If the US Treasury cannot sell US$2T of paper >end of 2010 then the Obama plan falls apart : Ditto UK
On January 22nd Tim Geithner in a written reply to Congress, in response to a question from Sen. Olympia Snowe, (R-Maine), that President Obama’s administration “backed by the conclusions of a broad range of economists - believes that China is manipulating its currency.”
Best estimates are that China bought US$374 billion of U.S. bonds in 2008. With the Obama administration proposing a deficit of more than $1 trillion in 2009, is it good policy to insult your best foreign customer?
Tim's comments were followed by a bond sell-of and Su Ning, vice governor of the People's Bank of China, countering that "these remarks are not only inconsistent with the facts, but they are misleading about the reasons for the financial crisis."
Yesterday Tim was testifying to Congress again. A Congressman asked a direct, simple question.
“Mr. Geithner can we sell the bonds necessary to fund this deficit? Are the Chinese still buying our bonds?”
Mr. Geithner responded with a full three minutes of non-answers to those questions. At the end of three minutes the Congressman repeated his questions.
For another two minutes Mr. Geithner ducked the questions.
If the US Treasury cannot sell about US$2T of paper up to the end of 2010 (at the current historical low rates), then the Obama plan falls apart. Period.
NB : Fleshy Gordon is in the same spot more or less, but his problems arise from selling UK Government securities in the next nine months to fund his banking payola, PFI bail out (which has only just started) etc.
If interest rates are (as widely rumoured) due to drop yet again in the morning - the job looks even harder.
Steve Bundred, (pic Nov200) chief executive of the Audit Commission,said in an article in the Times Feb 26th , "The measures that the government is taking to stimulate the economy may well be absolutely necessary but they involve unprecedented levels of public borrowing and public debt,"
The Office for National Statistics (ONS) say UK national debt rose to £703.4bn in January, or 47.8% of GDP the highest for 20 years - this will (say the ONS) increase sharply if the money being pumped into Britain's faltering banks was taken into account.
Mr Bundred warned that if borrowing pushed above 65% of GDP, there was a "distinct possibility" Britain could face "the Armageddon scenario most feared by the Treasury: that there will be insufficient lenders to match the planned level of borrowing".
PS : & UPDATE The 2008 Audit Commission report on the NHS included the first full year audit of payment by results bills, which found that up to £1bn of the bills hospital trusts have sent primary care trusts could be wrong.