Wednesday, February 1, 2012

Fiscal Liquidity Index for 2/1/2012



Current situation:

The negative streak continued with the Index now logging an uninterrupted 30 days in the red. That is, by far, the longest negative streak in the three years since I have been collecting the data. The reading was -69.9, which was actually a slight improvement from the prior day’s reading of -78.2. The raw (un-smoothed) index showed some improvement as well, to -49.7 from Tuesday’s reading of -81.3. Treasury had a gross surplus of $72.9 bln for the month so far. That is the highest surplus since Aug 30, 2010. Surpluses are worrisome since surpluses drain private sector financial balances. Large ones do that that even more so. But it’s important to note that yesterday’s surplus was really the result of the first sale of Treasuries since the lifting of the debt ceiling. The Treasury sold $117.4 bln of public debt securities. It’s very likely that these funds will be quickly spent back into the economy. Real net spending (total outlays adjusted for public debt redemptions) totaled $321.7 bln. That was $20.9 bln above the same time last month. The divergence index was 194. That keeps the risk level at red.


5 comments:

Kristjan said...

Hi Mike,
can you explain your fiscal liquidity index? How is It calculated?
Thanks.

Greg C. said...

http://www.youtube.com/watch?v=yoZV5jt9puc&feature=player_embedded#!

Please let me know why you miscalculated so badly.

Thanks,
Greg

mike norman said...

LOL!!! OMG, you pathetic jerk. Still going back to that 2006 prediction. What about Schiff's Treasury predictions? Dollar? Foreigners selling? Dow at 5000? Hyperinflationary depression? US rate spike? China stock boom? And on and on and on and on. Schiff will even miss the real estate BOTTOM when it happens again.

mike norman said...

Kristjan,

The Index tracks "net spending," which I define as total outlays minus total receipts. If the Index is negative, then more money is flowing into the Treasury from the private economy than is flowing back out. If the Index is positive then the Treasury is spending more than it is taking in.

Greg C. said...

I respectfully asked you a question, and don't appreciate the name calling. I am just interested in your logic since you were so condescending to the other guests that did not share this opinion. How could you be so wrong about this, yet be so imperious?