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Will Treasury be able to borrow the massive amount of over-spending?

*Barron's, by Randall W. Forsyth, January 24, 2009

“Bailouts Threaten Nations’ Debt Ratings

THE INCOMING OBAMA ADMINISTRATION got a rude reception from the debt markets.

Ed Yardeni, who coined the term ‘bond vigilantes’ back in the early ‘Eighties, sees them being roused again. Then, the vigilantes’ main target was inflation; now it’s burgeoning budget deficits around the globe.

The eponymous head of Yardeni Research notes that the Congressional Budget Office is projecting a fiscal 2009 budget deficit of $1.2 trillion — 8% of U.S. gross domestic product. And that’s before President Obama’s $800 billion stimulus plan. The CBO also accounts for the discounted present value of the TARP returns, which brings its cost down to $180 billion this year from the likely $700 billion cash outlay.

Taking all that into account, Goldman Sachs estimates that the Treasury’s cash borrowing needs may hit $2.5 trillion this year. Against this backdrop, incoming Treasury Secretary Timothy Geithner threw down the gauntlet to America’s biggest creditor, China, accusing it of currency manipulation.”

*This information is solely a highlight of the opinion of a third-party publication and is incomplete.  Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.