This is already a historic record for a budget deficit, and we still have 7 months to go.
Lower tax revenue and massive government spending on the bank bailout pushed the federal deficit to $765 billion in the first five months of the budget year, well on its way to hitting the Obama administration's projection of a record annual imbalance of $1.75 trillion.
The Treasury Department also said Wednesday that the February deficit reached $192.8 billion. That's a record for the month and up 10 percent from a year ago, but below analysts' expectations of $205.7 billion.
With seven months left in the current budget year, which ends Sept. 30, the deficit already has shattered last year's record annual gap of $454.8 billion.
The red ink this year also will reflect the $787 billion economic stimulus package that Congress passed last month in an effort to jump-start an economy in the grips of the worst recession in decades. None of that spending is included in the February figures.
I was just about to post that
Bloomberg has this:
Hello, gee wiz, when corporations do not make things, have profits and people lose their jobs, one cannot get as much tax as before!
This is just beyond scary and I'm turning into a conservative as of late. I'm super pissed at this insanity for they will not nationlize some of these financial institutions, tackle regulation right now and start killing some of these inane, nonsensical derivatives, are insisting on more guest workers (If you can believe this there is a bill to import more unskilled labor via H-2B guest worker Visas), will not stop illegal labor by enforcing anything, will not stop offshore outsourcing of jobs even when they are using public funds to do it....
are not targeting the "Stimulus" money to truly "stimulative" jobs...
now are saying they are first up going to pass more trade deals....
I mean this is just not what the people voted for...
I'm all for Stimulative spending, I know Keynesian works but this just ain't it.
Who finances this growing deficit?
China is struggling and focusing more resources domestically, Oil producing countries the same thing and now Geithner wants private investors to purchase toxic assets.
Who is left to purchase Treasuries?
RebelCapitalist.com - Financial Information for the Rest of Us.
I think we should examine the deficit hawks data and what they have to say. I must admit on the left, we have a tendency to ignore them, simply because they are continually attacking social security, health care, anything that gives more safety nets, enables social mobility....they attack it...
So, I think we need to look at these realities with (my belief) anyway, that society safety nets are critical to a high quality and standard of living for a nation.
Who will buy our debt?
So far foreign CB's have been buying our debt, and they don't appear to be slowing down at all.
But you have to think that at some point they will simply choke on all this bad debt. At that point I think we will be looking at an Argentina-scenario: they will grab people pensions and 401k's and force them into treasuries.
It may be just my paranoia, but I've always thought that all that pre-tax money is just too tempting for a greedy government, hungry for capital.
Agreed, but just in part
That part is the answer to the "Who's buying" question. The foreign CB's increased their purchases of debt in today's 10 year note aution by 6%. That's significant and it's most likely coming from countries like China that have huge dollar reserves and a vested interest in reflating the housing bubble that the administration is so desperately trying to blow. However, blowing the bubble in an over-indebted economy is unlikely to be successful, so at some point they will run out of dollar reserves to pay for the debt. The solution when that happens has already been announced. The Fed will purchase the treasuries. In the new "what-me-worry?" world of finance, so what if the Fed's balance sheet is loaded with trillions in new treasury issues. They need to have something to offset all that junk collateral currently on their balance sheet.