Treasury Says Anything But A Debt Ceiling Hike Would Lead To Default, As M.A.D. Escalates A Notch

Tyler Durden's picture

After in the past week, the blogosphere had been hobbled by one after another mindless oped claiming that the US can easily avoid default by just paying the interest on its obligations, and thus does not have to worry about the debt ceiling, we decided to put some sense to this debate when we pointed out that the "US Debt-to-Deficit Difference Hits Fresh Record, As Treasury Continues To Issue 50% More Debt Than Needed To Fund Deficit" meaning that i) it is not a debt ceiling, it is a debt target (© Lizzie363), and ii) the hundreds of billions of monthly obligations that are funded through debt, are "legal" obligations of the US government that have to be paid in full every month or a default will occur regardless. Neal Wolin, Deputy Secretary of the Treasury, has just released a statement on the Treasury's blog saying pretty much just that. Which, however is certainly not a good thing, as it merely confirms just how totally screwed this country is, and that absent a hike in the ceiling to $15.5 trillion (which we believe is where the debt ceiling will be through March of 2012 when it will be raised to $17 trillion), the dollar will be backed by several trillion in insolvent Federal Reserve Notes, er, assets (that should quickly end all debate about EUR-USD parity). It also confirms that Bernanke has no choice but to continue monetizing debt, through QE and to do that, he needs to make it palatable to the general public, which in turn will mean either a material economic deterioration, or, as the two are apparently identical in the Chairbeast's mind, the Russell 2000.

Just issued by the Department of Turbo Tax Failure:

Treasury: Proposals to “Prioritize” Payments on U.S. Debt Not Workable; Would Not Prevent Default

Neal Wolin

his January 6, 2011 letter urging that Congress act to protect
America’s creditworthiness by increasing the statutory debt limit
Secretary Geithner made clear that any default on legal debt obligations
of the U.S. would be unthinkable.  In response, Members of Congress of
both parties have indicated agreement that the United States must honor
its obligations.   However, Treasury disagrees with
suggestions by some that Congress could somehow evade this
responsibility by passing legislation to “prioritize” payments on the
national debt above other legal obligations of the United States. 

While well-intentioned, this idea is unworkable.  It
would not actually prevent default, since it would seek to protect only
principal and interest payments, and not other legal obligations of the
U.S., from non-payment.  Adopting a policy that payments
to investors should take precedence over other U.S. legal obligations
would merely be default by another name, since the world would recognize
it as a failure by the U.S. to stand behind its commitments.  It would
therefore bring about the same catastrophic economic consequences
Secretary Geithner has warned against, including sharp rises in mortgage
interest rates and other borrowing costs for families; reductions in
the value of homes, 401(k)s and other retirement savings; and negative
effects on the dollar and the safe haven status of Treasury bonds and
other Treasury securities.   Such a policy
would also be unacceptable to American servicemen and women, retirees,
and all other Americans, who would rightly reject the notion that their payment has been deemed a lower priority by their government.  For these reasons,  the
Department of Treasury has always emphasized – regardless of which
party has held the White House or either house of Congress – that the
only way to prevent default and protect America’s creditworthiness is to
enact a timely increase in the debt limit.

Neal Wolin is Deputy Secretary of the Treasury.


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ejmoosa's picture

"Such a policy would also be unacceptable to American servicemen and women, retirees, and all other Americans, who would rightly reject the notion that their payment has been deemed a lower priority by their government."


Morally it is so much more acceptable to push this burden off to the generations of children not yet born, right Neal?

The real risk is how all those folks who were deemed a lower priority would vote in the future. 

And I am ready to find that out sooner rather than later.


Michael's picture

Here is your children's future.

I Uploaded another copy of a video I made this morning.

I scrubbed my new video of key words to make it harder for the thought police to slow the downloading of it.

SNL Style Comedy Sketch

Hernando's picture

Good video.  Jesse Ventura is right on the money "I rather face the danger than lose my freedom"  Steve Cohen is a spinmeister who is well protected by the MSM.


