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Citi: "It Is Possible That We Will Get A Technical Default For A Few Days"

Tyler Durden's picture





 

From Citi's head of FX strategy, Steven Englander

No coin + temporary debt ceiling extension + sequester = USD negative

There was a an out-of-left-field idea that you could mint such a coin deposit it at the Fed and have a trillion dollars to spend. It was based on a very strained reading of some old legislation.  The Washington Post link shows just how strained the reading is

It really was a non-starter because it would have been risky from a legal viewpoint and financial markets would have priced in the risk that courts would have rejected it and the US would be close to default, not to mention the Fed looking rather Weimarian had they signed up for it.

The rejection of the trillion dollar coin should not put any pressure on financial markets or risk-correlated currencies on Monday

It may be viewed as political hardball by the White House, as there statement implies that they will not negotiate. WP quotes Press Secretary Carney  “there are only two options to deal with the debt limit: Congress can pay its bills or they can fail to act and put the nation into default.” This is a new reading since in 2011, they were busily negotiating with Congress (which is how the sequesters and temporary debt ceiling increase came into being.)

So it is possible that we will get a technical default for a few days, but more likely that Congress will give in, vote the debt ceiling up temporarily, and let the automatic sequesters kick in.

Mounting risk of a technical default was USD positive in 2011 because it led to cutting of long-risk positions and the USD/Treasury market remained safe havens.  However, it also occurred in an environemtn of slowing EM growth and intensifying euro zone soveregin risk pressure, so the USD support came from external forces as well. Given that investors are now somewhat long risk again, the position cutting is again likely to be USD positive, however, unattractive US assets were. As was the case in 2011, it is very unlikely that the Treasury will not pay its bills, although even a technical default could have very unforeseen consequences, given the multiple functions that Treasuries play in global financial markets.

The more likely scenario of sequester plus grudging debt ceiling rise is USD negative. It will put more pressure on the Fed to keep pumping liquidity into the US economy without giving any reassurance to investors that long-term fiscal issues are close to resolution.

 


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Sun, 01/13/2013 - 20:19 | Link to Comment SHEEPFUKKER
SHEEPFUKKER's picture

Just take the debt morning after pill and make it all right. 

Sun, 01/13/2013 - 20:23 | Link to Comment THX 1178
THX 1178's picture

Hay everybuddy who holds our bonds... DUMP 'EM!!!

Sun, 01/13/2013 - 20:25 | Link to Comment trav777
trav777's picture

just pass a goddamned budget and make the HNIC veto it

Sun, 01/13/2013 - 20:28 | Link to Comment UnpatrioticHoarder
UnpatrioticHoarder's picture

"Mounting risk of a technical default was USD positive in 2011 because it led to cutting of long-risk positions and the USD/Treasury market remained safe havens."

Of course, naturally

Sun, 01/13/2013 - 21:14 | Link to Comment Looney
Looney's picture

. "The rejection of the trillion dollar coin should not put any pressure on financial markets..."

 

AHHHHHH!!! AHHHHHHHHHHHH!!! (I am screaming so hard, my asshole has just fell out on the floor and made a huge dent) AHHH! AHHHHHH! AAAAAHHHHHH!!!

Instead of a brazilian-dollar-coin, someone should make 537 trillion-dollar- jalapeno-infused-TAMPONS (12” in diameter) and deposit those into every single asshole’s asshole in the District.  ;-)

Looney

P.S. AHHHH!!! AHHHHHHHH!!!

Sun, 01/13/2013 - 21:17 | Link to Comment Looney
Looney's picture

Ahhhhhhh!!! AHHHHHHHH!!!! AHHHHHHHHHHHHHHH!!!   ;-)

Looney

Sun, 01/13/2013 - 22:08 | Link to Comment SubjectivObject
SubjectivObject's picture

You're looney, it's brazilion.

Mon, 01/14/2013 - 00:23 | Link to Comment icanhasbailout
icanhasbailout's picture

Can't wait to read the news about the default on my ObamaPhone

Sun, 01/13/2013 - 23:27 | Link to Comment AndrewJackson
AndrewJackson's picture

What is the problem? Doesn't it make sense that the closer someone gets to not being able to the more valuable their debt becomes?

Sun, 01/13/2013 - 21:31 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

I have to agree with trav777 here.  PAFB!  Make Obama veto it.  Alas, Jim McTague, Barron's DC Pro, says the Republicans will roll over again, as they have a weak hand and are inept.  Yes.

