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Spending a buck while making 65 cents – Professional Edition

The 4 week bill auction was again very strong, signaling no diminution of strong buying interest from FCBs and others. So the game can go on. It had better. The Treasury released its monthly statement for June late yesterday and it revealed that revenues covered only 70% of outlays, continuing a weakening trend that began early in 2008. Tax receipts dropped 17% from June 2008. While the trend of diminishing receipts has slowed a bit, there’s no sign of an increase in revenues.

For the past year, on average, tax receipts have covered roughly only 65% of outlays. The rest must be made up with borrowing. The game can only go on for as long as our foreign lenders are willing and able. No doubt the will will always be there. They have too much at stake to risk withdrawing their lending support. So the question becomes one of how long they will be able to continue to fund $100 billion a month in Federal Government borrowing. When they no longer have the wherewithal, all kinds of questions arise. How much will the Fed print at that point? Will the government cut spending. Will it default on debt service? Will the US become a ward of the IMF? Click here to download complete report in pdf format (Professional Edition Subscribers). Try the Professional Edition risk free for thirty days. If, within that time, you don’t find the information useful, I will give you a full refund. It’s that simple. Click here for more information.

Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish LiquidityTrader.com, and was lead analyst for Sure Money Investor, of blessed memory. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both sales, analytical, and trading capacities. Prior to starting the Wall Street Examiner I was a commercial real estate appraiser in Florida for 15 years. I was considered an expert in the analysis of failed properties that ended up in the hands of bank REO divisions, the FDIC, and the RTC. Remember those guys? I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. I'm not some Ivory Tower academic, Wall Street guy. My perspective comes from having my boots on the ground and in the trenches, as a real estate broker, mortgage broker, trader, account rep, and analyst. I've watched most of the games these Wall Street wiseguys play from right up close. I know the drill from my 55 years of paying attention. And I'm happy to share that experience with you, right here. 

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