Category: Debt

Treasury Won’t Let Investors Pay It to Keep Their Cash Safe

12-Oct (Bloomberg) — Investors are so eager to buy Treasury bills that they’re willing to pay the U.S. to hold their money — if only the government would let them.

Rates on one-month bills, which have sporadically traded below zero in the secondary market since 2008, have been negative for weeks amid a supply drought as the Treasury reduces sales to keep the U.S. under its debt limit. Yet Treasury rules don’t permit auctioning new debt at negative rates, a phenomenon seen elsewhere in the world at times of heightened demand that means investors pay the government to hold their cash.

The lowest auction rates can currently go is zero, as they did on Oct. 5 when the government sold three-month bills, or a day later when it issued four-week securities. Amid the latest Washington standoff over a U.S. debt-ceiling accord, the auction rules may be causing the Treasury to forgo some potential income, while giving investors lucky enough to get orders filled a chance to flip the securities for a quick profit.

“Treasury officials are more concerned about whether or not the government is going to be funded and if the debt ceiling is going to be lifted,” said Ward McCarthy, chief financial economist in New York at Jefferies Group LLC, one of the 22 primary dealers obligated to bid at the auctions. “The concept of U.S. citizens paying the government instead of earning interest on Treasury debt would be a real political headache.”

…The Treasury is likely to exhaust measures to stay under the debt ceiling on or about Nov. 5, Secretary Jacob J. Lew said in a letter to House Speaker John Boehner Oct. 1. At that point, the U.S. won’t be able to sell additional debt and may have less than $30 billion of cash. The Treasury’s daily expenditures are as high as $60 billion, he said.


PG View: The Fed is not really an “investor,” so they don’t care whether there’s a yield or not.

Posted in Debt |

Obama warns Congress to not mess with the debt ceiling

02-Oct (Politico) — President Barack Obama lectured Congress on Friday, providing lawmakers with a basic economic lesson when it comes to the debt ceiling, which the U.S. is fast approaching.

He said the ceiling was not about spending more, but rather paying bills we’ve already incurred.

He said raising the ceiling is “a way for the U.S. to maintain its good credibility.”

“If it gets messed with, it would have profound impact for the global economy and put our financial system in tailspin,” Obama said during a press conference on Friday.


PG View: Let’s not forget we’re about a month away from hitting the debt ceiling . . . again.

There has never been a debt a ceiling that wasn’t eventually surpassed. We really need to get spending under control.

Posted in Debt |

Brazil has debt rating cut to ‘junk’ status as problems mount

10-Sep (Guardian) — The Brazilian government’s sovereign debt rating has been cut to junk status by one of the major credit agencies, ratcheting up pressure on President Dilma Rousseff to find a way out of the country’s economic and political crisis.

Standard & Poor’s said in a note on Wednesday night that Brazil’s hard-fought investment-grade status was gone and that its outlook on the country was negative, just as the nation entered recession and was expected to see an even worse 2016.

That means it will be far more expensive for the Brazilian government to tap international credit markets and that much investor money, such as mutual funds that only plough money into investment-grade nations, will automatically be yanked out of the country.

S&P said that extreme political challenges for Rousseff “have continued to mount, weighing on the government’s ability” to shore up its finances as promised.


Posted in Debt |

The Central Bankers’ Malodorous War On Savers

28-Aug (ZeroHedge) — Well, that didn’t take long!

After just three days of market turmoil the monetary politburo swung into action. This time they sent out B-Dud to promise still another monetary sweetener. Said the head of the New York Fed,

“From my perspective, at this moment, the decision to begin the normalization process at the September FOMC meeting seems less compelling to me than it was a few weeks ago.”

Needless to say, “B-Dud” is a moniker implying extreme disrespect, and Bill Dudley deserves every bit of it. He is a crony capitalist fool and one of the Fed ring-leaders prosecuting a relentless, savage war on savers. Its only purpose is to keep carry trade speculators gorged with free funding in the money markets and to bloat the profits of Wall Street strip-mining operations, like that of his former employer, Goldman Sachs.

The fact is, any one who doesn’t imbibe in the Keynesian Kool-Aid dispensed by the central banking cartel can see in an instant that 80 months of ZIRP has done exactly nothing for the main street economy. Notwithtanding the Fed’s gussied-up theories about monetary “accommodation” and closing the “output gap” the litmus test is real simple.