Review of Barron's -- Dated 14 January 2013:

http://tinyurl.com/ad6jzsl

Sun, 01/13/2013 - 22:18 | Link to Comment hoos bin pharteen
hoos bin pharteen's picture

Reid would block a bill in the Senate and the MSM would run flak and bury the story.

Sun, 01/13/2013 - 23:05 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

That is very likely true.  Sigh...

Sun, 01/13/2013 - 20:55 | Link to Comment Stares straight...
Stares straight ahead's picture

CHECK! That would be basically the same people that issue them.

Sun, 01/13/2013 - 20:58 | Link to Comment GtownSLV
GtownSLV's picture

House needs to pass a debt bill that only allows the ceiling to be raised to pay existing debt but not current or future deficits. Let AIDS boy chew on that.

Mon, 01/14/2013 - 06:52 | Link to Comment Accounting101
Accounting101's picture

Or just move the debt to the private sector. That's what happens when the government de-leverages, right?

Sun, 01/13/2013 - 20:20 | Link to Comment koaj
koaj's picture

HOOOOPA!!!

 

oh wait wrong country...or is it

Sun, 01/13/2013 - 20:21 | Link to Comment Snakeeyes
Snakeeyes's picture

No guff Chet. Each taxpayer’s share of the Total Public Debt is $145,737. And each taxpayer’s liability for unfunded entitlements is $1,083,342. And growing!

http://confoundedinterest.wordpress.com/2013/01/12/debt-star-federal-deb...

Mon, 01/14/2013 - 06:59 | Link to Comment Accounting101
Accounting101's picture

No Snakes, each taxpayers share is $145,737 worth of asserts, and growing. Unless, the Earth is indeed flat.

Sun, 01/13/2013 - 20:24 | Link to Comment Haole
Haole's picture

"...we will get a technical default for a few days"?

Cue the smoke and mirrors!

Lulz

Sun, 01/13/2013 - 20:24 | Link to Comment Everyman
Everyman's picture

And our lives are affected by the Congress and the ratings agencies as well.  All for a bunch of corrupt congressctritters that cannot seem to recognize and understand they are there to "do the peoples business".  Harry the asshole Reid needs to pass a fucking budget,  At least on of the 17 that the House has sent them.  This is Harry's problem.  Harry is a traitor.  If the HOuse caves for a debt ceiling top rise, all hell is gonna break loose.

I was in a line this weekend to buy a gun, 2.5 hour wait for paperwork.  People I know across the country did the same thing this weekend coincidentally, and they saw the same lines.  People are very angry.  They are angry at the GOVErNMENT, whoever they see.  The real issue is that "people" in those lines are REALLY PISSED at ALL IN CONGRESS and Elected office.  If these guys don't start doing what they are supposed to do for the best intrest for the country and in line with the constitution, I think we are not to far from revolution.  Plain and simple folks.   Many have had enough.  Action (from the citizenry) is not too far away.

Sun, 01/13/2013 - 20:28 | Link to Comment trav777
trav777's picture

selection bias.

The 7/10 million new californians over the past 30 years who went onto state assistance are VERY happy with government.  The 47% is happy with it.

The people NOT in gunstores are happy.

In fact, if they are unhappy it's only because the government isn't doing ENOUGH to make people like you unhappy.

Sun, 01/13/2013 - 20:32 | Link to Comment fonzannoon
fonzannoon's picture

when you can only pay your bills by borrowing more money you have already defaulted u Citi retards.

Sun, 01/13/2013 - 20:51 | Link to Comment TheSilverJournal
TheSilverJournal's picture

The masses will be very angry at the government...for not doing enough. When the printing press is rendered worthless and the government is no longer able to borrow and print in norder to support the US credit/consumption/service sector/government dependent economny, and people become very poor, the cries for the government to "help" will grow the loudest. The fact is there is nothing the government can do to help except get out of the way, and if those cries are answered, the black hole of central planning will engulf the world and prosperity may be forever lost.

Hopefully, those cries for help are not answered by the government and capitalism and free markets are chosen after fiat collapse...

Sun, 01/13/2013 - 20:55 | Link to Comment fonzannoon
fonzannoon's picture

or this just goes on for fucking ever.

Sun, 01/13/2013 - 21:47 | Link to Comment espirit
espirit's picture

Cue smoke.

Cue mirrors.

Cue printers.

