ANYBODY WITH A WHEELBARROW?

For 2009: We Will Be 1.42 TRILLION in the Hole!

Speaking of our questionable leaders, the U.S. government finally got around to printing their final Monthly Budget Statement that would end their fiscal year (Sept 30th).

The final total was $1.42 Trillion in the red. That's 10% of GDP! That's the highest level since World War II! And remember when I kept telling you that expenditures for this administration in 2009 would come in at $3.5 Trillion dollars?

Well, that's just about where they are. With revenues dropping 16.6% from 2008, we are left with this atrocious deficit of $1.42 Trillion! And don't forget that the next 10 years is forecast to add an additional $9 trillion to our national debt!

Okay, with this huge deficit, we REALLY need foreigners to start buying our stuff again. So let’s go back to the TIC’s data for a second.

Remember now, the TIC's data is an accounting of the net foreign purchases of U.S. stuff. So how'd we do? Well the big picture of all flows in and out for the last 12 months turned negative. It’s just shy of the worst level recorded, back in 1982.

Ouch! Central banks seem to be buying about the same amount. That’s not good considering the Treasury is spitting out a record number of Treasuries. But the real fall off has come from the Moms and Pops, the private investors if you will.
Our Debt…

So, is this just an aberration, or could it be a loss of confidence of global investors in the U.S.?

There was a hint of this loss of confidence on Friday in the China Daily newspaper. Even worse, the story was front and center for everyone to read...

It was a quote by Big Al Greenspan, our former Fed Chairman who said that he, "fears the budget deficit of the U.S. more than the collapse of the dollar."

Hmmm...

What the heck is Big Al talking about? He knows very well that the deficit caused the dollar depreciation! And just the fact that the Chinese put it front and center on their daily newspaper tells me that they are making fun of Big Al. At the same time they are telling their readers to avoid dollars. But that’s just my humble opinion folks.

So to recap... The TIC's data last Friday indicated a loss of confidence in the U.S., the Budget Deficit for the U.S. was $1.42 Trillion for the fiscal year ending Sept 30th. The currencies, for the most part, are rallying this morning vs. the dollar, and the data cupboard will fail to give the markets direction this week. Some Chuck speak on the soapbox on a Marvelous Monday too!

Chuck Butler
P.S. It’s scary at best that foreigners are cutting back on buying our exports. It all feeds into a bigger story happening with our Treasury market today