by Bill McBride on 11/03/2008 05:45:00 PM
Monday, November 03, 2008
It seems like just yesterday that the National Debt exceeded $10 trillion for the first time. Hard to believe that was just one month ago since the National Debt is now $10.574 trillion (yes, an increase of $574 billion in about one month).
This raises questions about funding the debt. From Bloomberg: U.S. to Borrow Record This Quarter to Finance Deficit
The U.S. Treasury more than tripled its planned debt sales for this quarter to help finance a 2009 budget deficit that bond dealers advising the department estimate may swell to almost $1 trillion.As I noted over the weekend, these huge financing needs combined with foreign governments need to stimulate their domestic economies (and maybe even selling foreign reserves) could lead to higher intermediate to long term rates in the U.S. next year - right in the middle of a recession.
Borrowing needs are expected to rise to $550 billion in the three months to Dec. 31, compared with the $142 billion predicted in July, the Treasury said in a statement in Washington. That follows a $530 billion record in the July-September quarter.