Cue punters.

Sun, 01/13/2013 - 21:48 | Link to Comment TheSilverJournal
TheSilverJournal's picture

Ponzi schemes must grow or implode. There is no forever with ponzies.

Sun, 01/13/2013 - 22:46 | Link to Comment NoDebt
NoDebt's picture

No, it won't.  There will be an end.  It's just that they realize it's unstoppable so they're getting while the getting is good.

Quick story..... a million years ago I worked for Xerox.  Bunch of us found out that their 401k plan had an option to buy and sell pretty much anything we wanted, including individual securities- a self-directed brokerage acct.  We day traded dot-com stocks like we worked on Wall St. or something.  Memo comes down "You better knock it off, you're killing us in transactions costs.  If you don't stop we're shutting down that program."  Did we stop?  Fuck no.  We did it twice as much until they eventually shut it down.  We knew the jig was up so we whipped that rented mule until it croaked.

Understand?

Mon, 01/14/2013 - 00:18 | Link to Comment lunaticfringe
lunaticfringe's picture

Most excellent.

Mon, 01/14/2013 - 02:19 | Link to Comment Matt
Matt's picture

As a fund for hundreds if not thousands of employees, couldn't they have gotten a break on brokerage fees?

Mon, 01/14/2013 - 07:18 | Link to Comment Accounting101
Accounting101's picture

No debt??? Really? Isn't that an economic improbability? Please explain how no debt is possible. I wait with bated breath!

Mon, 01/14/2013 - 00:58 | Link to Comment you enjoy myself
you enjoy myself's picture

you're forgetting the multiplier effect.  krugman, who has a nobel prize, a beard, and an association with princeton, says moar debt=awesome.  which means you are wrong.  

Sun, 01/13/2013 - 20:34 | Link to Comment The Shootist
The Shootist's picture

True. But who wins, lazy uneducated slobs living off stolen government scraps, or well armed patriotic firebrands?

Mon, 01/14/2013 - 02:33 | Link to Comment Matt
Matt's picture

Since everyone is free to individually define their own victory conditions, everyone can be a winner.

Sun, 01/13/2013 - 20:29 | Link to Comment SHEEPFUKKER
SHEEPFUKKER's picture

Unfortunately my friend, I think they are doing their jobs.  They don't work for the people and haven't for quite some time. They are doing exactly what they are told by their banking corporate masters. 

Sun, 01/13/2013 - 22:14 | Link to Comment formadesika3
formadesika3's picture

US system of gov does not work, except at manipulating public opinion Bernays-style thus options short of military adventurism are/have been exhausted.

Basic premise of time mgmt is to not neglect what's important  at the expense of what's urgent. Congress has failed on epic scale to perform on this count. Even proles with attention-span of poultry now knows something is wrong, giving Congress lowest marks in history but few among general public can view issues except through false left/right ideological lenses.

Banksters Rubin/Greenspan/Sommers used Libertarian watchword of "starving the beast" in 1990s as cover to enrich Wall Street and MIC while the rot increased. Fraud permeated the system without adequate checks on financial markets since the only starving that occurred involved cutbacks to financial regulatory agencies. If gov has any legitimate regulatory role, it's this, to regulate against fraud in financial markets.

Louis XIV said "Apres moi le deluge." The deluge has arrived.

Mon, 01/14/2013 - 02:00 | Link to Comment jerry_theking_lawler
jerry_theking_lawler's picture

Correction: You mean the 'current' US system.....

The original was almost perfect (except for the GD commerce clause) and a few other ideas that should have been state could never be changed.

Sun, 01/13/2013 - 20:30 | Link to Comment StychoKiller
StychoKiller's picture

All the background checks in the world cannot catch someone who's snapped inside and is contemplating taking out one of TPTB; opportunity awaits the prepared...

Sun, 01/13/2013 - 20:33 | Link to Comment UnpatrioticHoarder
UnpatrioticHoarder's picture

The come back is "Americans voted for Congress", but did they. Democracy is a release valve, by fiddling election results TPTB are bottling up an awful lot of voter discontent.

Same with gold and silver manipulation, the longer the distortion and suppression, the more dramatic the reversal.

Sun, 01/13/2013 - 20:40 | Link to Comment Chupacabra-322
Chupacabra-322's picture

@ Everyman,

"When people lose everything, and have nothing left to lose, they LOSE IT." -Gerald Celente

“When all else loses, they take you to war.” -Gerald Celente

 

By the way Everyman, there're Criminal corrupt congressctritters.  And need to be referred to as such.  CRIMINALS.....