Starve the beast, no debt ceiling increase!

Michael's picture

I made some tweaks to my new video and entered it in Infowars V for Victory contest.

SNL Style V Comedy Sketch INFOWARS.COM

The Alex Jones Show – 1/21/11 – V for Victory Resistance Campaign Launched

I would love for someone to post this video on Daily Paul.

I was banned from there for some inappropriate rhetoric.

bonddude's picture

Sonoma valley Bank fraud about to break in NYTimes Sonoma affiliate.

bonddude's picture

No more youtube just FB only sorry. Had to pull in horns

bonddude's picture

Borrowers who have defrauded dumb banks over and over, rolling their shit paper

from one dumbass bank to another and finally the music stops with the financial

meltdown. Bye bye credit, real estate values everywhere. This finally being

acknowledged at the federal level and pursued. BILLIONS.

THe music stopped on the greedy dumbasses at SBNK.OB and all of their

unaware small town shareholders. heard it here first.

bonddude's picture

HAHAHA Told ya Check out bank fraud where local elites gets their

panties in a twist y'all.

Michael's picture

I want to thank all ZH'ers four help and patiences while I was uploading the final cut.

No doubt the key words are attracting the thought police. They cause the video to freeze and or slow it down to a crawl.

Yesterday I experimented with no provocative and iniquitous key words and found the videos loaded faster without them.

I think I got them on the run.

Thanks again.

Blankman's picture

"the children are probably very happy there."  - quote of your video

Birddog's picture

good video...well put together

The Third Man's picture

No video. Pulled by user. Have another link?

ZEITGEIST's picture

they pulled it again...had it and then it went down..

creviceCaress's picture




whats the dealio michaeljokerfella?


sat.morn 1114EST tried watching yer video, mute was on, turned off mute raised vol on vid soon as you raise vol it reverts to way around it....never happnd before(conthpirathy!) it says removed by user?

Michael's picture

I want to thank all ZH'ers for your help and patience while I was uploading the final cut.

No doubt the key words are attracting the thought police. They cause the video to freeze and or slow it down to a crawl.

Yesterday I experimented with no provocative and iniquitous key words and found the videos loaded faster without them.

I think I got them on the run.

Thanks again.

Triggernometry's picture

Its hard not to get an overwhelming sense our world has been ruined by the same generation that so frequently demanded trust yet gave none back.

If there are lower age limits on running for public office, its only fair there be upper age limits as well. We force pilots to retire early, why should we not do so for those whose positions hold even more lives in their hands?

jeff montanye's picture

that would be ronald reagan's, alan greenspan's, george w. bush's, robert rubin's, bill clinton's, ben bernanke's, barack obama's and timothy geithner's generation?

M4570D0N's picture

You realize Reagan was born almost exactly 100 years ago in 1911, right? He was 50yrs old when Obama was born.

Cpl Hicks's picture

I hope you don't have evidence placing Ron in Hawaii (or Kenya) anytime before the you?

Michael's picture

We should establish a home for deranged presidents.

All current living presidents should be sequestered there.

serotonindumptruck's picture

Already have that particular convalescent facility.

The Fletcher Memorial Home (for incurables).

Edmund Dantes's picture

 Just checking in. I am a new memeber

Rodent Freikorps's picture

That means you have to fight.

You fucking pussy.

Hephasteus's picture

Speak. And call forth your troll.

Rodent Freikorps's picture

Damn near everything I put out there are fighting words to someone.

I try, but I think the world is mostly populated by betas.

Old warriors never die. They just transition into kicking in the teeth of idiots on blogs.

Hephasteus's picture

Yep I know boards messed up. Was supposed to link to the person above you but it's being zonkers.

Rodent Freikorps's picture

Wow. Taking a swipe at pussy Christians. Kinda like kicking puppies.

Why don't they take a swing at Islam?

Fucking pussies, when all is said and done.

nmewn's picture

"Why don't they take a swing at Islam?"


