The Upcoming Housing Boom

WASHINGTON (Thomson Financial) - The Labor Day holiday's place in the calendar this year caused a 117 bln usd record August budget deficit, the Treasury said today, as the US government spent more money in one month than it ever had before.

With September 1 on a Saturday and Labor Day on the following Monday, some 44 bln usd of Social Security, Medicare and other payments for September were paid on the last Friday of August according to the Treasury.

That brought total August outlays to the all-time monthly record of 284 bln usd, up 30 pct from a year before. August revenues were up 8 pct to 167 bln usd, which was a record for that particular month.

The 117 bln usd deficit was also the highest for any August and up 81 pct from the same month last year. Analysts had been forecasting a 75.0 bln usd monthly deficit. However, a corresponding spending offset and the usual quarterly tax payments should produce a large surplus for September.

For fiscal year 2007 through August, the federal deficit was down 10 pct to 274 bln usd. Revenues through August were up 7 pct to 2.282 trln usd and spending up 5 pct to 2.557 trln usd.

dennis.moore@thomson.com dem/wash/jlc COPYRIGHT Copyright AFX News Limited 2007. All rights reserved.

That is just fucked up. The government collected 8% more and still ran up a record deficit. It wouldn't surprise me if the US Treasury kills George Bush so that we can have a Republican run the country. Can you spot the predict 2:00 dip in the REITS. I day traded a 2.5% profit around this predictable event. Good luck finding a news article on the US Treasury press release. So here is where we are at. If you believe the Treasury that September will be a surplus, then so what about today. What does the Federal Reserve believe? The truth is the Treasury controls the interest rates based on hard real decisions. If the country is broke, the Treasury has to flood the market with notes at the next auction. Supply and demand will drive up the rates on the ten year note and thus drive up all cost of borrowing in the US. What the Federal Reserve does is chase the reality and pretend they are in control of it. The Federal Reserve has become our Wizard of OZ. As long as we believe in the power of the Wizard of OZ American can sleep soundly at night. What if the Federal Reserve totally guts the intra-bank rate and at the same time the ten year note rates go up? The Wizard of OZ would die much like Santa Clause has died when we all grew up. What choice does the Wizard have? He will cut but disappoint. He will not give a strong rhetoric of future cuts. The stock markets will react and the press will say that a deeper cut was factor into the markets. This is why rates went up. Once you recognize the Wizard of OZ as being a powerless fool, his reactions are easy to predict. BE PREPARED.