 

 

 

 

Sun, 01/13/2013 - 20:53 | Link to Comment centerline
centerline's picture

Celente is right.  And he is also fun to listen to.

Sun, 01/13/2013 - 21:27 | Link to Comment Everyman
Everyman's picture

I stand corrected Chupra.  +1

Sun, 01/13/2013 - 20:55 | Link to Comment Poetic injustice
Poetic injustice's picture

It's normal. In Soviet Union you waited in line for 4-5 hours, unless all the items were sold earlier. The same with paperwork, it could take countless hours.

Sun, 01/13/2013 - 20:22 | Link to Comment koder
koder's picture

Wake me when the EBT cards stop flowing...

Sun, 01/13/2013 - 20:22 | Link to Comment q99x2
q99x2's picture

Sounds like I better max out the available student loans this year.

Sun, 01/13/2013 - 22:45 | Link to Comment ForTheWorld
ForTheWorld's picture

Good thing you'll never really have to pay them back either. Isn't America great?

Sun, 01/13/2013 - 20:23 | Link to Comment rehypothecator
rehypothecator's picture

Ho hum, no big deal if we have a technical default, everyone's doing it, no big deal.  Then again, if you are suspected of maybe having an illegal gun, you can expect a no-knock raid that night, because some laws are incredibly important to enforce right now, while other laws are merely guidelines and suggestions.  Specifically, those laws that constrain citizens are urgent and important, while those that constrain government are optional and unimportant.  

Sun, 01/13/2013 - 20:58 | Link to Comment Poetic injustice
Poetic injustice's picture

For the record of TSA, NASA and all other random spying agencies. I do detest previous comment, and my dog accidentally hit on +1 button. As it is my wife's dog, I don't object if you waterboard dog to get information on which terrorist organization aforementioned dog works.

Sun, 01/13/2013 - 20:23 | Link to Comment Taint Boil
Taint Boil's picture

 

 

Aren’t we about due for the “deer in the headlights” picture? Bring it!  ….Sorry, just got into Peoria, driving 7 hours ….need to relax, breath deep … a little Zero Hedge …  a little alcohol … everything is OK , aaaahhh.

 

OK…….. I’m OK now - carry on.

Sun, 01/13/2013 - 20:24 | Link to Comment Dan The Man
Dan The Man's picture

bullish

Sun, 01/13/2013 - 20:27 | Link to Comment knukles
knukles's picture

Technical default, my ass.
There are no terms and conditions of default anywhere in the federal code, no indenture under which federal debt is issued.  None.  By default (LOL) it would mean the basline rudimentary non payment on timely basis of interest or principal when due. 

Out-standings to Lockheed Martin and Halliburton, be damned.

http://detroit.cbslocal.com/2013/01/12/riot-breaks-out-at-housing-assist...

Sun, 01/13/2013 - 20:28 | Link to Comment gimli
gimli's picture

Techical DeFaults can be found at Lowes......

http://www.dewalt.com/Home.aspx

Sun, 01/13/2013 - 20:29 | Link to Comment trav777
trav777's picture

hmm...find me some common elements between all these riots

Sun, 01/13/2013 - 20:41 | Link to Comment knukles
knukles's picture

Not enuf free shit?

And talk about riots, this type of crap bothers not the banksters, as long as they get their "free" money from the Fed and interest on "their" holdings paid on a timely basis.
Never yet seen banksters burning unemployment, welfare offices or their own homes or branches of the Fed to the ground now, have we?

Nooooooooooooo....

Never seen a congresscritter take to the streets, placards in hand protesting injustices, have we?  In fact, last time I saw congresscritters and cops together it was during town hall meetings on ObamaDon'tCare and the cops were keeping people away from those already selected by the very same meeting organizers to be inside.

Not enuf free shit.

Sun, 01/13/2013 - 20:57 | Link to Comment centerline
centerline's picture

Just wait till the free shit party slows down.  Doesn't even have to end.

Sun, 01/13/2013 - 21:49 | Link to Comment CPL
CPL's picture

One more QE away from that now in direct commodities costs.  Stockpiles only last so long.

Sun, 01/13/2013 - 20:44 | Link to Comment Deacon Frost
Deacon Frost's picture

Prepare for the inevitable.

