Monday, June 6, 2011

Debt Issuance and Spending Cuts

This week the Treasury will be auctioning off the following:

$27 Billion in 13-week Bills on June 6, 2011
$24 Billion in 26-week Bills on June 6, 2011
$32 Billion in 3-year Notes on June 7, 2011
$21 Billion in 10-year Notes on June 8, 2011
$13 Billion in 30-year Bonds on June 9, 2011

After pledging to cut $100 billion, the House Republican leadership was only able to cut a pathetic $38 billion.  This weeks debt issuance, which is consistent with previous auctions, puts the cuts of $38 billion in perspective.  The question now remains; will the federal government heed the advice of Stan Druckenmiller to demand substantial spending cuts and enact true entitlement reform?

Some highlights of Druckenmiller and his interview with James Freeman (added information not included in the interview shown in parentheses):

 - Druckenmiller and his wife gave away over $700 million to charity in 2009.
 - Druckenmiller has been credited with orchestrating George Soros's successful shorting of the British pound in 1992 (earning one billion dollars of profit in a single day).
 - After working for Soros, Druckenmiller also built his own fund, Duquesne Capital, which at one point had $12 billion in AUM (as of August 2010, Duquesne Capital's returns had averaged 30 percent annually since 1986).
 - Forbes estimates Druckenmiller is still worth $2.5 billion, despite his generous charitable givings.
 - Druckenmiller, over the last two decades, has been the largest benefactor of the Harlem Children's Zone, a community service organization featured in the movie "Waiting for Superman".
 - Druckenmiller was accused by (the now disgraced former Treasury Secretary) Robert Rubin of wrongdoing in the Treasury market, however Druckenmiller was long Treasuries at the time, and is long Treasuries now (despite Rubin's accusation otherwise).
 - Druckenmiller spoke up about his concerns with the our fiscal situation in 1995 and noted that the first baby boomers would turn 65 in 2010.  He know states that we do not have another 16 years to get things in order.
 - He stated that the Treasury market is not a free market, nor is it a clean market due to The Federal Reserve buying much of Treasury bonds through QE2 to the tune of $19 billion of Treasurys a week.

Druckenmiller has proven expertise in the Treasury market and other fixed income markets.  Our political "leaders" would be making a major mistake not listening to him.


Anonymous said...

today the treasury announced 2 new debt offerings for the week-

28 billion in 4 wk bills tomorrow and 15 billion of 6 day bills weds.

any reason why they would wait so late to announce??

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