…What these unspeakably dangerous fools argued was that cash should be abolished so that the central banks could get on with their job of stimulating “depressed” economies by setting interest at negative nominal rates.

In other words, it is apparently not enough that someone who saved $150,000 over a lifetime of work and foregone consumption should earn just $1 per day of interest on liquid savings deposits or treasury bills. No, the central bankers’ posse now wants to actually expropriate these savings by extracting a monthly levy, and by throwing anyone in jail who attempts to hide their wealth outside the controlled banking system by keeping it in private script or unconfiscated greenbacks.


Posted in Debt, Economy |

China Sells U.S. Treasuries to Support Yuan

27-Aug (Bloomberg) — China has cut its holdings of U.S. Treasuries this month to raise dollars needed to support the yuan in the wake of a shock devaluation two weeks ago, according to people familiar with the matter.

Channels for such transactions include China selling directly, as well as through agents in Belgium and Switzerland, said one of the people, who declined to be identified as the information isn’t public. China has communicated with U.S. authorities about the sales, said another person. They didn’t reveal the size of the disposals.

The People’s Bank of China has been offloading dollars and buying yuan to support the exchange rate, a policy that’s contributed to a $315 billion drop in its foreign-exchange reserves over the last 12 months. The $3.65 trillion stockpile will fall by some $40 billion a month in the remainder of 2015 because of the intervention, according to the median estimate in a Bloomberg survey.

China selling Treasuries is “not a surprise, but possibly something which people haven’t fully priced in,” said Owen Callan, a Dublin-based fixed-income strategist at Cantor Fitzgerald LP. “It would change the outlook on Treasuries quite a bit if you started to price in a fairly large liquidation of their reserves over the next six months or so as they manage the yuan to whatever level they have in mind.”

…“By selling Treasuries to defend the renminbi, they’re preventing Treasury yields from going lower despite the fact that we’ve seen a sharp drop in the stock market,” David Woo, head of global rates and currencies research at Bank of America Corp., said on Bloomberg Television on Wednesday. “China has a direct impact on global markets through U.S. rates.”


Posted in Central Banks, Currency Wars, Debt, Markets, Monetary Policy |

Treasury Yields Fall Below 2%

24-Aug (Wall Street Journal) — Yields on benchmark U.S. government bonds tumbled below 2% for the first time since April on Monday as a deepening turmoil in global stocks and crude-oil markets boosted demand for haven assets.

The flight for safety has been gathering speed over the past few weeks, underscoring growing anxiety over China’s slowing economy and its stock market rout, which has rippled through markets globally and clouded the global economic outlook.

The uncertainty over whether the Federal Reserve will raise interest rates next month or wait longer to act has contributed to growing volatility in riskier assets, driving many to shed their risk appetites and shift focus to preserve capital.

“This is a flight to quality and the actual level that the Treasury yield achieves in this environment is not meaningful,” said David Keeble, global head of fixed-income strategy at Crédit Agricole. “This is a time when you dig a deep hole, close your eyes and put your fingers in your ears.”


Posted in Debt, Markets |

Japanese Dump Most Treasuries in Two Years as Fed Liftoff Looms

10-Aug (Bloomberg) — Japanese dumped the most U.S. Treasuries in two years in June, as the Federal Reserve prepares to raise interest rates as soon as next month.

Investors also sold German bunds for a fourth month, and offloaded the most French sovereign debt on record in data going back to 2005, as low yields globally this year offered the smallest premium over Japanese government bonds since at least 1993. Swaps traders see 54 percent odds that the Fed will increase borrowing costs in September for the first time since 2006.

“Most Japanese are not bullish on the U.S. Treasury market, especially the short end,” which is more sensitive to monetary policy expectations, said Kazuyuki Takigawa, who manages about $6 billion of bonds as the chief fund investor for foreign fixed income at Resona Bank Ltd. in Tokyo. “German bunds are not attractive enough to lure investors from Japan because of the very low level of yields there.”


PG View: China is also dumping large amounts of Treasuries.

