This page has been archived and commenting is disabled.

Treasury Warns Default Impact Could Last A Generation

Tyler Durden's picture




 

The President warned yesterday that "this time is different," and now the Treasury has weighed in with an even more ominous warning. In their statement, they note:

  • *TREASURY OFFICIAL: CONGRESS ACTION ONLY WAY TO AVOID DEFAULT
  • *TREASURY SEES 'TENTATIVE' SIGNS IMPASSE AFFECTING MARKETS
  • *TREASURY SAYS BILL YIELDS MAY REFLECT `NASCENT CONCERNS'
  • *TREASURY: DEFAULT IMPACT COULD BE PROFOUND, LAST A GENERATION

And so it seems not only are they looking at the same indicators as the smart money in the markets but it is clear that the rhetoric will be increased until the equity market cracks and the politicians get their catalyst to act.

Via The Treasury,

The United States has never defaulted on its obligations, and the U. S. dollar and Treasury securities are at the center of the international financial system. A default would be unprecedented and has the potential to be catastrophic: credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008 or worse.

Full Treasury Statement can be found here.

What is amusing among all this blatant fearmongering, is that the Treasury can clearly choose to prioritze its payments and have more than enough cash from tax revenues alone to fund its debt obligations for a long period of time, even if that means not paying some of the government's other ultrabloated programs.

From: Treasury "X Date" May Hit As Soon As October 18.

Priotiziation, or selective payment of obligations.

It would be as follows:

  • If we reach the X Date, Treasury might either prioritize payments or make full days’ worth of payments once they receive sufficient revenues to cover all of a day’s obligations.
    - Interest on the federal debt would likely be prioritized in either scenario – it is paid on a separate computer system (FedWire).
  • Scenario # 1: Pay some bills, but not others
    - Treasury might attempt to prioritize some types of payments over others. Prioritized payments would be made on time, others would not.
    - This option may not be possible to implement using Treasury’s current financial systems. It would involve sorting and choosing from nearly 100 million monthly payments.

If the X Date arrives on October 18 (the beginning of the BPC range):

  • Treasury would be about $106 billion short of paying all bills owed between October 18 and November 15 (20 business days).
  • Approximately 32% of the funds owed for the period would go unpaid.
  • The reality would be chaotic:
    – Unfair results, unanswered questions
    – Treasury picking winners and losers
    – Public uproar
    – Intense global media focus

  • Scenario # 2: Make all of each day’s payments together once enough cash is available
    - Treasury might wait until enough revenue is deposited to cover an entire day’s payments, and then make all of those payments at once.
    (For example, upon reaching the X date, it might take two days of revenue collections to raise enough cash to make all of the payments due on day one. Thus, the first day’s payments would be made one day late. This, of course, would delay the second day’s payments to a later day.)
    - In the 2012 OIG report, some senior Treasury officials stated that they believed this to be the most plausible and least harmful course of action.
    - Since debt operations are handled by a separate computer system, these payments could likely still be prioritized under this scenario.

Full report from the Bipartisan Policy Center on the debt ceiling contingenies can be found here.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 10/03/2013 - 10:26 | 4018173 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

We are fucked one way or the other, jump fuckers. Time to go off the cliff and into the unknown see who is made of what.

Thu, 10/03/2013 - 10:27 | 4018185 Wahooo
Wahooo's picture

Government pretending to be relevant. obama warns himself.

Thu, 10/03/2013 - 10:29 | 4018193 Stackers
Stackers's picture

As opposed to running up multi hundred trillion dollar deficits that will impact multiple generations ?

Thu, 10/03/2013 - 10:33 | 4018209 ZippyBananaPants
ZippyBananaPants's picture

nice tits

Thu, 10/03/2013 - 10:35 | 4018214 hedgeless_horseman
hedgeless_horseman's picture

 

 

From the United States Government:

We NEED moar dope! 

We are dope fiends; we cannot cope without our dope.

We will say ANYTHING to get moar dope.

Thu, 10/03/2013 - 10:36 | 4018230 Joe Davola
Joe Davola's picture

Redundant, moobs above already mined this topic.