Sun, 01/13/2013 - 20:30 | Link to Comment buzzsaw99
buzzsaw99's picture

is that the same dude who called for usd/eur parity in 2013?

Sun, 01/13/2013 - 20:32 | Link to Comment Seasmoke
Seasmoke's picture

there is no default ............without fault

Sun, 01/13/2013 - 20:33 | Link to Comment jubber
jubber's picture

All futures up as usual

Sun, 01/13/2013 - 20:39 | Link to Comment rsnoble
rsnoble's picture

Gazillions later look where we are.  I like the "temporary" part. Didn't we just have a "temporary part" that will last 2 months till the next "temporary part"????

Here's what's temporary:  this society holding together for much longer while these fucknuts keep raking in billions blowing up shit, getting drunk and fucking hookers.

Sun, 01/13/2013 - 20:44 | Link to Comment knukles
knukles's picture

Don't forget the blowjobs and jetting all over to exotic places to figure shit out, too.  Very important.

What in the world... why is there no hew and cry from the female members of congress about the coke and hooker shit with their male counterparts?
Like Nazi or Madame Butterbutt sitting next to a drunken critter getting a BJ under the table?

Where is the outrage?

Sun, 01/13/2013 - 20:50 | Link to Comment fonzannoon
fonzannoon's picture

I'm mildly upset.

Sun, 01/13/2013 - 20:59 | Link to Comment centerline
centerline's picture

Would it be inappropriate if I said I was jealous?

Sun, 01/13/2013 - 21:34 | Link to Comment Mr Pink
Mr Pink's picture

Actually it would be inappropriate to be jealous, unless of course your wife is sneaking out at night to hang with Congressmen. If you said you were envious then that might make two of us

Sun, 01/13/2013 - 22:17 | Link to Comment centerline
centerline's picture

I stand corrected on the proper word selection!

Tue, 01/15/2013 - 18:59 | Link to Comment MisterMousePotato
MisterMousePotato's picture

@Mr. Pink:

Truly, we are all in awe. Recognizing your superiority, we ask, "What is the word to describe that person who was paying attention in eighth grade English class when the rest of us were looking at the developing girls all around us?"

p.s.  By the way, I did actually give you an up arrow because I thought you did a pretty good job of correcting someone's grammar without being a, well, 'not nice', shall we say?

Sun, 01/13/2013 - 20:51 | Link to Comment rsnoble
rsnoble's picture

They probably aspire to be like Hillary and have 100 twenty-something pussy eaters and 10,000lbs of coke for themselves.

Sun, 01/13/2013 - 21:00 | Link to Comment centerline
centerline's picture

If you ever really feel like seeing how close you can come to wanting to put a bullet through your own noggin, watch any good documentary on the life of Hugh Hefner.  Dear god.

Sun, 01/13/2013 - 23:09 | Link to Comment tango
tango's picture

I have always thought that talk of secession, violence and the like was the province of the crazies. Now I am not sure. I'm certainly not one of those posters salivating over violence and death but eventually, as conditions worsen in the big blue states, the flyover states will increasingly question their commitment to a union in which they are permanently bled dry.

Sun, 01/13/2013 - 20:49 | Link to Comment Gamma735
Gamma735's picture

People, it is does not matter if you are liberal or conservative.  The politicians and their wall street masters are almost done with your rape.  I hoped you enjoyed it. Welcome to your serfdom!

Sun, 01/13/2013 - 20:52 | Link to Comment joego1
joego1's picture

I think congress should have ankle bracelets with tasers. No balanced budget and they get jacked up.

Sun, 01/13/2013 - 20:52 | Link to Comment Cheshire
Cheshire's picture

obodyOk, Republicans time let you in on a secret. They scare you idiots into buying more guns by saying people want to take them. Demorcrats that I know could really give a shit about your gun hobby. Dont take our chess boards and we wont take your guns. Might want to pay attention as to who exactly your handing these thing too. That last kid really did some damge.

Mon, 01/14/2013 - 01:01 | Link to Comment Overfed
Overfed's picture

I have a chessboard. And a gun. And I'm not a Republican, or a Democrat. Fool.

Sun, 01/13/2013 - 20:55 | Link to Comment Jason T
Jason T's picture

Default that shit.... on the Foreign debt that is.