"The report said Mohammed and two others arrived at the compound on the outskirts of Karachi, where Pearl was being held. According to the report, some U.S. and Pakistani officials think the accomplices were Mohammed's nephews, including Ali Abdul Aziz Ali, who is also being held at Guantanamo Bay.

Mohammed slashed Pearl's throat, killing him, but one of his accomplices failed to operate the video camera, which they had brought to capture the murder for propaganda purposes. Mohammed restaged the killing, this time decapitating Pearl, according to the report. He then dismembered Pearl's body, and it was buried on the compound. Guards washed the bloody floor and then prayed, foreheads to the ground, on the same surface where their prisoner had just been killed, the report said.

The report said that 27 men, including guards and drivers, played a part in the kidnapping and murder, and that 14 remain free in Pakistan. Mohammed has not been charged with Pearl's murder, in part because he first confessed while in CIA custody, where he was waterboarded 183 times. Prosecutors fear that his treatment at the hands of the agency could compromise any case, the report said.

Mohammed told the FBI that he wanted to exploit the murder for propaganda. But the report also quoted a former chief military prosecutor at Guantanamo Bay as saying that "one of the high value detainees told interrogators that Osama bin Laden was angry that [Mohammed] had slaughtered Pearl so publicly and brutally, arguing that the murder brought unnecessary attention on the network."

KSM, his nephews & Omar should be taken out back and shot.

Rodent Freikorps's picture

An eye for an eye.

Cut off their heads with a knife...slowly.

JW n FL's picture

pearls nephew's should get to do it... if able, if not... i would stand in and use a spoon, so get comfortable... its gonna take a while.

nmewn's picture

Yeah...I thought bout that...but on reflection, I would say it's one thing for you and I to do it in this case (we would be judged by a jury of our peers)...not a government.

Here's another one to get the leftists nose outta joint (hard to pick fights lately...LOL)'s the most recent list of gifts to the president, his wife, children, staff etc. from foreign countries.

We already know who the top gift giver is ;-)

nmewn's picture

Speaking of lists & irresponsibility;

"The expenditures fall into broad categories of community outreach grants, charitable contributions, and payments for services rendered. In this list, EIA has deliberately omitted spending such as media buys, or payments to pollsters or consultants that have no obvious ideological component. The grants range from $2.125 million to a California ballot initiative campaign, down to smaller grants to organizations such as People for the American Way, Media Matters and Netroots Nation."

"You will literally be fired, whoever you are. You must spend this money."

Maura Policelli, U.S. Department of Education's senior advisor for external affairs,
describing what will happen to school officials who don't spend their
stimulus money by the end of next year. (July 27 Thompson

Lovely lady...LOL.

Rodent Freikorps's picture
The evil implanted in man by nature spreads so imperceptibly, when the habit of wrong-doing is unchecked, that he himself can set no limit to his shamelessness.
Roman author, orator, & politician (106 BC - 43 BC)
nmewn's picture

The words of Cicero are timeless.

I see Olberwaffen was fired Friday...looks like Huffpu has a new employee ;-)

Rodent Freikorps's picture

I would love to take a look at Huffpoo's books.

I surely would.

nmewn's picture

Might be a stimulating October surprise in someones future ;-)


Michael's picture

Thems the rules of Fight Club.

Alcoholic Native American's picture

Don't you mean the Count of Monte Cristo?

Seer's picture

TPTB are wanting to save their asses TODAY and are not all that interested in TOMORROW.  Consider that it's always been more of a priority to tend to the Praetorian Guard than to the future's children (they can be manipulated to become members of the Praetorian Guard, just has been done for eons).

Given this, and that the FACT of TPTB is to hang on to their power, yes, maintaining payments to the Praetorian Guard is essential...

And, given that the entire system operates based on growth and that growth is collapsing -permanently, well, yes, push out to the future makes perfect sense when you figure it's all going to go tits-up anyway.

Rodent Freikorps's picture

Are you trying to be a recruiting ad for the Praetorian Guard?

Cuz, if not, you are a nutter.