Thu, 10/03/2013 - 10:50 | 4018307 Cognitive Dissonance
Cognitive Dissonance's picture

When this money tide goes out nearly everyone will be found swimming naked.

<Got milk PMs?>

Thu, 10/03/2013 - 11:04 | 4018418 DaddyO
DaddyO's picture

I can safely sum this post about our wonderful Treasury up in a word...

Bullshit!

Doesn't the word "treasury" summon visions of a room full of bountiful loot?

Goonies, anyone?

WTF, Over!

DaddyO

Thu, 10/03/2013 - 11:17 | 4018490 SafelyGraze
SafelyGraze's picture

"Treasury Warns Default Impact Could Last A Generation"

as maw-maw used to scold us, "you boys should have thought of that before you borrowed all that money for hookers and blow"

that maw-maw!

Thu, 10/03/2013 - 11:22 | 4018507 HoofHearted
HoofHearted's picture

The sooner we get this default shit over, the sooner we can start to rebuild. Just do it already. Stop threatening. Shut your piehole and let slip the hogs of war. Bring it, bitchez. Bring it. 

Those candy asses will find some way to continue this game. They can't handle the TRUTH!!!! We're already there as far as default goes. We just call it "inflation" instead.

Thu, 10/03/2013 - 12:02 | 4018691 The Alarmist
The Alarmist's picture

Did someone tell DHS that T is engaging in t'rism???

Thu, 10/03/2013 - 12:25 | 4018809 smlbizman
smlbizman's picture

cant they just take a heloc on the white house et.als, or open up credit card accounts in 57 different states with identity theft.....isnt that why they met with the big boys yesterday, doing a loan app with a black guy...{yeah right}....showing him to go greece and nobody will ever find out.....looking at u bama...you know, dont u....how 'bout dem sewr bills...

Thu, 10/03/2013 - 11:05 | 4018421 Rubbish
Rubbish's picture

This looks doable.

 

And yes, I got some PM's

Thu, 10/03/2013 - 11:11 | 4018459 ForWhomTheTollBuilds
ForWhomTheTollBuilds's picture

Here's what I find so interesting about this:

 

From Greece to Ireland to Mexico in the 90s etc etc etc, govts always vehemently deny they are about to default or devalue their currencies.  The theater always starts out with whispers in the press which officials refuse to even dignify at first and then when they can no longeravoid dealing with the rising tide of questions they go on tirades about how ridiculous it is to even suggest default is possible.  Then a day or so later they default or devalue...

 

For the president, the Treasury and the heads of the major banks to come into the press screaming that the US is "THIS FRIGGEN CLOSE" to defaulting proves that there is practically no risk at all of default on the kind of time horizon they are contemplating.

 

So what are they really up to?

Thu, 10/03/2013 - 11:16 | 4018470 Anusocracy
Anusocracy's picture

To keep the con conning and the dupes duped.

Thu, 10/03/2013 - 11:29 | 4018541 Joe Davola
Joe Davola's picture

"Fire" in a crowded theater when you're the beneficiary of the patron's life insurance policies.

Thu, 10/03/2013 - 10:52 | 4018322 Manthong
Manthong's picture

..amazing how much money there is for putting barricades up to block the public from public spaces.

We feel their pain.

Thu, 10/03/2013 - 10:54 | 4018325 The Phu
The Phu's picture

I'm 30 years old.  My peers, the Millenials, helped to elect Obuttfuck's "hope and change" agenda.  That being said, Congress/TPTB/President have clearly demonstrated they could give a rat's ass about my generation.  So, Mr. Treasury official (*TREASURY: DEFAULT IMPACT COULD BE PROFOUND, LAST A GENERATION), please, blow me.

Also making me question the "wisdom" of the Treasury, you have this: "The United States has never defaulted on its obligations..."  That may be technically correct, but I'm afraid that we're also on our fourth or fifth currency: Continentals, Green backs, Gold Standard, Silver standard, and currently post-1971 pure, unadulterated fiat FRNs.  God Bless America, and God Bless our spotless default record!!!  Amen!

