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Treasury Says Anything But A Debt Ceiling Hike Would Lead To Default, As M.A.D. Escalates A Notch
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
By:
Neal Wolin
Neal Wolin
1/21/2011
In
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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Yep. Somebody's gotta fix the mobsters before any of this shit will ever work.
Those mobsters wouldn't have been able to operate if not for the influx of foreign capital. When the US goes down there won't be anything coming to it (all other participants in the "global economy" will go down with it).
So, you are saying the US has already collapsed?
I think that is pure gold. That line will be case studied and immortalised. So instead of not paying the money we owe now, it will increase our creditworthiness if we borrow even more money we can't repay.
You cannot make this shit up. One day fathers will point to Timothy and say 'See son, even someone with an IQ of 70 can get a well paid job in our Federal Government".
No, it's why YOUR son will be sitting there contemplating why he's a slave. Believing that these folks' IQs are low is a BIG mistake. They bloody well know what they're doing, and they're doing it just as they've always done it: keeping TPTB in control. Watch what they do, not what they say... (or, if you're like me, I try to ignore it all and get on with a life that makes their's obsolete)
lets see what expenses can be cut: eliminate the expense of that all illegals put on the system, eliminate the fraud in medicare that some high profile office holders lied to us about in 2009, eliminate tax refunds for those that never paid taxes, reduce the salaries of elected officials by 10%, reduce overtime to straight time for all government employees and those working under government funded projects, eliminate night differential pay, eliminate pension padding, not going forward with unwanted & unneeded projects, would be a good start.... so who knows someone that knows someone that can expand on this and forward it to someone that can actually get something done? (btw: feel free to take the credit as my only concern is helping to resolve some issues)
I flagged you because you're a dupe of TPTB. You're playing right into their hands by attacking the little people.
Oh, and never mind that NOTHING that you're saying has a fucking chance in hell of stemming the tide of perpetual growth on a finite planet.
Thanks for playing!
"I flagged you because you're a dupe of TPTB. You're playing right into their hands by attacking the little people."
And you are attempting to justify theft on the basis of the degree of the theft.
If someone comes onto my property (crosses my border) enters my house, takes my bread, refuses to leave and the law won't intercede on my behalf no matter how many times I request them to, what option is left to me?
Would personal force...the use of violence, be a viable option?
You could always do the Christian thing and turn the other cheek! </sarc>
In the Mahabarata, even Krishna (arguably the Hindu God of Love), urged his disciple Arjuna to fight.
"There are some things in this World worth fighting for!" -- Samwise Gamgee, Lord of the Rings trilogy
It was Arjuna's DUTY to fight, to preserve honor , integrity, and justice.
Sty,
I was satisfied he would not respond...too many leftist strawmen would have been burned in effigy to do so...which tells me all I really need to know about him.
He worships straw? ;-)
if you want a solution that would work, reduce the federal gov't by 70%; corporate and personal taxes on profits at 10%, no taxes on labor, no cuts in social security, end Medicare/medicaid, no taxes on small farms and new industrial development, 50% haircut for treasury bondholders, federal pensions suspended, state pensions suspended; military cut by 70%, tariffs on foreign goods introduced across the board (fuck Walmart)
State taxes limited to 2% of gross income, repal all property taxes, etc.
your suggestions only compounds the ponzi scheme
I don't think there is any shortage of workable solutions, just a shortage of workable POLITICAL solutions! A lot of your proposal(s) would generate a plethora of angry people, complaining about their gored oxen, especially Medicare/Medicaid recipients. The only road out of this box canyon is the Great Implosion -- NO ONE will have more justification than anyone else, when ALL is destroyed! The Dreams WILL come due! Nature/Reality is fed up with all the bounced checks...
The righteous shall weather the storm:
http://i14.photobucket.com/albums/a324/martin_fierro/Goldbuggery/gold_pr...
LOL!
The rich rules over the poor,
and the borrower is the slave of the lender.
Proverbs 22:7
Great programming!
Depends on the definition of poor, doesn't it?
Abide by TPTB's system (which also includes their pushing of authoritarian religions) and you're certain to be poor... It's the mindset. Play their game and be controlled... but that's what dupes do, and, sadly, will always do...
