THE REFINANCE BOOM LIVES ON

the refinance boom has not ended...at least not yet. the federal government has proved that in the last few days by coming to market with some $60billion worth of 3, 5, and 10 year treasury notes, in order to refinance its own debt. the government is doing exactly what all of us have been doing for the last few years. with revenues falling and huge demands spending side, the US government is in the process of refinancing the nations debt. and just like we all did, its getting a "cash out" refi. with the latest refunding of some $60billion it is repaying $47billion of debt and taking an additional $13billion in debt to fund the war on iraq and all the other extra expenditures.

the good news is that the government was able to sell all the bonds and therefore has the money it needs to do what it wants. the bad news is that the government has no plans to payback the money, or stop borrowing so aggressively, anytime soon. just like you and i, the federal government is just fine with pushing out the obligations to sometime in the future, probably the distant future. in fact, our children and grandchildren will be talking about what this administration did when they are dealing with the repercussions of todays actions.

no doubt the economic team is aware of whats its doing, yet it has no alternatives but to hope for a better economy which will lessen the consequences of todays actions. if the economy doesnt do what they hope, then the consequences will be bad and will last a very long time.

academics and economists have lots of different opinions and thesis on the national debt and what it will do to interest rates, the dollar, the economy, the trade deficit, future generations, and all sorts of other things that will be affected by this american habit of leveraging the future. our current leaders have one mind on the subject. we need to spend this money so we need to borrow it. we will deal with the consequences later.

have a grateful day!

larry