The creeping crisis of sovereign debt: Towards the third financial crisis.

This post will look at debt turnover to try to understand the FED policy shift in relation to developments in the US sovereign debt financing policy

The decision of the FED to buy back the Treasury debt deserves to be faced with the rollover of debt in the consolidation phase. It is not enough to consider the debt in its quantitative evolutions and its subdivision into the type of treasury bills (T. Bills, T. Notes, T. Bonds, TIPS). It is also necessary to consider its depreciation and its emissions to understand the evolution of the financial policy of the public administrations, by putting in public administrations the FED.

Two objectives of the FED make it possible to scrutinize the reverse of the debt: the desire to ensure the consolidation of the debt and the desire to avoid the rise of interest on the “long debt” that represent the T. Notes and the T Bonds. This will imply that the FED weighs by its purchases on the conditions of financing (supply of capital) and the level of remuneration of treasury bills (Interest). We will deal with this issue by showing that there has been deconsolidation of the debt for one semester due to a change in the financial basis of the latter’s financing. We will thus be able to examine the evolution of interest rates and understand the intervention policy in successive phases of the FED. This first part will lead to highlighting a creeping debt crisis that began in the spring of 2010.

In an expanded analysis in the form of a conclusion, we will put in perspective the turning point of the FED policy of the period August-November 2010

This post indeed wants to show that an analysis of the technical data of the reverse side of the debt leads to highlight that the US is experiencing a general crisis whose center of gravity is the sovereign debt and the maneuvers organized around it to save a US economy exposed since 2010 to the risk of a financial failure affecting the Treasury.

It should be remembered that the share of the financing of the total US financial debt ($ 13668 billion) by the market roughly represents two-thirds of the total debt, ie just over 8500 billion at the end of October. It is this part of the debt that the Obama administration wants to consolidate, the social funds ($ 4598 billion) and the non-marketable debt ($ 548 billion) ensuring the financing and consolidation of the rest of the debt United States by purchases that can be administered, the social funds are indeed managed by the Treasury. It is therefore imperative that the negotiable market debt is also consolidated- click this link here now, a negotiable market debt financed in the short term by the market would indeed prove that the US or foreign investors are defying the US debt beyond a few quarters.