China Slashes U.S. Debt Stake by $180 Billion, Bonds Shrug

Posted in Debt, Markets |

Debt-plagued Puerto Rico defaults on a bond payment for the first time

04-Aug (Washington Post) — Debt-plagued Puerto Rico defaulted on a bond payment for the first time Monday, triggering what is likely to be a long battle with creditors as it seeks to restructure about $73 billion in loans.

The U.S. territory, whose governor has declared its debts “unpayable” and is seeking the largest restructuring ever in the country’s municipal bond market, paid just $628,000 of a $58 million payment owed by its Public Finance Corp. because the legislature didn’t provide enough money, according to the island’s Government Development Bank.

“Due to the lack of appropriated funds for this fiscal year the entirety of the PFC payment was not made today,” bank president Melba Acosta Febo said in a statement. “This was a decision that reflects the serious concerns about the commonwealth’s liquidity in combination with the balance of obligations to our creditors and the equally important obligations to the people of Puerto Rico to ensure the essential services they deserve are maintained.”

The default marks an escalation of the financial crisis on the island, which has been caught in a nearly decade-long recession that has crimped government revenues and triggered an exodus to the U.S. mainland.


Posted in Debt |

Puerto Rico Lacks Cash for Aug. Bond Payment, Official Says

27-Jul (Bloomberg) — Puerto Rico currently lacks the funds needed to make a payment due next month on bonds sold by its Public Finance Corp., a government official said.

Victor Suarez, the chief of staff for Governor Alejandro Garcia Padilla, told reporters Monday in San Juan that whether the payment is made will depend on if the commonwealth has cash available. He didn’t say whether the island will be able to do so.

The payment will hinge on “the liquidity the government has to attend to each of its obligations,” he said. “The priority will always be to attend to the essential services to citizens, such as security, health care and education.”

Puerto Rico faces $58 million of interest and pricipal due Aug. 1 on the Public Finance Corp. bonds, according to Moody’s Investors Service. It may miss the payment because the legislature has failed to allocate the funds, which would be the first default by the commonwealth as it moves toward restructuring $72 billion of debt.


Posted in Debt |

Puerto Rico Misses First Debt Payment as Default Risk Rises

15-Jul (Bloomberg) — Puerto Rico said one of its agencies failed to transfer funds to a trustee to cover an Aug. 1 debt payment because the legislature didn’t appropriate the funds when it passed the budget last month.

It’s unclear whether the Public Finance Corp. will make the $36.3 million principal and interest payment on bonds maturing that day. If it doesn’t, that would mark the first time Puerto Rico has defaulted on a debt payment and would come as the commonwealth seeks to negotiate with creditors to restructure $72 billion of obligations.

“In accordance with the terms of these bonds, the transfer was not made due to the non-appropriation of funds,” Melba Acosta, president of the commonwealth’s Government Development Bank, said in an e-mailed statement.


Posted in Debt |

Germany suggests Greece issue IOUs domestically

15-Jul (AP, via YahooNews) — The German government is arguing that one possible way to help Greece meet its financial obligations in coming days, before a full bailout program is established, is for the country to issue IOUs for domestic needs.

Finance Ministry spokesman Martin Jaeger said Wednesday that “we have included this element in the discussion” among eurozone nations on how to keep Greece afloat while talks proceed on the details of a full bailout deal. The talks are expected to last weeks.

Jaeger says that IOUs are just one of “various conceivable approaches.”


Posted in Debt, European Debt Crisis |

Why the Average American May Be Worse Off Than Greece

09-Jul (Time) — The fate of debt-troubled Greece is now only days away from being decided. Greek Prime Minister Alexis Tsipras requested bailout funds on Wednesday, promising to submit reform proposals later this week. Either the country will agree to severe austerity measures in exchange for a reprieve from its lenders or will have to exit the eurozone and strike out on its own.

Whatever happens, the average American may be worse off than Greece. Here are three ways to look at it:

• Americans actually have more debt relative to income earned
• Greece’s debt can be wiped out, but not yours
• Greece can print money, but you can’t


PG View: Well, Greece can’t print money YET, but if they return to the drachma or some form of parallel currency, they will surely print with wild abandon.

While it is true that individual Americans can’t print currency (at least without attracting the attention of the Secret Service), the Fed can and will continue to expand the money supply in order to support our ever-growing debt load.

