Thursday, March 17, 2011

US coffers now down to less than $56 Billion before debt ceiling hit

After last weeks treasury auctions were settled, the US debt has now reached a staggering $14.237 Trillion.  This is less than $56 Billion dollars below the legal debt ceiling of $14.294 Trillion.

Even with the temporary 3-week spending bill passed by the House of Representatives on Tuesday, all indications are pointing to either a showdown between fiscal conservatives and old guard Republicans to raise the debt ceiling, or, a capitulation by all sides to let the government shutdown.

In an article today by Zerohedge, even with the treasuries sold last week, the government has about $150 Billion in funds they can actually use under law.

However since the debt actually subject to the limit is $52 billion less, there still is $109 billion in constitutional capacity. Add to that the $45 billion in SFP run offs over the next two week and Treasury has $150 billion or so in spending money left. As the deficit in the month of March is expected by Zero Hedge to be around $90 billion due to the deferred tax refund payments, we believe the money will last the US a month and a half, although once again depending on the daily burn rate, it may come much sooner as there is no book debt settlement until the week after next.
Unfortunately, the events taking place in Japan, and across world markets may lead to the end of foreign purchases in future treasury auctions.  If this is the case, then the Fed will be forced to monetize ALL future debt unless Congress and the President can compromise on a budget for 2012.


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