Sun, 01/13/2013 - 21:07 | Link to Comment cxl9
cxl9's picture

Crank up the debt another dozen trillion, then announce we must have a "temporary" (honest!) national sales tax to pay it off. Something around 17% ought to do it. You know that's part of the game plan. This party is just getting started. There's plenty more wealth left that can be looted and plundered.

Sun, 01/13/2013 - 21:09 | Link to Comment chump666
chump666's picture

I would take out an account with Citi, just because they are doomers sitting on fat tail risk trades. 

Sun, 01/13/2013 - 21:11 | Link to Comment chump666
chump666's picture

Steve check your DXY charts, it's getting punched to sh*t, one day there will a be a risk free bet against the money printers...maybe not just yet.

Sun, 01/13/2013 - 21:28 | Link to Comment F. Bastiat
F. Bastiat's picture

Since the intakes are more than the interest payments due, the only reason for a default would be a choice chosen by the despot's regime.

Sun, 01/13/2013 - 21:44 | Link to Comment Meremortal
Meremortal's picture

Correct, F. Bastiat.

Sun, 01/13/2013 - 21:33 | Link to Comment Everybodys All ...
Everybodys All American's picture

Technical default of US debt. Would you ever have thought in your lifetime? I can honestly say I never thought the US would ever face that kind of challenge.

Mon, 01/14/2013 - 03:05 | Link to Comment Freddie
Freddie's picture

Hope & Change.  All backed by TV and Hollywood - you watch - you enable it all.

Looks like Aaron Swartz was whacked for speaking up against O's kill list.

http://www.infowars.com/obamas-kill-list-critic-found-dead-in-new-york-city/

Sun, 01/13/2013 - 21:35 | Link to Comment Meremortal
Meremortal's picture

If there is any default, it will be done on purpose, and in violation of the 14th Amendment (not that THAT would be a surprise). The fed govt takes in enough money each month to pay all it's monetary obligations, with money left over. 

It is discretionary spending that would get shorted.

The default talk is a lie. The country is nowhere near a default on debt obligations.

Not as long as the wage slaves keep paying their taxes.

 

 

Sun, 01/13/2013 - 21:40 | Link to Comment Caveman93
Caveman93's picture

Oh for fuck sakes ROLL OVER AND FUCKING DIE ALREADY!

Sun, 01/13/2013 - 21:48 | Link to Comment Meremortal
Meremortal's picture

 

THAT WOULD BE CRAZY, LIFE IS A BLAST!

 

Sun, 01/13/2013 - 21:48 | Link to Comment Never One Roach
Never One Roach's picture

It's pretty cool living in a country at a time when it defaults....almost psychodelic.

Sun, 01/13/2013 - 22:16 | Link to Comment Skateboarder
Skateboarder's picture

"I wish none of this happened."

"So do all who live to see such times, but it is not for them to decide."

"All we have to do is decide what to do with the time that is given to us."

https://www.youtube.com/watch?v=izSjEQ84OwQ

Decide well, friends.

Sun, 01/13/2013 - 21:54 | Link to Comment Boilermaker
Boilermaker's picture

SHUT IT!!!

We have futures to ass fuck higher overnight!

Idiots.

Sun, 01/13/2013 - 21:56 | Link to Comment Meremortal
Meremortal's picture

According to the Daily Treasury Statements, as of the close of business on May 16, the federal government had taken in $1.333454 trillion in tax revenues since the beginning of fiscal 2011. By the close of business on July 7, tax revenues for fiscal 2011 had grown to $1.629630 trillion. Therefore, between May 16 and July 7 the federal government took in a total of $296.176 billion in new tax revenue.

In that same time period, total interest payments on the national debt equaled $14.632 billion.

Thus, the new tax revenue of $296.176 billion the federal government took in between May 16 and July 7 was enough to pay the federal government’s $14.632 billion in interest obligations during that period 20 times over.

Also during that same period, the federal government’s combined expenditures for interest payments on the national debt, Medicare, Medicaid, Social Security, the Veterans Affairs department and federal workers wages and insurance benefits equaled $270.151 billion.

Thus, since hitting the legal limit on the federal debt on May 16, the federal government could have spent its $296.176 billion in new tax revenues to pay for its combined $270.151 billion in expenses for interest, Medicare, Medicaid, Social Security, Veterans Affairs and federal workers wages and insurance benefits and still had $26.025 billion in additional tax revenue to spend on other government activities.

 

Debt Default?

 

Laughable, unless simply done on purpose by your govt. Which would call for lamposts and rope, some assembly required.