Posted in Debt, European Debt Crisis |

The Coming Liquidation

by Hugo Salinas Price
18-Jun (24hgold) — Total world debt has been calculated recently at $223 Trillion dollars. World debt has increased some 40% since the crisis of 2008-2009; as I recall, it was about $157 Trillion at that time. The $223 Trillion is actual debt, and does not include the potential debt lying in derivates of this debt, which is another humongous amount and would become debt should there be any default on the $223 Trillion world debt.

The $223 Trillion world debt is like a huge cloud up in the sky.

It is of vital importance for the world of finance, as it presently exists, that the $223 Trillion world debt continue up in the sky, and that it not be subject to liquidation.

Liquidation and payment are two different things.

Liquidation means that holders of debt seek to exchange the debt they hold, for cash.

The problem for the world’s central bankers is to keep the debt cloud up in the sky and avoid at all costs a deluge of liquidation. That is to say, there must be no movement to get rid of bonds in exchange for cash.

World debt will continue to be a massive cloud up in the sky, as long as investors wish to own bonds; since central banks drove down interest rates all over the world to absurdly low levels – even to negative interest rates – prices of previously issued bonds rose to equally absurd levels and thus created huge profits for those who owned those bonds.

World debt is not being paid down and has to grow, because the debt is being rolled-over, and rollovers include interest due. So the debt cloud has to get bigger.

…Interest rates will have to rise, sooner or later; central bankers tremble when they see the slightest sign that interest rates are ticking up. Obviously, the FED and ECB cannot even think of raising interest rates; they are trapped and wait in dread for the deluge of bond liquidation when the $223 Trillion debt cloud hanging over the world turns into a cloudburst.


PG View: This will not end as well.

Posted in Debt |

The Debt To GDP Ratio For The Entire World: 286%

by Michael T. Snyder
18-May ( — Did you know that there is more than $28,000 of debt for every man, woman and child on the entire planet? And since close to 3 billion of those people survive on less than 2 dollars a day, your share of that debt is going to be much larger than that. If we took everything that the global economy produced this year and everything that the global economy produced next year and used it to pay all of this debt, it still would not be enough. According to a recent report put out by the McKinsey Global Institute entitled “Debt and (not much) deleveraging“, the total amount of debt on our planet has grown from 142 trillion dollars at the end of 2007 to 199 trillion dollars today. This is the largest mountain of debt in the history of the world, and those numbers mean that we are in substantially worse condition than we were just prior to the last financial crisis.

When it comes to debt, a lot of fingers get pointed at the United States, and rightly so. Just prior to the last recession, the U.S. national debt was sitting at about 9 trillion dollars. Today, it has crossed the 18 trillion dollar mark. But of course the U.S. is not the only one that is guilty. In fact, the McKinsey Global Institute says that debt levels have grown in all major economies since 2007. The following is an excerpt from the report…

Seven years after the bursting of a global credit bubble resulted in the worst financial crisis since the Great Depression, debt continues to grow. In fact, rather than reducing indebtedness, or deleveraging, all major economies today have higher levels of borrowing relative to GDP than they did in 2007. Global debt in these years has grown by $57 trillion, raising the ratio of debt to GDP by 17 percentage points (Exhibit 1). That poses new risks to financial stability and may undermine global economic growth.


PG View: This is no surprise, but incredibly disturbing nonetheless. The world basically clawed its way back to mediocre by going another $57 trillion into debt; ignoring the first rule of getting out of holes . . . stop digging. Since governments and policy makers won’t stop digging, it behooves you to take defensive measures to preserve your wealth, which should include buying physical gold.

Here’s a link to the McKinsey & Co. report: Debt and (not much) deleveraging

Posted in Debt |

Demand For Physical Gold Remains Strong And Global Debt Explodes

by David Levenstein
19-May (Gold-Eagle) — Last week, gold prices gained an impressive $37 an ounce of 3.1%. And, on Monday prices hit a three month high and were trading just above the $1225 an ounce level.

Gold prices hit their highest level since mid-February as the dollar’s decline increased investors’ appetite for the precious metal. Much of golds rise was attributed to disappointing U.S economic data including sluggish U.S. retail sales data.

There is a growing perception that the Federal Reserve is likely to hold off hiking interest rates until September or December to ensure the economy is strong enough to withstand an increase in borrowing costs, and this is supporting gold prices at the moment.

