How stunningly appropriate.
On the last day of 2003, the Treasury's official debt rose by:
$US 86.126 Billion
That is $US 7 Billion more than the official debt rise for the MONTH of December
It is $US 33 Billion more than the official debt rise for the MONTH of November
It is $US 3 Billion less than the official debt rise for the MONTH of October
At the end of the first quarter of fiscal 2004, Treasury debt is up by $US 218.1 Billion, according to the official figures. According to those same official figures, $US 86.1 Billion or 39.5% of that debt was incurred in ONE DAY - on December 31, 2003.
On December 30, the Treasury was looking at a $US 10 Billion SURPLUS on their official debt for the month of December. One day later, the official DEFICIT was $US 76 Billion. Great Galloping Horny Toads! What a way to end an old year - and start a new one.
As you probably know, there is no "official" inflation in the US. The Fed can't find any no matter how hard they try. As you probably know, the US economy is "officially" in recovery and has been for the past nine months. As you may not know, the Dow rose 25.32% in 2003, a slightly bigger percentage gain than it managed in 1999, the BEST year of the Clinton bull of the last half of the 1990s.
The combination of wilful blindness in the markets and official government financial ledgerdemain which combined to produce this result is unprecedented in US history. An official increase in Treasury debt of $US 86 Billion on the last DAY of the year was fitting icing on the cake, especially since most markets ignored it totally.
To anticipate that the amazing "suspension of disbelief" which charactarised 2003 can be maintained in 2004 is drawing an extremely long bow. Were it not a Presidential election year, we would say it would be utterly impossible. As it IS a Presidential election year, we will merely say that it is EXCEEDINGLY unlikely.
We will know soon enough. Gold hasn't traded yet in 2004 on the Comex, it had January 1 and 2 off. The Dow started the year with a minor (40 point) fall. The $US index fell to another brand new low in its bear market. The simplest measure of financial 2004 will be how long US stock markets can defy economic reality, a plummeting Dollar, and a $US Gold price which is poised at the verge of decade plus highs.
Watch for ANY weakness on the Dow. Watch especially for any concerted move back down towards the 10000 level. The death knell for the "Alice in Wonderland" nature of US financial markets will come when the Dow slips back below, and then STAYS below, the 10000 level. If it happens this month - in January 2004 - the rest of the year will look grim indeed for paper based investments, Presidential election or no Presidential election.
On the Treasury debt front, 2003 has gone out with a deafening BANG! Just the wake up call that is needed as we start the new year. Let's see who heeds it, and how long it takes for it to be heeded.
We hope you all had a pleasant, enjoyable, and safe holiday season. Next week, the whole contraption clanks into top gear again. Welcome to 2004, it should be quite a year.