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« Extract Resources Limited: Going for $8.65 a Share | Main | No one has right to ask Iran to halt uranium enrichment »
Wednesday
Feb012012

US Adds $120 Billion In Debt Since Debt Ceiling Hike On Friday, $310 Billion More On Deck In Next Two Months

Remember when the US hiked its debt ceiling on Friday courtesy of a formulaic 52 affirmative votes in the Senate, giving the Treasury $1.2 trillion in dry debt powder to attempt to grow the economy one more time according to the algorithmic fantasies of voodoo priests with pieces of Ivy League parchment on their walls? Well, two days later, the dry powder is less than $1.1 trillion. In other words, in the past two days, total US debt increased by $120 billion, along the lines of our expectations, as the Treasury filled up all the G-fund cash it had pillaged to continue issuing debt throughout the month of January even though it was formally above the debt ceiling. What is more concerning, is that as the chart below shows, the trendline of US debt since the beginning of 2011 is no longer a straight line, but has slowly transformed into a parabola, the very same word used as the root in such other infamous words as, for example, parabolic.

It gets worse: even according to the drastically, and very unrealistically, downward revised borrowing expectations of the Treasury released yesterday, the US will issue $444 billion in debt in this quarter. Today's number means that in February and March alone Tim Geithner will raise another $310 billion, which will send total debt to $15.7 trillion as of March 31. What is the final debt ceiling? Just under $16.4 trillion. So the US will have $700 billion in debt issuance capacity for the 7 months leading into the presidential election (and 9 until the end of the year).

Now naturally, if the debt ceiling becomes a sticking point at the election, Obama's chances of reelection plunge. Which makes us wonder - will Republicans grasp that the paradox of defeating Obama is precisely in giving him a carte blanche on all the stimulus programs he wants? Because if Congress approves another $200, 300 or even $400 billion in stimulus pork (the only thing better than one Solyndra? One thousand Solyndras!) the Treasury will drown in the need to raise hundreds of billions more, and will in fact hit the ceiling well in advance of the elections. As for the stimulus projects themselves, they will crash and burn just like all centrally planned endeavors, and actually results in a far worse outcome than if they had never been attempted. Because ironically, now that the entire world has passed the Rubicon, and unfortunately there really is no way of fixing anything, the only thing one can hope for is letting the status quo get on with doing what it does best, and leading the 100 year process of central planning to its sad and terminal conclusion, only after which can the "fresh start" reset occur. Ironically, the same thing is true with the farce that is the debt ceiling: the best way to finally get back to a fiscally prudent regime? Why go to town, of course.

To read this article in full please click here to go to Zerohedge.

 

Regarding www.skoptionstrading.com. We are off to a good start with our three positions showing profits of 62%, 26% and 2% on Wednesday, moving higher on Thursday to show profits of 67%, 30% and 6% respectively.

So last Friday we closed two of these trades, the first gave us a profit of 71.58% and the second gave us a profit of 33.97%.

Its nice to bag a couple of winners before January is out and hopefully 2012 will continue in a successful manner. We do have a number of ideas on the drawing board which we are looking to execute shortly, but only when the risk/reward environment is firmly in our favour.

Please be aware that discussions are taking place regarding an increase in the price for this service for new members, so if you are thinking about joining us, then do it sooner rather later in order to avoid this additional expense. This price increase will not affect the current subscribers whose subscription will remain unchanged.

Our performance stats have now been updated as follows:

Our model portfolio is up 446.55% since inception

An annualized return of 98.38%

Average return per trade of 36.68%

96 completed trades, 88 closed at a profit

A success rate of 91.67%

Average trade open for 50.48 days


 

 

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