…According to the WGC’s report, global gold demand slipped marginally by 1% in Q1 to 1079.3 tons. Demand was down by a mere 11 tons this year compared with a year ago.

…In the meantime, demand for gold bars and coins in Europe increased by 16%. Much of this came from German investors who are reported to be purchasing at massive rates, with the demand for total gold bar and coins jumping 20% in the first quarter of 2015.

…Global debt is now in the region of $200 trillion. The McKinsey Global Institute recently published a report highlighting the bloated, unsustainable levels of debt that have been accumulated globally and the huge risks when interest rates begin to rise again.

McKinsey concluded that total global debt was $199 trillion and the little covered report was released in February – 3 months ago – meaning that the figure is likely over $200 trillion. With a global population of 7.3 billion this works out at over $27,200 of debt for every man, woman and child alive in the world today.

Almost 29% of that debt – $57 trillion – has been accumulated in the relative short period since the financial crisis erupted in 2007 – just 8 years.


Posted in Debt, Gold News, Gold Views |

Debt-Choked Puerto Rico at Fiscal Brink as Bond Buyers Pull Back

18-May The sobering news arrived in San Juan via telephone from Washington.

It was April 28, and U.S. Treasury Secretary Jacob J. Lew called to tell Puerto Rico officials they must confront one of the island’s gravest financial crises without a bailout. Saddled with $72 billion in debt, the commonwealth — a U.S. territory since the Spanish-American War — needs a “credible” plan, Lew said.

The Caribbean island is hurtling toward the fiscal brink. After years of borrowing to paper over deficits, and with $630 million due to investors on July 1, Puerto Rico may confront the unthinkable: a default. The prospect has set Wall Street on edge as bond yields surpass those of Argentina and Greece; about half of municipal mutual funds hold commonwealth debt.


Posted in Debt |

U.S. National Debt: $18,152,438,060,107.24

Posted in Debt |

Moody’s downgrades Chicago debt to ‘junk’ with negative outlook

12-May (CNBC) — Moody’s downgraded Chicago’s credit rating down to junk level “Ba1″ from “Baa2.”

The announcement, which the ratings agency released Tuesday afternoon, cited a recent Illinois court ruling voiding state pension reforms. Moody’s said it saw a negative outlook for the city’s credit.

Following that May court decision, Moody’s said it believes that “the city’s options for curbing growth in its own unfunded pension liabilities have narrowed considerably.”

… The downgrade affected $8.9 billion of general obligation, sales, and motor fuel tax debt, according to Moody’s.

The firm said its downgrades could trigger up to $2.2 billion in accelerated payments on Chicago debt.


PG View: The ratings agencies have been warning Chicago about this for at least a decade. The Windy City’s death spiral just accelerated markedly.

Posted in Debt |

Abe adviser fears BOJ has den of conspirators opposing reflation

27-Apr (Bloomberg, via JapanTimes) — The Bank of Japan appears to be wavering in its commitment to unprecedented monetary easing, said Kozo Yamamoto, an adviser to Prime Minister Shinzo Abe and an advocate of reflationary policies.

“I’m worried the BOJ’s attitude is wavering,” Yamamoto said in an interview in Tokyo on Friday. “I wonder if Kuroda is being affected by fukumaden,” he said, which translated means “a den of conspirators.”

Yamamoto made the remarks after Gov. Haruhiko Kuroda signaled confidence that consumer price gains remain on track for a 2 percent target, even as inflation ground to a halt by the bank’s key gauge. The Abe administration is pursuing a strategy of shock therapy to revive the world’s third-biggest economy with steps including record purchases of government debt by the central bank.

Abe’s government and the BOJ agreed in January 2013 to set a 2 percent inflation target. Kuroda took over in March that year and unleashed unprecedented monetary easing the following month. The inflation target is not laid out in the current BOJ law.


PG View: For 20-years Japan has been ringing up the debt and printing yen with abandon, but rather than blaming the bad policy, let’s get paranoid and blame a ‘den of conspirators’.

Posted in Central Banks, Currency Wars, Debt, Deflation, Monetary Policy, QE |

Fitch drops ratings on Japanese debt as the country attempts to rein in debt and spur growth

27-Apr (AP, via USNews) — Fitch Ratings has lowered Japan’s credit rating as the country continues to wrestle with staggering debt.