Sun, 01/13/2013 - 22:59 | Link to Comment uncle reggie
uncle reggie's picture

But, wouldn't it be more accurate to revise the 2nd to the last sentence to read; "Laughable, unless simply done on purpose by your those who have taken control of our govt?"

Sun, 01/13/2013 - 22:07 | Link to Comment Jack Burton
Jack Burton's picture

Here is what congress needs to do. "Raise the fucking debt ceiling, then borrow a shit load of money. Then get on with the patriotic duties of America. Invade fucking Syria and install a NATO puppet. Start a civil war in Lebanon and then invade the fucking place to protect civilians and install a NATO puppet government. Give Isreal a boat load of money to buy arms. Then invade those camel jokies in fucking Iran and liberate the god damn place to install a NATO puppet government."

That is a good start on the patriotic duty of America. Warn Russia and China to disarm or we are coming for them next.Our government is obligated first and foremost to protect the American people. There are dozens of threats out there, we need to invade them and conquer them or else we will have to fight the Iranian Revolutionary Guards on the streets of Oklahoma City and every other American city.

Raise the debt ceiling and get on with defending America.

 

Sun, 01/13/2013 - 23:26 | Link to Comment tango
tango's picture

I've heard these same things for years out here and all one can say is that NATO is about as relevant as the US dollar, especially with European defense spending almost nonexistent. I could not care less if Assad and his religious minority retain their stranglehold over the nation but I will predict that the next Syrian regime will be about as friendly toward NATO as ZH posters.

Mon, 01/14/2013 - 01:19 | Link to Comment salvadordaly
salvadordaly's picture

"W" is that you?

Sun, 01/13/2013 - 22:16 | Link to Comment PGR88
PGR88's picture

At the top of ZH page I saw on the left:  "Citi...US Gov't technical default."

And then my eyes were immediately drawn to the advert on the right "COUGAR LIFE"

Kind of sums up America's situation....

Sun, 01/13/2013 - 22:20 | Link to Comment centerline
centerline's picture

You got some freeky cookies go on over there.  Might want to check your wife's browser history - ha ha.

I keep getting the Bad Idea t-shirt ad with the chick leaning into the picture.  No complains over here on that one.

Sun, 01/13/2013 - 23:45 | Link to Comment Likstane
Likstane's picture

I'm still getting the ads for penis reduction surgery. 

Sun, 01/13/2013 - 22:32 | Link to Comment Lost Wages
Lost Wages's picture

Technical default = short dip, followed by massive bond price spike.

Sun, 01/13/2013 - 22:48 | Link to Comment IridiumRebel
IridiumRebel's picture

I want the coin! I want a poster of it for my wall! Maybe it will lead to some fiscal responsibility. Is that possible anymore? We did only have a defecit of 220 million in Dec.

Sun, 01/13/2013 - 23:06 | Link to Comment Northern Lights
Northern Lights's picture

Agreed,

 

To sum it up, had they introduced that coin and made it a reality, the RESET everyone on ZH has been wanting would be VERY VERY close at hand.

Sun, 01/13/2013 - 22:48 | Link to Comment uncle reggie
uncle reggie's picture

Sorry, don't really care about what spouts from CITI. Anyone else think Japan may have others thinking about escalating the currency war. 

Sun, 01/13/2013 - 22:57 | Link to Comment Elmer Fudd
Elmer Fudd's picture

Whats the point of getting paid with worthless freshly printed currency?

Sun, 01/13/2013 - 23:02 | Link to Comment uncle reggie
uncle reggie's picture

Correct, that's what the war is all about! 

Mon, 01/14/2013 - 00:03 | Link to Comment lolmao500
lolmao500's picture

More important than a fake default... congress passing hardcore gun control bills, starting the American civil war of 2013...

Mon, 01/14/2013 - 03:34 | Link to Comment Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Speaking of defaults.

http://watchdog.org/65786/study-warns-dodd-frank-could-trigger-financial...

ALEXANDRIA — In the wake of the fiscal crisis of 2008, lawmakers in Washington rushed to craft legislation to curtail risky practices at the center of the financial collapse.

The product was the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, a massive slate of regulations that expanded the role of government to police everything from debit card purchases to insurance.

Now, a new book argues that the ongoing complexity and reach of Dodd-Frank could plant the seeds for another collapse.

Dodd-Frank: What It Does and Why It’s Flawed, produced by the Mercatus Center of George Mason University in Fairfax, provides a thorough dissection of the more than 8,800-page law.

