U.S. federal debt has been stuck at $16,699,396,000,000.00 for
68 straight days, according to the Daily Treasury Statement on July
24. That amount is exactly $25 million less than the legal
borrowing limit of $16,699,421,000,000.00 set on May 17, 2013. But
that's only part of the story.
A digger deep at the numbers actually shows the U.S. Treasury
has already blown past the federal legal borrowing limit! And the
mainstream media, as usual, is out to lunch. The table below shows
how "Total Public Debt Outstanding" is already $38.82 million above
the statuary debt ceiling and now at $16,738,220,000,000.00.
The yield on 10-year U.S. Treasuries (^TNX) has surged 51% over
the past three months and 84.07% over the past year alone. That
move has taken the 10-year yield from 1.40% to 2.61%. And bond
investors - especially owners of long-term debt - are beginning to
see something they haven't seen in a while; hefty losses.
Winning the Battle of Excessive Debt and
Joining these bond losers is the all-wise, all-knowing
Federal Reserve, who, courtesy of its massive Treasury holdings
(NYSEARCA:TLT), suffers paper losses of approximately $3 billion
for every 0.01% rise in interest rates. Maybe the omnipotent Fed
isn't so omnipotent after all.
Meanwhile, leveraged short Treasury ETFs like the ProShares
UltraShort US Treasury 20+ Bond ETF (NYSEARCA:TBT) and the Direxion
Shares US Treasury 20+ 3x Bear Shares (NYSEARCA:TMV) have jumped
between 12% to 16% over the past few months. Not bad when
considering the total U.S. bond market (NYSEARCA:AGG) has lost
around 3% while long-term U.S. Treasuries have fallen an even
harder 10% year-to-date.
As the next debt ceiling debate takes center stage, we can't
help but wonder why bother? If Detroit D.C. has already
subversively exceed its legally mandated borrowing limit what's the
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