Fitch said Monday that the government did not include sufficient measures in its budget to replace a sales tax hike it put off in the current fiscal year, which ends next March.

Japan’s debt is the largest among developed nations and more than twice the size of its economy. The country eventually has to boost taxes to cover rising costs for health and elder care as the average age in the nation rises. But a sales tax increase last spring hurt consumer and business spending as the Japanese economy slipped into a recession.

That led Prime Minister Shinzo Abe to put off a second, planned hike, illustrating the tough position in which government leaders have found themselves.

Fitch said Monday that Japan’s main credit and rating weakness is due to its high and rising level of government debt. The ratings agency noted that the government has already cut corporate tax rates and plans to do so again in fiscal 2016.


Posted in Debt |

Puerto Rico officials warn government shutdown imminent

22-Apr (Reuters) – Puerto Rico’s top finance officials said the government of the U.S. territory will likely shutdown in three months because of a looming liquidity crisis and warned of a devastating impact on the island’s economy.

In a letter to leading lawmakers, including Governor Alejandro Padilla, the officials said a financing deal that could potentially salvage the government’s finances currently looked unlikely to succeed. It warned of laying off government employees and reducing public services

“A government shutdown is very probable in the next three months due to the absence of liquidity to operate,” the officials said. “The likelihood of completing a market transaction to finance the government’s operations and keep the government open is currently remote.”


Posted in Debt |

Greece ‘in a corner’ as Europe blocks payment

26-Mar (CNBC) — Greece’s last-ditch attempt to get desperately-needed funds from its euro zone neighbors failed on Wednesday, but the country appears eternally optimistic that a list of reforms — as yet to materialize — will unlock vital aid.

Greece appealed for the European Financial Stability Facility (EFSF) to return 1.2 billion euros ($1.32 billion) it said it had overpaid when it transferred bonds intended for bank recapitalization back to the fund this month, Reuters reported Wednesday.

However, euro zone officials ruled that Greece was not legally entitled to the money, the news wire said.


Posted in Debt, European Debt Crisis |

ECB Prepares For Grexit, Anticipates 95% Loss On Greek Debt

18-Mar (ZeroHedge) — Dear Greek readers: the writing is now on the wall, and it is in very clear 48-point, double bold, and underlined font: when the ECB “leaks” that it is modelling a Grexit, something Draghi lied about over and over in 2012 and directly in our face too, take it seriously, because it is time to start planning about what happens on “the day after.” And incidentally to all those curious what the fair value of peripheral European bonds is excluding ECB backstops, the ECB has a handy back of the envelope calculation: a 95% loss.

Which also is the punchline, because while the ECB is making it very clear what happens next in the case of a “Graccident”, it has yet to provide an explanation how it will resolve the billions of Greek debt held on its own balance sheet which are about to be “marked-to-default”…


Posted in Debt, European Debt Crisis |

IMF Considers Greece Its Most Unhelpful Client Ever

18-Feb (Bloomberg) — International Monetary Fund officials told their euro-area colleagues that Greece is the most unhelpful country the organization has dealt with in its 70-year history, according to two people familiar with the talks.

In a short and bad-tempered conference call on Tuesday, officials from the IMF, the European Central Bank and the European Commission complained that Greek officials aren’t adhering to a bailout extension deal reached in February or cooperating with creditors, said the people, who asked not to be identified because the call was private.

…Concern is growing among officials that the recalcitrance of Prime Minister Alexis Tsipras’s government may end up forcing Greece out of the euro, as the cash-strapped country refuses to take the action needed to trigger more financial support. Tsipras is pinning his hopes for a breakthrough on a meeting with ECB President Mario Draghi, German Chancellor Angela Merkel, French President Francois Hollande and European Commission head Jean-Claude Juncker this week in Brussels.


Posted in Debt, European Debt Crisis |

Tsipras Strikes Defiant Tone Ahead of Meeting With EU Leaders

18-Mar (Bloomberg) — Greek Prime Minister Alexis Tsipras struck a defiant tone as he prepared for meetings in Brussels with European leaders to discuss the cash-strapped country’s bailout.

