US Avoids Technical Default By Three Days

Tyler Durden's picture

On December 24, the Senate passed a vote by a razor thin margin (with not a vote to spare) to raise the Federal debt ceiling from $12,104 billion to $12,394 billion. The actual debt ceiling increase took effect on December 28. And as the chart below shows, the Treasury's cash flow projections were spot on: 3 days later, and the debt subject to limit surged to $12,254, a jump of over $200 billion in 2 days, and a whopping $150 billion over the old debt ceiling. Three days is all the buffer the administration's reckless spending spree has afforded this country to avoid bankruptcy. Had one more Democratic vote dissented from the stopgap measure, the US would now be in technical default. There is just $140 billion left before the revised debt ceiling is breached. We hope for the country's sake that Bill refunding in January is massive, because as we already pointed out, on January 7th we expect another ~$130 of new Treasuries to be announced for auction by January 15th. And then there are two more weeks in January... Which is why the Treasury better be using that TARP money to pay down all it can, because if the general population understands how close this nation was to the fiscal brink, many more answers may be demanded out of the ruling party as to how it could allow things to get so out of hand.

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bugs_'s picture

Maybe someday.

Cursive's picture

As the old CCR song goes, "Someday never comes...."

Seriously, though, I am hopeful we'll get this thing back on track.

phaesed's picture

Marla had pointed out several weeks before the vote that we were in fact over the $12T ceiling.

Tyler Durden's picture

That was on total debt outstanding (blue line), not debt subject to limit (green line).

phaesed's picture

Ahhh, ty... I tend to think of debt as debt, nothing more, nothing less :)

Cognitive Dissonance's picture

As Maxwell Smart would always say, while holding two fingers close together.... "Missed it by that much."

deadhead's picture

Golf clap, CD!

That one brought back memories to this old fart!

Cognitive Dissonance's picture

I still have a "thing" for 99. She's burned into my memory banks, or what's left of them. It's hard to believe Barbara Feldon is nearly 78.

Move along everyone else. It's just two old farts strolling down memory lane.

Argos's picture

I vote for "I dream of Genie" Barbara Eden! Dibs.

Cognitive Dissonance's picture

A real beauty in her time and still a very fine looking woman at 76.

phaesed's picture

A truly beautiful woman can be beautiful at any age :) Hell, look at Morgan Fairchild or Dolly Parton

Cognitive Dissonance's picture

Just read and responded to your QE 2.0 post.

Tweaker time it is. That is now part of my ZH vocabulary and I'll try to use it daily. Thanks Miles for furthering my education. :>))

ShankyS's picture

Barbara Eden ruled - but the question of Mary Ann or Ginger must be posed to the ZH old fart community.

BoeingSpaceliner797's picture

"Lobster or cracked crab?"  "Can't we have both?"

Scooby Dooby Doo's picture

Ceiling schmealing. What's a few billion between uber debtors.

john_connor's picture

They'll make it by $1 next month and no one will care. 

faustian bargain's picture

1. the herd doesn't care much about this.

2. passage of the raised debt ceiling was a formality. If it hadn't passed, all that would mean is the accountants would have to work a little overtime to cook the books some more.

Cognitive Dissonance's picture

Agreed on both points. The proof of the book cooking is the moon shot it did after the ceiling was raised. Steam has a tendency to do that when the pressure is released. You just know money was moved around and bills were left unpaid.

I'll even wager a small bet that some patriotic defense contractors called to let the government know they wouldn't mind being paid a little late if it meant they would get a "late payment" from the government as compensation for suffering a few days.

Anonymouse's picture

Agree.  Frankly, the debt limit is just a political game so that the party out of power can complain about the party in power.  It has no practical effect.  Robert Rubin proved that (when was that, 1995?).  If memory serves, we were over the debt limit for about 3 weeks, but Treasury shenanigans papered over it.

Don't get me wrong. The US is close to the brink, but not because of the debt limit.  It's like when Bugs Bunny draws a line "I da'st you to step over that line". --next line -- "Well, you'll never step over this one." --new line--, etc. until Elmer Fudd steps over the last line and falls off a cliff.  Actually, rather prescient now that I think about it.

Cognitive Dissonance's picture


I just made a Maxwell Smart quip above. It's truly remarkable how cartoons and prime time TV from any era applies so well to modern day life.

Insanity any way you slice it.

