Courtesy guano

The Treasury Department issued an amazing press release today announcing, among other things, the return of the 1-Year Treasure bill to help raise money to pay for ongoing deficit spending. Of all of the undigested nuggets of information, this is a nice warm shot of tequila that reminds us that the economy  is starting to flat line, we spent a lot of money bailing out Wall Street and the United States Federal Government is expected to run a $400+ billion dollar deficit this year as well as next.

A careful review of the Treasury Department press release contains all sorts of veiled information about recent events such as the credit-crisis and the Federal Reserve’s attempt to quell it as well as a glimpse into how we go about borrowing money to fund the government:

Over the last several months, changes in economic conditions, financial markets, and monetary and fiscal policy have impacted Treasury’s marketable borrowing needs. Financial market strains have impacted the real economy, and the nation has experienced lower economic growth, lower receipts, and increased outlays.

As a result, projected marketable borrowing requirements have increased significantly over the last three months, driven by changes in the deficit estimate, a decline in SLGS issuance, and redemption and outright sale activity undertaken by the Federal Reserve in its System Open Market Account (SOMA).

Treasury has responded to the increase in marketable borrowing requirements in its traditional manner and consistent with our comments in the February 2008 quarterly refunding statements.  Over the past several months, as borrowing needs have accelerated rapidly, the Treasury has significantly increased issuance sizes of regular bills, the frequency, terms, and issuance sizes of cash management bills, and the issuance sizes of shorter and intermediate-term nominal note offerings.

Given issuance sizes of securities on our current offerings calendar, future borrowing needs for the remainder of fiscal year 2008, as well as deficit projections for fiscal year 2009, we believe it prudent to add an additional maturity point at this time.  Treasury will continue to monitor our projected fiscal needs and make adjustments as necessary.

Let’s rewrite that portion of the press release so it makes more sense:

Dear Mom and Dad (Taxpayers):

I hope everything is going well at home!  The economy is really taking a digger, huh?  Anywho. School is great, although there have been “changes in economic conditions” over the past several months that have impacted my “borrowing needs.”

As a result, projected “borrowing requirements have increased significantly over the last three months.”  This is driven mainly by “changes in the deficit estimate” and outright “sale activity undertaken” by my girlfriend.  For instance, she and her friend Morgan bailed some reckless frat boy out of jail. A lot of people thought he should have just stayed there but I went along.  This guy is Morgan’s bitch now!

I have responded to the increase in “borrowing requirements” in the “traditional manner and consistent” with my last letter. As “borrowing needs have accelerated rapidly,” I “significantly increased” draws against your equity line of credit.

Given the “future borrowing needs for the remainder of fiscal year 2008, as well as deficit projections for fiscal year 2009, [I] believe it prudent to” seek an increase in your equity line of credit.  I will continue to “monitor [my] projected fiscal needs and make adjustments as necessary.”

I miss everyone!

Love,

Spoiled College Boy

Bottom Line:  Just because it’s a press release doesn’t mean it isn’t full of good information.  It’s always good to go directly to the source instead of relying on the media herd to interpret a press release for you.

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