt, which includes Treasuries, TIPS, agencies, interest rate swaps, Treasury futures and options and FDIC-guaranteed corporate securities.
The $240 billion Total Return fund also raised its cash position to 37 percent in April from 31 percent in March, added Pacific Investment Management Co, which oversees $1.2 trillion in assets.
The Total Return fund took down its mortgage exposure to 24 percent in April from 28 percent the previous month.
The fund also decreased its allocation in investment-grade credit to 17 percent in April from 18 percent in March and junk bonds to 5 percent in April from 6 percent the previous month.
http://www.reuters.com/article/2011/05/09/us-investing-pimco-fund-idUSTRE7486LU20110509
The $240 billion Total Return fund also raised its cash position to 37 percent in April from 31 percent in March, added Pacific Investment Management Co, which oversees $1.2 trillion in assets.
The Total Return fund took down its mortgage exposure to 24 percent in April from 28 percent the previous month.
The fund also decreased its allocation in investment-grade credit to 17 percent in April from 18 percent in March and junk bonds to 5 percent in April from 6 percent the previous month.
http://www.reuters.com/article/2011/05/09/us-investing-pimco-fund-idUSTRE7486LU20110509
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