Financial topics

[OLD1953]

Something close to five trillions are held by the government itself. Less than half that is SSA.

[jusme]

This statement made in a email by an S & P analyst after the S. H. T. F. in" 08 ".

" A bond could be structured by cows and we would rate it !"

Moody's and Fitch are no better.

Is it as simple as taking the heat off both parties because it's election time again ?

We all know the cut's are going to be deep and wide, to us !

Maybe all this theater, "The parties can't come together " "Washington is broken " is just that "a staged production " ?

I never doubt them to benifit their own agenda's !

With all the "Wall Streeter's " in this Administration doesn't this all seem a bit odd ?

We all see this as the "horror movie " we become a part of, I think it was said on G D ?

I just don't get that feel from them ?

Anyone else ?

It's like 'no big deal " !

They all go on vacation ?

What's up with this ?

jusme

[jdcpapa]

I just don't get that feel from them ?

Anyone else ?

I jus started to look into the details of the US budget. I was going to spread it out and analyze it and realized that: "You cannot force a square peg into a round hole!" (Even if you manage to cut waste,fraud, entitlements and the military). There is simply not enough in the way of revenues. Tax rates below historical ratios to GDP do not appear to be stimulating growth over the 10 year test period.

The "cuts" being negotiated are future cuts(a drop in the hat at that). Right now deep cuts are being made in my community. Entitlements are being slashed. The local economy is stagnant. The unemployment rate is among the highest in the nation.

The other day I read about a newly elected congressman that did not want to raise the debt ceiling. He was adamant about not putting the debt burden on the backs of his children and grandchildren. Later, I find out that he owes over $178,000 in back child support. If true, what kind of people are we putting into office and how can we expect a different outcome under this scenario?

Washington is not fulfilling it's obligation to the people. Why? What else is working here? John is right. The only way out is a crisis to cause us to unite. The only question that remains is at what price?

[Higgenbotham]

Overall, I see what are classified as "Financial assets" having grown by about $4 trillion over the past year. That seems a bit high as personal savings are about $0.6 trillion per year while corporate profits are running at about $1.7 trillion per year.

I forgot about the pension funds; that is shown on line 28 of B.100. Those assets are up $1.1 trillion in the past year. Not all of that would be due to net contributions though.

Something close to five trillions are held by the government itself. Less than half that is SSA.

SSA is another ongoing source of funds for treasury purchases.

In thinking about that last night, I was looking for new sources of funds for treasury purchases and the SS contributions might need to be netted against the payouts.

After accounting for that, then any net shifts in allocations from other asset classes to treasuries would also be a source of funds.

So summarizing overall, I see the US domestic sources of funds (increase to Q1 2011 vs Q1 2010) for treasury purchases being:

Personal savings ($0.6 trillion)
Corporate profits ($1.7 trillion)
Pension funds (?)
Social Security (?)

and the entities that hold them are

Financial corporations (banks and brokerages)
Investment funds (like Soros and Buffett)
Pension funds
Social Security Administration
Private individuals and nonprofits
Nonfinancial corporations

My brokerage purchases large multimillion dollar blocks of treasuries regularly that they allocate to accounts that want them (for no charge by the way). I put my (small) Roth IRA that is held in a brokerage into treasuries about a month ago.

There's probably something I forgot.

[jusme]

It's Medicare and Medicaid !

50 % of the budget ! Half of which I think is fraud.By 2020 with rising Med.cost, Big Pharma, off the cliff !

I read military is only 20% ?

50 years ago it was 52%.

Is that the something you forgot L O L !

All of you are so great at clearing the tree's so we can see the forest ahead.

jusme

[Higgenbotham]

I just don't get that feel from them ?

Anyone else ?

I just started to look into the details of the US budget. I was going to spread it out and analyze it and realized that: "You cannot force a square peg into a round hole!"

Washington is not fulfilling it's obligation to the people. Why? What else is working here? John is right. The only way out is a crisis to cause us to unite. The only question that remains is at what price?

Agree 100%.

Taxes must be increased and sensible austerity imposed at all levels. A new kind of thinking is required. That's the only way out if the US is to remain a stable first world country. I hear S&P trying to say that without really saying it.

As far as funding deficits through treasury issuance, my take is they can go through one more round of asset takedowns and the pools of money are still large enough that a forced shift in allocations to treasuries will be adequate short term. However...the aftermath of that will not be the right time to impose tax increases and austerity. The time window is now. That will be messy enough but if it's put off any longer I think the political system will collapse. Either a strongman will take over or the US will break up into pieces (I suspect the latter).

[Higgenbotham]

http://www.ssa.gov/cgi-bin/transactions.cgi

Click GO at the bottom of the page to see the data.

The Social Security Administration increased net holdings of treasuries $91 billion in 2010. SSA should become a net seller as the Baby Boomers retire.

[jdcpapa]

The time window is now.

That will be messy enough but if it's put off any longer I think the political system will collapse. Either a strongman will take over or the US will break up into pieces (I suspect the latter).

I agree the time window is now. I believe the strong man may be in place.

Here is the fiscal year 2010 US Source and Use of funds (in summary)

US Sources and Outlays of Funds
Fiscal year 2010 (in millions)


Sources

Individual income tax 898,549
Corporate income tax 191,437
Social Insurance and Retirement 864,795
Excise tax 66,909
Estate taxes 18,885
Customs 25,298
Miscellaneous 95,872

Total source 2,161,745 100.000%


Outlays

Legislative branch 5,838 0.270%
Judiciary 7,185 0.332%
Agriculture 129,454 5.988%
Commerce 13,233 0.612%
Defense 666,717 30.842%
Education 92,858 4.296%
Energy 30,775 1.424%
Health and human services 854,060 39.508%
Homeland security 44,455 2.056%
Housing and urban development 60,143 2.782%
Interior 13,163 0.609%
Justice 29,558 1.367%
Labor 172,886 7.998%
State 23,804 1.101%
Transportation 77,751 3.597%
Treasury 444,390 20.557%
Veterans affairs 108,275 5.009%
Corp of engineers 9,875 0.457%
Other civil defense programs 54,031 2.499%
Environmental protection agency 11,008 0.509%
Executive offfice of the president 583 0.027%
General service administration 862 0.040%
International assistance programs 20,038 0.927%
NASA 18,906 0.875%
National science foundation 6,720 0.311%
Office of personnel management 69,916 3.234%
Small business admn 6,126 0.283%
Social security admn 754,179 34.888%
Other independent agencies (11,502) -0.532%
Other ofsetting receipts (249,452) -11.539%

Total outlay 3,465,835 160.326%

defecit/debt (1,304,090) -60.326%

Sorry about the format

[jusme]

I did click on the link

And just for fun I also clicked on the highlite "interest" on that page below the line.

It goes back to 1940.There's a graph and if you click on the graph it gives historical data.

Interesting ?

jusme

[Higgenbotham]

This is the Fed Flow of Funds Report which covers flows through March 2011.

http://www.federalreserve.gov/releases/ ... ent/z1.pdf

Page 44 shows who bought and sold treasuries and how much.

Page 89 shows who holds treasuries and how much.