Anonymous's picture

Just curious - when is this debt doomsday device going to actually blow up? The collective world continues to view our electronic created dollar units as having some value. Last time I was in Australia the nice people down there gave me 1.1 of their units for every one of my "phony" US money units. The people at Taco Bell also give me a 1/2 pound bean burrito when I slip them one of these paper notes that is not backed by gold, silver or any other element on the periodic table. I have this sneaky feeling these digitaly produced monetary units will continue to be sought after and hoarded by those hard working peasants in China, sweatshop owners in India etc.. Since the collapse of global credit is effectively buried several trillion dollars into a black hole whats a few trillion of these alleged phony electronic dolar units between friends.. Much ado about nothing in my opinion.. Love ya all

dark pools of soros's picture

maybe we will just get a higher denomination to play with soon..  the $1,000 bill..  who would be on it??  Ben?  Obama? ahh yes..  Greenspan of course.  It'll even sound cool..   give me some Greenspans...

BoeingSpaceliner797's picture

How 'bout just revive the $10,000 bill (traitor to US Salmon P. Chase on that one) and/or the $100,000 bill (traitor Woodrow Wilson on that one)?

Anonymous's picture

This fiat money world is like Orwell's animal farm, everybody better carry on pretending, don't let any smart pigs get out of the farm and corrupt the masses. Meanwhile the technocrats of the world will carry on using delete button to paper over any shortfalls and to amend the government accounts, all would be well, I think.

stedlarhope's picture

You'll only get about 0.94 of our aussie units now.

SilverIsKing's picture

They trample over the constitution without blinking an eye.  Debt limit?  What's that?

Anonymous's picture

What's that?

Its proof that the Constitution is toilette paper - a worthless chasing after the wind.

Congress sold off democracy in the 1970's to the bank (yep THE bank). Thank a boomer and kiss a banker. They are both fucking the country every which way possible.

Turbo timmy is just the lube!

Anonymous's picture

This nation was created a constitutional republic, not a stinking mob-rule democracy.

Democracy is when 60% of the population is on welfare derived from the other 39%. Oh, and the remaining 1% is special. "We are all equal, Comrades, but some are necessarily more equal than others!"

Democracy is what happened in 2008, and we're looking at a great big helping of democratic seconds when the collectivist traitors rev up the voter registration / voter fraud machine before the mid-terms.

Anonymous's picture

Yes: reading stuff about how "[h]ad one more Democratic vote dissented from the stopgap measure, the US would now be in technical default" on a supposedly hard-bitten and cynical anti-establishment website is pretty embarrassing. 'kabuki': look it up, please.

Anonymous's picture

They would have covered the bill just by printing out some new money, Mugabe style I think.
They will never run out of money to spend

chet's picture

They're going to have to raise it every couple of weeks at this rate.  If they couldn't raise it by a significant level in the dead of night over the holidays, what makes them think they'll get the votes now we're in the election year?

MarkD's picture

To infinity and beyond.........Quick, get Dick to explain to us once again how deficits don't matter.

Does this mean those with mortgages won't get their principle reduced? Darn.

I hardly doubt we will be living within our means anytime soon.......what will we cut? 

Once Americans are givin the choice between cutting or borrowing, they will take the borrowing and demand the ceiling be raised.

What will we cut when the economy and most Americans are dependent on gov spending.

dark pools of soros's picture

schools of course..  they can just dumbify the exams to make it look like everyone passes ..  we are going to outsource the jobs anyway

Anonymous's picture

"What will we cut when the economy and most Americans are dependent on gov spending."
As I recall, households are up to about 20% of income from various gov't entities on average.

Anonymous's picture

If the US is in 'technical default' but no one has the balls to call it out, is it really in default? I think what this whole crisis has taught me was that until someone uber powerful says you are fucked, ie Treasury to Bear and Lehman, then you arent fucked.
And who would have the balls to call out America? No one. Everyone wants the carousel to keep on spinning until they print[PIIGS]/export[Nazis/Japanese/PRC] themselves out of this shithole.

Im-Not-Dumb-Im-Bernake's picture


What? Are the Chinese going to put the whole nation in debtor's prison? 

dark pools of soros's picture

worse... they can change all our keyboards and road signs to Mandarin!!!

faustian bargain's picture

might not be so far much US real estate do they own by now? And they've got a pro sports team too. We might just end up paying them rent to live in our houses.

Cognitive Dissonance's picture

I remember hearing similar comments about Japan 20 years ago, though the circumstances are now completely different. Or are they?

Charles Mackay's picture

It looks like the debt limit won't stand beyond February 15, based upon recent deficit spending trends.  That is assuming, of course, that blank checks will not be written by Fannie & Freddie for a few more months to cover their losses and/or asset (mortgage) purchases.

10044's picture

don't worry, they'll raise the ceiling, like I said before:

What's the point of having the fcking ceiling if they keep raising it?? why have it at all, bunch of fcking morons.

Only Ron Paul understands what's going on.