 

Thu, 10/03/2013 - 11:05 | 4018417 LawsofPhysics
LawsofPhysics's picture

Kudos to you sir as most of your generation doesn't understand basic math, much less how credit "markets" actually work.

Thu, 10/03/2013 - 11:30 | 4018544 HoofHearted
HoofHearted's picture

Cue Sam Kinnison here...

http://www.youtube.com/watch?v=Fj5k6toS7i8

"We like your style" here. We'll be watching you. Keep it up.

Thu, 10/03/2013 - 11:38 | 4018578 XitSam
XitSam's picture

My 27 year old co-worker asked my yesterday how long the shutdown would go on. He thought it would be for a set number of days. 

Thu, 10/03/2013 - 11:42 | 4018590 Miffed Microbio...
Miffed Microbiologist's picture

Dear Phu, for your sake and my 21 and 23 year old daughters sake, I pray this goes down. Ultimately, your group has the greatest chance to recover if it does soon. At 52, I'm going to take a hit but I'm actively prepping to survive it. Otherwise, your generation's backs will be crushed carrying this debt burden, something you did not cause or deserve. I hope you can plan and prep to survive it and get a few of your peers on board that are willing to listen. Please know there are many tail-end baby boomers like me pulling for you and have your best interests at heart. Best of luck.

Miffed;-)

Thu, 10/03/2013 - 11:59 | 4018674 Bananamerican
Bananamerican's picture

ditto.

and if the choice ever comes to either kick our asses to the curb or survive...do it.

PS

start with the BMw drivers if you would

Thu, 10/03/2013 - 12:10 | 4018715 DaddyO
DaddyO's picture

Miffed has summed up where a lot of us in her age group find ourselves.

I have been preparing to weather an inevitable sh*tstorm of financial chaos for quite a few years. However the FED has been able to put off the storm through all sorts of financial skullduggery.

I have tried to raise my children to be aware of the coming slide into oblivion and live outside the system as much as possible.

I too, feel for all the millenials who are being crushed by this and aren't even aware of what's happening. They are really up on how to operate an iPhone but couldn't operate a wheat grinder if their life depended on it.

Many, many everyday survival skills have been lost due to our dependence on a JIT lifestyle and food delivery system. Woe to the millenials because of it...

DaddyO

Thu, 10/03/2013 - 13:26 | 4019151 Miffed Microbio...
Miffed Microbiologist's picture

In my experience Daddyo, the 50-55 group seems to be more awake than the older group. In the last 3 months I've had 2 people ask me if my house could be a secondary bug out locale (remote, up in the mountains, very defensible with a great well with a 10k gallon cistern) both presented skills they could add to mine (exmilitary, great hunters). I readily agreed.

A few weeks ago another person at our shooting range invited me and my husband to join his militia he was forming. I'm actively setting up bartering groups with people with skills or items I lack. In essence, I'm a community organizer of a different sort! All these people are 45-55.

Now the 60+ group seems to be just concentrating on their mythical retirement. All I here about is the number on a piece of paper that states what they will be receiving from their pension and all the wonderful cruises and vacations they will be taking. I once ask one how they knew that number had any validity. Blank stare. Then the inevitable " i was promised this."I almost told them they should study Neville Chamberlain to learn the value of paper but that would have violated my " be less of an asshole" New Years Resolution.

The amount of work and effort I have done the last few years have been staggering. I don't know what one could really do to adiquately prep if there are only months than years left. I'm taking an herbology class to learn how to make my own medicines. Come to find out there are many local plants in my region that have medicinal properties but there is a lot of learning for me to know how to properly extract and prepare them. My teacher told me it will take me 2-3 years of work to become proficient. My professional skills will be worthless if we go down. I pray I have enough time!

Miffed;-)

Thu, 10/03/2013 - 13:51 | 4019256 Sean7k
Sean7k's picture

Miffed, as a herbalist, I can tell you that 2-3 years is pretty ridiculous. Can you do a simple alcohol extract? These extracts last five years. You can learn how in ten minutes, though it requires about $125.00 in glassware. If you have questions:

Principles and Practice of Phytotherapy by Mills and Bones.Is a good all around resource.

