Are We Broke Yet?

Times are changing.  It used to be you'd run across news stories headlined something like Social Security Bankrupt by 20XX.  Or Medicare Won't Help Boomers.  These were certainly problems, even big problems, but at least according to the reporting, we didn't have to worry about fixing the problem right this minute.  Some very recent news on pending financial disaster has a different time frame: days, weeks, months.  Not years or decades.

Last week it was reported that the "U.S. Treasury is depleting its cash at an accelerating pace, drawing down its cash balance by $81.6 billion in the just the first four days of March, leaving the Federal Government with only $108.9 billion on hand, according to the Daily Treasury Statement release Monday afternoon."  Today Zerohedge provides an update noting Treasury is now down to $14.2 billion.  Given that the government has been spending about $12 billion a day, Geithner better be balancing juggling the government's checkbook nightly.

Others see the  matter much differently.  "Make no mistake about it, we're not broke," Rangel said in a floor discussion...".  Paul Krugman, taking issue with "right-wingers", says the U.S. Government is not broke in any normal sense of the term and there's no need for immediate austerity.  Michael Moore knows the country's not broke because some rich people live here.

Who's right?  To paraphrase an ex president, it probably depends on the what the meaning of broke is.  As for me, I'm going to keep reading the likes of Zerohedge and greet government's every word with skepticism.

Lastly, just a bit of housekeeping.  We sold the SPDR S&P Metals and Mining ETF (XME) today, one of our best performers that was up 32% annualized.  We were outside the hard asset allocation limits, want to consolidate around HAP, likely were too heavy with miners, and were not enamored with the current XME chart.