The point, Skippy, is that you should not become a debt slave.
I'll slow down for you if I am going too fast. My wife says I am too willing to write people off and just shoot them in the face.
"My wife says I am too willing to write people off and just shoot them in the face."
Your point, it seems, is from the barrel of a gun. Yeah, makes me want to sign up to YOUR religion!
Again, let me point out that you've only been here for a little over 16 weeks now. I on the other hand, well have been here for... feel free to actually do some reseach to see who it is that you're trying to engage in battle with... you're going to have to brush up on your aim a tad bit more.
But, thanks for letting me in on the big tip of not being in debt. That's some big stuff there, "Skippy!"
Been here all that time and haven't learned shit. What are you, a govt. worker? What do you want, tenure? Fuck you.
Not impressive.
All power does, in fact, come from the muzzle of a weapon.
Wow! You've got a ton of insecurities happening there. And even a follower of "God!"
As far as I know you're working for Intelligence, trying to troll up info on folks. Ain't playing! Hint: people like me are regularly rounded up by TPTB when they (TPTB) decide to lash out.
But... congratulations on solving the problems of the universe: get rid of govt, arm everyone with weapons, AND kill brown un-born babies in the name of "God!"
So, "Skippy," how about we get back on track on the thread at hand? Please provide your reasons for why or why not increase the "debt ceiling?" NOTE: you'd be surprised at how close our positions are likely to be (but, as is usually the case with me, I come at things from a different, non-group-think angle).
You are a free thinker? Pull the other one, it has bells on.
You pull out the "brown people" flag and hate on religion. You spout the leftist party line. Ya, got it.
BTW, why would you think I am a Christian, just because I will defend a Christian church?
You haven't watched any of those videos I've posted, have you?
http://www.youtube.com/watch?v=ZPRt6Tt6RyM
My fondest hope is to die in battle. My Death Guard is not large enough, yet.
buy some pm's, so your wife will have something of value when you're gone, besides her cherished memories of you.
Let me put two and two together.
You like Norse religion,
You are a Freikorps (proto-nazi)
and you mentioned that Hitler preferred Norse religions.
Hmm. Therefore, would I be wrong to conclude that you are a N...?
asshole much?
i'll bet that gun in your hand really makes you feel like a man.
No, the gun in my hand makes me feel safe.
Wait...you have no right to a gun or an opinion!...you don't have enough seniority!...LOL...why, if we let just anyone comment our own status might be compromised ;-)
make no mistake gentlemen... the rodent is correct.
Can you fund and army? how many? how long? when do you have to become the destroyer to continue the party of destruction...
this is what will happen when the dust settles, have no illusions.
Of course the rodent is correct.
Jobama & Seer's first instinct is to diminish an individuals rights? (speech & gun ownership)...then have the nerve to portray themselves as populists?...LOL.
So tell us tough guy, how long will you keep paying 50% in taxes, getting sexually groped at airports, etc, before you pick up that weapon and show them who the real power is?
Or are you waiting on your "god" to give the go-ahead?
I'm waiting on you to show me the way, Mr. Badass.
Typical "christian" gun-slinging wanabe warriors for "christ", always waiting for someone else to lead the way. I have zero respect for them ...and lots of contempt.
FYI your deities don't give a damn about America ...nor you... you fucking fraud.
Well duh.
Y'all have this religion thing backwards. The Gods do not serve us, we serve them.
Why would an eternal being give a flying damn about something as ephemeral as a nation?
Souls are eternal, nations are not.
Not enough people will notice the dry intellect of this wonderful point.
That's exactly the method used in the accounting books with ObamaCare in order for it to score out "good" with the CBO...ten years of taxation...six years of benefits.
Fucking thieves.
It is the new normal.
No doubt.
If I had a mind to, I bet I could go back and find some posts of these clowns touting the virtues of ObamaCare.
Why not just hide all new debt @ the fed where the bulk of the National Debt is already secretly held......surely you don't think that the gov't gets by with only some 1.5 trillion deficit per year. Don't forget, they use Enron-like accounting!
