My Chinese translation abilities are not that good, but if I’m reading that caption above correctly, they were not impressed with our debt dump this week on to the bond markets. The auctions today are only part of the story. The reality is that there is competition for debt refinancing and it is now to the point where government largess will squeeze out or down right impair the ability of private industry and society to put their debt out for bid at competitive rates. Especially considering the total amounts the Federal Government, its corporate entities it now controls (GSEs, GM, Chrysler, AIG, C, etc.) , the states and municipalities, and of course private industry. Someone dared to speak the unspeakable at cocktail parties and polite society in this weekend’s edition of Barron’s. Stephanie Pombay at MacroMavens was interviewed for an article (A Jolly Good Year, Barron’s December 28th edition) and her reminder at the end of the article sums up what we are up against in the next 36 months:
The numbers, Stephanie exclaims, are unbelievably big. Uncle Sam must roll over $2.5 trillion in debt during the next two years, banks worldwide have some $7 trillion due in the same stretch and commercial real estate will weigh in with another $750 billion.
Which conjures up for her a looming new “credit-bust blitz.” Gulp!
One more time for those of you slower than the average Bernanke:
$7 trillion worldwide
$750 Billion in CRE
Yet the Federal Government through its allegedly brilliant strategy of using short term financing on continuous rolls is going to attempt to roll that $2.5 trillion (with a “T”) while competing with private entities, namely the technically insolvent fiat funny money fractional reserve banking system and the CRE enterprises they have married themselves to, for a limited pool of monies unless Benron and the boys intend to re-institute Quantitative Easing on a massive scale to insure that the system does not collapse. The problem that the Federal Reserve and the anti-Inflationistas face in to 2010 is that the debt levels are unsustainable unless the United States experiences ChiCom like growth in the 9-11% range on an annualized basis each quarter for the next four years. That ain’t happenin’ boys and girls nor will we even come close. Thus the problem that the Fed and the Treasury face as they end up squaring off against each other not due to the installation of their “boy” (Geithner) but due to the blithering incompetence that the American people (ok, sheeple) and multinationals have in their ability to control and constrain the Legislative branch of government.