Thu, 10/03/2013 - 15:19 | 4019715 Miffed Microbio...
Miffed Microbiologist's picture

Actually Sean, I decided to go the hardcore "certification"route because I'm interested in possibly developing a practise. Because of my background I'm confident I could learn to make infusions, decoctions and tinctures to standard and learn therapeutic doses. However I need to learn a lot of plant identification for wild crafting. Because I work full time the best I can manage is 1 three hour night class a week and a full day Sundays for herb walks. Otherwise I could finish his course list in about 8-10 months before I learned clinical. If I was only thinking of personal use it certainly wouldn't take as long. There is certainly a plethora of information out there for anyone to learn the basics if so inclined.

Miffed;-)

Thu, 10/03/2013 - 16:47 | 4020233 Sean7k
Sean7k's picture

Then, that is about the time for a full program, though there are others that are doable in 12-18 months and are certified. If you don't know them, mountain rose herbs is a good organic source. Best of luck!

Thu, 10/03/2013 - 12:46 | 4018959 OldE_Ant
OldE_Ant's picture

I will third the sentiment.  Many of us out here are creating habitable/sustainable zones NOW for not just decades to come but generations to come (i.e. even after I am ashes in the winds).  But they are going to require real people doing real things to sustain them, keep them at peak production.

I have to tell a story though regarding the Z+ generation.  While some of you have your shit together (i.e. some hard working go getter visionaries - mostly deBOXed) 98% of you are so absorbed by the 'digital screen' (da Box) there is nothing else other than the virtual world.  I have never seen a generation so absorbed by the 'BOX'.   No-one else matters except who is at the end of your virtual line.  Mommy and daddy still wipe your ass and feed your pie holes as well as pay for internet and cable.  Someday they and their houses won't be there for you.

GET YOUR HEADS OUT OF THE BOX and ENTER THE REAL WORLD.  REAL PEOPLE, PLACES and things WILL BE, AND ARE more important that the BS in the BOX.  You can't eat virtual pizza.  You can eat a real apple or tomato and if you never have had a fresh tomato off a plant midday - you have never had a tomato.!

Learn how to grow a home garden, even if in a box.  Start bicycling places.  Hell find someone who has horses and shovel some shit for a while.   Learn to make and fix things (anything useful).  Actually do something other than live your life in the 'BOX' otherwise you too will be plowed by what is coming.  The time is now to get your systems and support networks up and running, learn tradable skills.  Wait until the horn sounds for the race and you will be too late.

You have been aptly warned.

Thu, 10/03/2013 - 10:46 | 4018284 earnyermoney
earnyermoney's picture

That's why Barry had the dope syndicate at the W.H. yesterday.

 

 

 

Thu, 10/03/2013 - 10:55 | 4018305 fockewulf190
fockewulf190's picture

No more financial crack!  Scrape your pipe for the final high and go suffer the detox.  Only through pain can the lesson be learned.

@HH,

"We NEED moar dope! 

We are dope fiends; we cannot cope without our dope.

We will say ANYTHING to get moar dope."

Soon you´ll hear "I´ll suck your dick!"
Thu, 10/03/2013 - 10:50 | 4018299 Manthong
Manthong's picture

So.. the future generations have student debt up the wazoo, can’t get a decent job, can’t afford a house and have to live with mom and dad.

So tell how much worse can it get for them?

I’d consider learning Portuguese and moving to Brazil.

Thu, 10/03/2013 - 10:53 | 4018329 Eeyores Enigma
Eeyores Enigma's picture

Why is SS listed on there? It is fully funded and not a Gov expense, unless he is talking about the interest Gov should be paying for all the money they have "borrowed" from SS.

This post is looking like BS propaganda.

 

Thu, 10/03/2013 - 11:20 | 4018502 I Write Code
I Write Code's picture

If you think SS is "fully funded", gimme some of what you're smoking I wanna be happy too.

