The US Deficit

Source: Washington Post.

With the latest sombre figures for US bond auctions, these figures will have to be revised. Closer to 2 trillion than 1.85 now.

A U.S. government auction of 30-year bonds met a dismal reception on Thursday, driving down bond and stock prices and raising fears the United States may face difficulty financing spending to stimulate the economy.

The $14 billion auction met below-average demand from investors, who forced the government to pay a higher yield. An extended trend of rising yields could force up longer-term interest rates throughout the economy.

It was the first 30-year auction since the government said last week it would move to monthly sales of long bonds, which some analysts say are harder to sell than other maturities.

"It was a horrible auction," said Mary Ann Hurley, vice president of fixed-income trading at D.A. Davidson & Co in Seattle.

"It just does not bode well for interest rates. It's ugly, it's very, very ugly," Hurley added.

The good news is that President Obama has promised to cut the deficit by $300 million. The bad news is that this is less than the thickness of the zero line on the graph above. The really bad news is that if things go well and according to plan, then in 10 years time the US deficit will continue plunging lower, year after year.