Obama Should repatriate all the corporate money but instead he is not changing any tax laws but is in favor of more Federal spending.
The debt ceiling is the Rubicon. I listened to an Alan Simpson conference call last week and it scared me to death...you can see his commmittee's work on www.fiscalcommission.gov but he said if the country does not address the deficit others like China will.
Rand Paul said we will not default as we get over 200 Billion a month in revenue into the Treasury, plenty enough to pay our interest and roll over our debt. We just won't pay any of our other bills.
"catastrophic economic consequences" = "reductions in the value of homes" Why oh why oh why do we as a country want houses to be expensive. They should be dirt cheap! Affordable, abundant, durable housing should be our goal.
We've burned hundreds of billions in a furnace trying to artificially keep houses rare, I don't get it.
this is a symptom of a disease.. it has causes and cures, this symptom.
Got a rope?
With reasonable, affordable homes we can break the banks strangle hold on this country. If housing prices were reset by 40% the banks are shit. Milestones
According to Micheal Hudson, debt is not an issue. To quote him on the response to the effect of a not raising the debt ceiling, he said" It would be like gum stuck on your shoe", which he said is not a problem. According to him, USA doesn't have a debt problem, it has a foreign debt problem, because the USA can issue it's own currency, and control it, so all you people scared over debt problems, are probably have fear over nothing.
Tell Micheal Hudson to wipe the Bernank splooge off his chin.
All is well, the goobermint spokesman has announced it will be ok... nothing to see, everyone back to appl / goog / ge and the super run in the markets that will continue well beyond your abilities to be logical.
I fucking promise!
The increase in debt ceiling is unlikely to make much of a difference because there are only three final outcomes of debt :
Repayment
Default
Part repayment part default
The problems of excessive debt and leverage cannot be solved by taking on more debt and leverage. The only solution is to take immediate pain by taking measures to cut expenditures. Kicking the can down the road leads to much bigger problems
http://www.marketoracle.co.uk/Article24581.html
The United States is a colossus whose feet is of clay.
Hold the line....Hold the Line!!! do not FALL BACK!! There is a time an a place to make a stand and the Time and Place is NOW! Do you really think the next generation coming is going to do better? Look at them and what they are interested in. America is truely screwed if this gets passed on down the road. I say draw the line in the sand and stand or DIE! Two words to live by in the coming days...FOOD & AMMO.
Rodent has a good point why we must Hold the line at all cost. Even if its at the end of a gun or rope because all we hold dear will be gone crushed by the Planet size debt that the Gov. has created. Desperate measures sometimes must be taken to save the Desperate.
Is this 'debt issued' a simple addition of all auctions? If it then it is ignoring the old debt being rolled over. I'm sure you know that right? I mean it's embarrassing to have to bring it up and I don't mean to imply your dumb, I just want it to be clear.
Debt ceiling will be raised same way TARP passed, threats of financial / govt / economic collapse, maybe even martial law. Same ole song & dance.
I concur with you that this is a likely scenario. It is also my belief that should such a tactic be employed successfully for a second time (especially threats of martial law), then we will begin to witness a mass "awakening" of the citizens of the USA.
It is my hope that Constitutional resistance will begin at the County Sheriff level. Legal claims of (Federal) jurisdiction will be challenged, with force if necessary. Posse Comitatus will be invoked, and any use-of-force attempted through active duty military forces or National Guard troops will be met with acts of extreme prejudice by the citizens.
Where in the Constitution is martial law mentioned? I think most are confusing Article 1 Section 8 Parts 15 and 16 as calling forth "Martial Law" with calling out the "Militia" to put down insurrections which is in the hands of Congress to do, not the President or the Army.
Calling up the Militia is far different than declaring Martial law. For one, the militias are controlled by the state governors not the Federales.
The founding fathers never envisioned a full time standing army any where in the Constitution.
Milestones
I'm confident as to the validity of your assertion that the words/phrase "martial law" does not appear in the Constitution. I wasn't alluding to the 2nd Amendment so much as I was to the 10th Amendment.
Without getting into the tedious semantics and hair-splitting as to the definition of the words "militia" or "martial law", would you agree that a formal declaration (executive order) amounting to the "suspension of habeas corpus" represents a defacto declaration of martial law?
