feds $230b bond flop

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    July 29, 2003 -- The stage was set yesterday for a make-or-break showdown over the White House's handling of the economy.
    The U.S. Treasury said it would try to pull off its biggest ever borrowing deal in weeks ahead to manage the government's record $455 billion budget deficit.

    The agency plans to borrow a record $230 billion in the second half through the sale of its three-year, five-year and 10-year notes.

    But analysts doubt that any buyers will step up to buy Uncle Sam's IOUs and bail out the White House's huge deficit.

    "The bond market is revolting because they've already lost trillions on bonds," said portfolio manager Bill King. "A lot of the very rich are hurting badly, and they're leveraged to the hilt."

    News of the giant bond sale sent the already battered bond prices tumbling again yesterday on fears the new paper will flood the market with unwanted securities.

    If investors turn their backs on the new debt and it's withdrawn, the embarrassment "will totally repudiate everything [Fed Chairman Alan] Greenspan has been doing all these years," said King. "All the usual buyers of Treasury bonds are now sellers, and there's no reason for them to buy."

    http://www.nypost.com/business/1751.htm
 
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