Matt Franko and I have been detailing the last two months' net spending by the Treasury while under the debt ceiling constraint and the numbers haven't been good. A total of only $9 bln of $NFA's have been created where the normal "need" to ensure system stability is around $90 bln.
Sharp reductions in $NFA creation in the past have led to "liquidation events" like we saw in July-August 2011. I believe another one could occur soon. A technician friend of mine told me to watch the 1491 level on the S&P 500 Index. A break below that would be the first sign that the market is turning on its heels.
Do you have a historical graph illustrating $NFA creation?
ReplyDeleteThis may help?
ReplyDeletehttp://research.stlouisfed.org/fredgraph.png?g=eZD
Which is Government total expenditures (W068RCQ027SBEA), Quarterly, Seasonally Adjusted Annual Rate as a percentage of GDP
ReplyDeleteBull & Net,
ReplyDeleteWe have been following it as the federal deficit on a monthly basis via the DTS statement (which is "cash basis", MTS uses accrual)
So you look at total withdrawals, subtract withdrawals due to UST redemptions (asset swap) to get Net Withdrawals..
Then total deposits, subtract deposits due to UST issuance (asset swap)...
Look at the difference between those two and you get the "deficit" or $NFA "injected"...
December resulted in a 20B surplus and so far in Jan it is a 29B deficit so since Dec 1, only net 9B has been injected and we have 60B of SS taxes due, plus income taxes, and much interest to be paid on loans, etc....
Where are the funds going to come from to pay these liabilities? iow the govt is imposing 100s of Billions of liabilities this month having injected only 9B since Dec 1... this doesnt look good...
rsp,
Thank you for the responses!
ReplyDelete@Bear
ReplyDeleteHere's the official history of $NFA in an Excel spreadsheet:
https://www.dropbox.com/s/c43m9m1eo7hl5e6/debthist01z1.xls
From the FoF data. Have a ball!!!