I see that in our future.
well, I'd also like to know where in the Constitution is granted the right and authority for POTUS to issue Exec Orders that authorize whatever the fuck he/they/tptb want to do - period. Sorry, I wish it weren't so, but all this yap about constitutionality is just yap. Like that wacko above said "power comes out the end of a gun" (or a pen-stroke) we're soooo fucked
Uh. I have a question. Why does this chart look almost exactly like the price of gold in usd chart for the year. It's smoothed a bit but otherwise it's like a shocking replica.
http://www.zerohedge.com/article/m2-update-1#comment-896485
'I have complete confidence they will do the right thing and what's best for the country and we will be on the road to recovery soon. We are lucky to have these fine ladies and gentlemen to guide us.' That's my paraphrase of USSA state controlled media's take of the story. My overview of the story would be something similar to Tunisia's dictator fleeing the scene with as much gold as he could stuff in his suitcase. Sheer and utter PANIC!!!
I may be a troll. I may be long stocks but i say jubilee. Our children did not vote for this debt that we are piling on them. I hope the tea party manages to.fuck up the debt ceiling and we default. It will destroy our borrowing ability and we would have to live within our means and not cheat future generations.
Shit can the EPA. Problem solved, and growth restored.
They would rather a de facto default than a "real" one, huh? Either way, it's still gold and silver bichez!
Isn't this around the critical time gold/silver options expire? Could this be a 1-2 punch? Maybe the tax cheat Timmy G. is worried about circumstances out of his crooked control making things even more difficult for the syndicate.
An Inside Look at Global Money Center Bank Activities by Robert Wenzel | EconomicPolicyJournal.com | January 20, 2011
"An EPJ reader writes:
"This report dovetails nicely with my analysis of Fed activities and changes in the attitude of banks (and others) with the desire to hold cash balances. The Fed money printing is kicking off the show and impacting the economy. This slowly nudges economic actors to decrease the desire to hold cash balances. Both these factors will continue to intensify as long as the Fed maintains its current money printing stance. It will, of course, ultimately result in severe price inflation, but in the short-term it looks like Fed manipulated happy days are here again.
"If you need a loan, now is the time to get it. Lock in rates for as long as you can. Rates have ticked off their lows, but they are still headed much higher from here. Higher rates will come either becasue of the inflation or because Bernanke stops printing, which will push rates higher."
http://www.economicpolicyjournal.com/2011/01/inside-look-at-global-money-center-bank.html
______________________________________
In the face of repeated failures in its policy maneuvers, the Fed continues on a planned trajectory; these failures can now be described as continued episodes of destruction, using the powers of the Fed to facilitate international developments that, in general, are detrimental to the United States. It seems to me Bernanke is charged with protecting t the U.S. economy but yet he has taken on the role of trying to direct and fit what’s happening here into a centrally-controlled world economy.
Here’s the 21st Century list of continued financial policies, continued financial failures, continued financial destruction:
2000—Bursting of the dot-com, or technology, bubble
2001—Enron, the Emergence of Corporate Fraud, and Corporate Governance
Stock Market Crash of 2002
2005—The growth of China and India as World Financial Powers (rising in relationship to the United States)
2007 and 2008—Sub-Prime Housing Crisis and the Housing Bubble
2007 - 2009—The Global Recession and The Collapse of Wall Street and bailout
Stock Market Bubble of 2010-2011
J.R.
This is silly...why call it a "debt ceiling"?
Call it what it is...an increase in the rate of borrowing...
Got my FedEx beg from JPM yesterday, for a wet signature mortage. Gonna offer a 1% reduction on their offer Monday.
6 7/8 current, their offer 4.75, I'm going for 3.75, but will settle for 4.
Just make sure that when they pretend to be the grantor that they actually are in a position to grant.
I owe them, fer sure. But if they shredded the originals, they gotta pay for a replacement.
the redish newt lied motionless his soft belly filled with
green crickets. While the great cat from the south continually stroked
the fluoride heads.
- Nostradamus bitchez...
Iridium, bitchez!
I've never had the desire to fight someone.
