Bye, bye debt limit
Here’s a what a rise in the debt limit after a six month impasse looks like in accounting terms:
Debt subject to the limit rose by $238bn yesterday as the Treasury replenished all of the trust funds it has been borrowing from for the last few months. That leaves it with $162bn of headroom. Read more
The trouble with a small debt limit rise
The idea of a small rise in the federal debt limit to buy more time after August 2nd for a larger deal is starting to come up quite a lot. For example, the reporting on the Mitch McConnell fallback plan suggests that a $100bn rise in the debt limit would be made available immediately in order to buy time.
The trouble is that as soon as there is any space under the debt limit, the Treasury will be obliged to replenish the government trust funds that it has been borrowing from in order to stay under the limit for the last few months. The law is unambiguous: Read more
Suspension of the SFP and the Fed
Ready for some true Fed balance sheet wonkery? Sit back and enjoy…
The US Treasury has announced today that it will suspend the Supplementary Financing Program (currently $200bn) that it runs to help the Fed. Here is the Treasury statement:
“Beginning on February 3, 2011, the balance in the Treasury’s Supplementary Financing Account will gradually decrease to $5 billion, as outstanding Supplementary Financing Program bills mature and are not rolled over. This action is being taken to preserve flexibility in the conduct of debt management policy.”
The point of all this is to give the Treasury more space to borrow as it waits for Congress to raise the debt ceiling – but it has consequences for the Fed. Read more
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Chris Giles has been the economics editor of the Financial Times since 2004. Based in London, he writes about international economic trends and the British economy. Before reporting economics for the Financial Times, he wrote editorials for the paper, reported for the BBC, worked as a regulator of the broadcasting industry and undertook research for the Institute for Fiscal Studies. RSS
Michael Steen, Frankfurt bureau chief, covers the ECB and the eurozone's economies. He joined the Financial Times in 2007 as Amsterdam correspondent and later worked as a front page news editor in London. Before joining the FT, he spent nine years as a correspondent at Reuters, mostly in foreign postings that included a previous stint in Frankfurt, as well as Moscow, Kiev and central Asia. He read German and Russian at Cambridge.RSS
Robin Harding is the FT's US economics editor, based in Washington. Prior to this, he was based in Tokyo, covering the Bank of Japan and Japan's technology sector, and in London as an economics leader writer. Robin studied economics at Cambridge and has a masters in economics from Hitotsubashi University, where he was a Monbusho scholar. Before joining the FT, Robin worked in asset management and banking. RSS
Ralph Atkins, capital markets editor, has been writing for the Financial Times for more than 20 years following an economics degree from Cambridge. From 2004 to 2012, Ralph was Frankfurt bureau chief, watching the European Central Bank and eurozone economies. He has also worked in Bonn, Berlin, Jerusalem and Brussels. RSS
Claire Jones is Money Supply economics team writer, based in London. Before joining the Financial Times, she was the editor of the Central Banking journal and CentralBanking.com. Claire studied philosophy and economics at the London School of Economics. RSS
