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Menelaus
13 Sep 12 17:51
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Date Joined: 03 Feb 05
| Topic/replies: 6,745 | Blogger: Menelaus's blog
http://www.marketwatch.com/story/fed-to-launch-qe3-of-40-billion-mbs-each-month-2012-09-13

Print, print, print, there's no pl.......oh feck it, you either get it by now or you don't.

Laugh
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Report bongo September 13, 2012 9:18 PM BST
Thank you for the heads up on this menelaus - it had to happen as there was no serious alternative plan.
It looks like the Federal government are going to be paying their bills by a combination of tax receipts ( 69%ish ), printing (14%ish) and borrowing (17%ish) for a long time yet. Might be out by a few spots on the % figures. If they find themselves unable to borrow then the US will become very vulnerable but the lenders are still out there who are willing to do so. Why this is, I don't understand, but it could be inertia - that govts or other institutions with major surpluses are always persuaded by PIMCO and others they must include yet more US debt in their portfolio.
If these big lenders ( e.g. China and Gulf States ) stop running massive surpluses or become unwilling to keep on lending then the party will have to end, but for now their party continues ( excessive Federal spending, money printing and surprisingly low inflation being the equivalents of alcohol, strippers and a cheap taxi home, smiles )
Report Menelaus September 13, 2012 9:58 PM BST
bongo can you elaborate on the printing 14%ish, and the rest of your %s please.

Last I checked the FED has bought about 60pc of USG debt last year and about the same since.

http://online.wsj.com/article/SB10001424052702304450004577279754275393064.html

The numbers is the UK don't look much better

http://www.bankofengland.co.uk/markets/Pages/apf/announcements.aspx

Also, I think you need to consider how in a recessionary economy tax revenue is diminishing. Greece and Portugal are finding out the hard way.

We're living an illusion bongo, a fantasy and today we took one more step closer to a financial world of pure fiction.

I suppose nominal GDP targeting will be the next stop in this banker concocted nightmare (only Michael Woodford will be in some kind of nirvana) where no one of us can escape.

Bury your gold and……WAIT.
Report bongo September 13, 2012 10:34 PM BST
Hello Menelaus - it's a very rough and ready esimate for 2013 fiscal year from .
http://useconomy.about.com/od/fiscalpolicy/p/deficit.htm
Spending 3.80tn USD
Tax receipts 2.90tn USD
Printing 0.48tn USD ( based on 12*40bn per month, although there's nothing to stop them printing more if they want to )
Balance of 0.42 tn USD from borrowing would still be needed.

Which gives a breakdown of receipts (76%), printing (13%) and borrowing (11%).

So well spotted - actually I was quite a lot out ( too much Whyte & MacKay in me, and not enough single malt I fear is my excuse ).
Frankly I don't trust the projections - on recent form they always overestimate receipts and underestimate spending.
Report Menelaus September 13, 2012 10:43 PM BST
Try this site, a lot more closer to reality:

http://www.cbo.gov/


Enjoy the rest of your evening bongo. I'm signing off now to enjoy a couple of shots of my favorite single malt and try to get my ahead around of what really happened today and why. Was the shadow banking about to blow, was he bailing out Fanny & Freddie, was it a desperate move in front of an election? Only he knows for sure, and the rest of us will find out in the fullness of time. Regardless, I think those unintended consequences will veer their ugly head again very soon.

Good night.
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