“I think it really didn’t get to the problems we saw in the last crisis. In fact, I think it made them worse in many ways,” said Hester Peirce, a senior research fellow at Mercatus and, with James Broughel, co-author of the book.

Peirce maintains that Dodd-Frank created an intricate web of governance, producing uncertainty in many industries.

“There was this need to do something,” she said of the law’s genesis. “Congress was more concerned about doing something than about doing something right.”

By creating new agencies like the Bureau of Consumer Financial Protection and expanding the role of existing entities like the Securities and Exchange Commission, Federal Reserve and others, Peirce said Dodd-Frank puts the nation’s financial health in the hands of regulators while providing little clarity for the rules they enforce.

Among the book’s key criticisms is the law’s underlying philosophy, that some companies are so large and interconnected throughout the economy that their default would result in disastrous market contagion. The authors contend that Dodd-Frank responds with the sort of regulatory overreach that guarantees government protection for companies that, like insurance giant AIG, are considered too-big-to-fail.

“In 2008, people weren’t exactly sure how far the government safety net went,” she said. “I think a lot of people were surprised that AIG was rescued. Now, under the (Dodd-Frank) regime, AIG is likely to be designated as a systemically important financial institution, which means it will be regulated by the (Federal Reserve). It will be clearly anticipated that if something were to happen, that it will be rescued.

“We’ve basically broadened (oversight) from just banks to all sorts of new entities. It’s just going to be very expensive.”

While some regulations have expanded, others have vague constraints, such as the Volcker Rule. Named for Fed chairman Paul Volcker, the rule was designed to keep banks from investing customer assets in risky speculation. But the rule brought more questions about how banks can legally invest, setting up a potential chill in the securities market.

While Dodd-Frank is responsible for much new financial regulation, Peirce said the law provides no oversight for the housing industry that was at the center of the financial crisis. Nor does it clarify government’s role in the home mortgage business.

“Big components like housing finance reform, that issue was totally not addressed by Dodd-Frank,” she said. “That was a huge part of the problem in the crisis, the government’s involvement in (backing mortgages). It made the government more likely to step in and save entities because the government itself was so deeply entrenched.”

The bigger problem: the natural risks of the marketplace have been replaced by Dodd-Frank’s confidence in the wisdom of regulators.

“Because the government was such an active participant in the markets, the markets got lazy,” she said. “They assumed regulators were doing more work than they were. Markets relied very heavily on credit agencies because the government told them it was okay to rely on them. It turned out that those agencies hadn’t done a great job.

“If we look at the lead-up to the crisis, we see that a lot of the problems stemmed from government failures, not pure market failures, because the market was already too dependent on the government.”

Mon, 01/14/2013 - 11:46 | Link to Comment andyupnorth
andyupnorth's picture

A "Financial Police" would be the perfect source for insider tradring.

The Too Big To Fail and the Powers That Be would LOVE to have such an institution.  It would be like being able to see see everyone's hands in a game of poker, yet no one can see yours.

Mon, 01/14/2013 - 03:36 | Link to Comment Fiat agnostic
Fiat agnostic's picture

A possible default drives investors into the 'safe haven' that is about to default. Kind of sums up todays markets...

Mon, 01/14/2013 - 11:40 | Link to Comment andyupnorth
andyupnorth's picture

 

 

Scenario A)

1. Miraculously elect politicians (including President) who are not totally corrupt, ignorant or both. 

2. Start a new currency issued by the US Treasury.

4. Convert existing Fed debt into new USA bucks.

5. Only defaults on debt owed to the Federal Reserve.

6. Abolish the Federal Reserve.

7. Jail the fraudsters, regardless of how big they are (HSBC, JPM, GS, BAC, CITI, etc)

8. Mandate a balanced budget and forbit debts to be allowed to roll-over to future generations.

Scenario B)

1. Perpetual bailouts makes the system unsustainable.

2. SHTF: Markets crumble, social disorder, several States exit the US Union.

3. Competition between new efficient countries and old corrupt USA.

4. Old corrupt USA implodes into dystopia.

5. The rats abandon old corrupt USA because there's nothing in it for them.

5. After a few generations, old corrupt USA eventually re-learns the Rule of Law.

 - - - - - - - - - - - - - - -

I believe Scenario B is more likely since I don't foresee the first step of Scenario A ever happening.

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