“People have asked us to put an end to austerity and bailout agreements, to begin the process of reclaiming the dignity of the nation,” Tsipras said today in a speech to parliament. “Elected officials will negotiate with elected officials and technocrats will deal with technocrats.”

Tsipras is seeking a political deal at a European Union summit starting Thursday to unlock funds from the country’s 240 billion-euro ($254 billion) bailout package. Concern is growing among officials that the recalcitrance of his government may end up forcing Greece out of the euro, as the country refuses to take the action needed to trigger more financial support.

…“We will not back down from what we promised, and what society and economy need, in order to breathe,” Tsipras said Wednesday, adding that his government expected the “liquidity pressure.”


PG View: I keep hearing nobody really wants Greece out of the eurozone, but it sure doesn’t seem like negotiations are bringing either side closer to a deal. Today it was also reported that the ECB had run models on the debt impact of a Grexit.

Posted in Debt, European Debt Crisis |

Meet the new debt ceiling: $18,113,000,000,000

17-Mar (CNNMoney) — The suspense — or rather, the suspension — is over. The U.S. debt ceiling has been reset at $18.113 trillion, the Treasury Department said Tuesday.

That new limit on public debt is about $1 trillion above where it stood in February 2014, when lawmakers decided to “suspend” the ceiling through this past weekend.

That cool trillion reflects how much the Treasury Department has borrowed during the suspension to pay the country’s bills.

For lawmakers, a debt ceiling suspension is like a game of pretend. As in “We don’t want to publicly vote for an actual increase to cover all the spending we’ve already approved. So let’s pretend the debt ceiling doesn’t exist for awhile.”

The game isn’t quite over yet, either.

Yes, the suspension has ended and the country’s outstanding debt is now at its limit. But Treasury still needs to borrow.


Posted in Debt |

Greece has destroyed all the trust that was rebuilt, Germany’s Schaeuble says

16-Mar (Reuters) – German Finance Minister Wolfgang Schaeuble said on Monday that the new Greek government destroyed all the trust that had been rebuilt in the past.

Speaking at a panel in Berlin, Schaeuble also said that he did not expect Athens to keep its election promise to introduce higher taxes on ship owners. “Even a radical leftist government won’t keep that promise,” the conservative minister said.

Schaeuble reiterated his view that the reason for Greece’s debt problems was that the country lived far beyond its means in the past.


PG View: Seems like Germany is not so keen on the idea of working with Greece to resolve their issues.

Posted in all posts, Debt, European Debt Crisis |

It’s Back: Your Guide to the $18 Trillion Debt Ceiling

13-Mar (Bloomberg) — The cap on U.S. government borrowing kicks back into action Monday after Congress temporarily suspended it last year. The reinstatement means lawmakers in coming months must either lift or re-suspend the ceiling on the nation’s debt, which exceeds the size of the economy and which, divided among the world’s population, would make every person on the planet $2,500 poorer.

Partisan showdowns have become the norm for debt limit debates as congressional Republicans call for spending cuts and President Barack Obama refuses to sign legislation with strings attached. Whether this year’s negotiations bring renewed turmoil is important, for these reasons. . .


Posted in Budget/Debt Ceiling Crisis, Debt |

Roubini: Massive Contagion If Greece Leaves the Euro

13-Mar (Bloomberg) — In an exclusive interview, Roubini Global Economics Co-Founder Nouriel Roubini discusses what a Greek exit from the euro would look like.


PG View: Roubini does not think Grexit is likely, because if it happens it could be devastating and even the Germans know that.

Posted in Debt, European Debt Crisis |

The German government is discussing whether Greece should be cut from Europe like an ‘amputated leg’

13-Mar (BusinessInsider) — Even without the heat of official negotiations, relations between Athens and Berlin are getting more sour by the day. The latest example comes from Wolfgang Schaeuble, Germany’s finance minister.

When pressed by Austrian reporters on whether there could be a “Grexident” — an accidental series of events that could lead to Greece’s leaving the euro — Schaeuble said Greece’s future would be determined by Greek authorities “and since we do not know exactly what the authorities in Greece will do, we can not rule it out.”

Other German government officials are discussing whether Greece might be “amputated” from Europe like a “gangrenous limb,” according to the Financial Times. Greece’s official position is that it will stay in the euro, so Athens most likely will not appreciate the intervention.


Posted in Debt, European Debt Crisis |