With that being said I would love to bring Tim G into the Octagon with no gloves.
I expect to be spied on.
I ain't spyin' on ya, dewd.
BTW, have you ever seen an elf fight? They're downright mean and nasty.
W.O.W.
Yes, I have seen elfs fight...that type o' shit happens in Vegas on the regular.
the non predictive predictions of nostradamus...
nostradamus, using the word flouride, is eerie
well done.
Oh, by the way, one can put voting age limit to reduce problems with SS etc.. You start voting at 18, end at (average life length-18) , so around 62. or 70. That would help, I guess, to remove voting bias that favors old people interests.
Sorry to break into the thread, but this just in...and it is significant....according to this Ft. Meyers, FL news report, Bank of Scamerica is withdrawing foreclosures in Florida: here's the link:
http://www.news-press.com/article/20110119/RE/101190387/1014/business/Banks-drop-foreclosures-in-Southwest-Florida
How the hell does one protect America’s creditworthiness by "enacting a timely increase in the debt limit". Surely the way to protect it is to show some responsibility in trying to REDUCE it?
DavidC
The chocolate ration has been raised to 25 grams from 30 grams.
Duh.
I guess that means that BAC will gap up monday morning. Missed the FD again.
The "Debt Ceiling Hike" issue is a ruse. There is no such thing. It's all political theater:
http://www.youtube.com/watch?v=fbMq1WWUXc8
ITS NWO COMMING
I'm more worried about NWA.
The Obuma BC has snared the new gov of hawaii..in the comming months this could be a
"mulatto Swan" that roils the markets??
just reporting what the MSM seems so eager to avoid,but that may change..
who ever has a copy of the long form Birth cert
has tremendous leverage over the most powerful man in the world...
http://hillbuzz.org/2011/01/23/hawaii-ground-report-could-hawaiian-governor-neil-abercrombie-not-be-as-incompetent-and-foolish-as-he-appears-but-orchestrating-a-deliberate-birth-certificate-recovery-dead-end-to-cover-his-own-pap/
So who do you think has that long form birth certificate?
Crash is, thank you for stating this. It is indeed a rework of the argument last week, which was the less sophisticated: we cannot consider cutting spending to just pay interest.
We know they have no legal limit for SS, and the rest is breach.
http://www.lewrockwell.com/north/north931.html
The Symbolic Debt Ceiling
by Gary North
"Everyone has a role to play in the show.
The House Republicans must demonstrate their commitment to fiscal responsibility. This is nonsense, of course. Minimal fiscal responsibility would require the politicians to run a budget surplus and steadily reduce the Federal debt to zero, as it was for the first and last time in fiscal 1836. Serious responsibility would require money invested in the capital markets as a reserve. Zero Federal debt is a goal for fiscal sissies.
So, the House Republicans will huff and puff and threaten to blow the fiscal house down."
.....
"The government always raises the debt ceiling. Since 1940, it has done this 80 times. But wait! It has been only 70 years since 1940. This gives some indication of the certainty of the next hike in the debt ceiling.
There will be lots of political hot air expended on a discussion of the debt ceiling. But the economists will not say much. A hike is marginal. No, the debt will never be paid off. It need not be paid off. It must just be kept within reasonable limits. What limits? The economics guild never says. It says this: "There is no immediate threat to the economy. Someday, of course. . . ."
Someday is not now. Politics is all about now, and how now relates to the next election
For those of us who have warned about the increase in the debt ceiling for the last 50 years, all of this is familiar. Nothing ever changes in this beloved play in political theater. It is America's political equivalent of "It's a Wonderful Life." We see it every year.
It ought to be the equivalent of Night of the Living Dead. When it comes to the debt ceiling, George Romero is the qualified director, not Frank Capra." .....
.
http://csper.wordpress.com/2010/11/11/discussing-the-debunking-money-series-with-max/
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← Debunking Money #4 and #5: The Way the World Really Works In Conclusion… → Discussing the Debunking Money series with MaxDefault.
Do not raise the debt ceiling.
Close down the federal reserve.
Close down the federal government.
No honest human has any use for those predators anyway.
Result: The world economy will boom like never before, including the economies in the 50 states.