Sunday, 20 July 2008

Five into ten does not go

Bloomberg points out:
The [U.S.] debt limit is $9.815 trillion and the current outstanding public debt subject to that limit is about $9.4 trillion, according to the Treasury.
In other words, actual US borrowing is within $415B of the maximum permitted by Congress. Now while more or less everything I know about the US budget process comes from an episode of the West Wing, it does seem clear that this $400B ceiling limits Hank's ability to do much meaningful for Freddie and Fannie. And comparing $9.4T with $5T makes the impact of bringing the agencies' $5T of mortgages onto the government balance sheet clear. Hank must be hoping the markets bought his `we'll fix it' speech because if he actually has to do something, is room for manoeuvre is limited.

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