Thu, 10/03/2013 - 10:59 | 4018370 markettime
markettime's picture

There is no chance they are going to let the debt ceiling be breached. But this is a perfect opportunity for them to start demonizing small government believers and holders of PM's. They are going to label these groups as financial terrorists who want to bring down the dollar. It is going to be spun to try and make those who are trying to be responsible the enemy. 

Thu, 10/03/2013 - 11:25 | 4018530 Stoploss
Stoploss's picture

"*TREASURY: DEFAULT IMPACT COULD BE PROFOUND, LAST A GENERATION"

 

oh, so we already have one lost generation, is this the second or third one??

WHAT DIFFERENCE DOES IT MAKE AT THIS POINT!!????

Thu, 10/03/2013 - 11:50 | 4018627 Miffed Microbio...
Miffed Microbiologist's picture

This whole thing reminds me once when we were driving to Disneyland when the kids were little and they were whining constantly "Are we there yet?". Finally you just have enough and you scream " The next word I hear out of either of you we're turning around and driving home!". And the rest of the trip is in peace. Empty threats work well on the ignorant.

Miffed;-)

Thu, 10/03/2013 - 10:54 | 4018227 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Funny you mention that because this may not be hundred trillion dollar deficits but the mindset of running debts you ultimately can't pay off without fisical prudence while always expecting someone else to pick up the tab is illustrated here.

http://www.opposingviews.com/i/politics/2012-election/democratic-nationa...

According to the Democratic National Committee’s latest finance report, the committee is struggling to pay off its debt from the 2012 election.

After last year’s elections, the DNC was $20 million in debt. 10 months later, the DNC’s situation is not much better, as they find themselves $18.3 million in debt. In comparison, the Republican National Committee has $12.5 million in cash reserves and no debt. While the DNC managed to raise $3.9 million over the last several months, they spent even more -- $5.4 million – over that same time period.

In a recent piece, CNN writer Tom Newmyer cites several DNC strategists and donors that are worried about the committee’s ability to pay off its debt.

"They really thought they could get this money raised by the summer," one strategist said, "but the fact is, from talking to people over there, they have no real plan for how to solve this."

sums it up.

...

Jump fuckers.


Thu, 10/03/2013 - 11:33 | 4018552 HoofHearted
HoofHearted's picture

So the Free Shit Army isn't ponying up to pay off the DNC debt? Whodathunkit?

Thu, 10/03/2013 - 12:05 | 4018694 Bananamerican
Bananamerican's picture

yup.

but the TBTF banks paid off the RNC tab with a couple days lunch money....

Thu, 10/03/2013 - 10:39 | 4018240 Glass Seagull
Glass Seagull's picture

Yatzee!  Default hurts for one generation, while alternative keeps the debt shackle on for centuries to come.

 

A no-brainer IMO

Thu, 10/03/2013 - 10:39 | 4018248 El Tuco
El Tuco's picture

I can't see, I left my glasses at home. Is that Randy?

Thu, 10/03/2013 - 10:28 | 4018187 SilverIsKing
SilverIsKing's picture

<- No Default

<- Default

Thu, 10/03/2013 - 10:33 | 4018221 Bobbyrib
Bobbyrib's picture

I voted no default, not because I believe that is what is best for the country, but that you would have better odds at winning the lottery. Now is not the time the .gov will choose to default.

Thu, 10/03/2013 - 10:43 | 4018274 CH1
CH1's picture

And every day that don't default declares them to be lying thieves.

Thu, 10/03/2013 - 11:35 | 4018570 HoofHearted
HoofHearted's picture

I voted "no default" because none of the pols in Washington have the balls for it. We'll keep stealth defaulting by inflation. If default here means "inflate away," then I'll change my vote. I think we'll keep trying this inflate away scheme, giggling as long as we can get those suckers to keep thinking that green coupons (or 0s and 1s) are truly valuable. "Dumb asses...they bought it. They really believed us."

Thu, 10/03/2013 - 10:30 | 4018188 SilverIsKing
SilverIsKing's picture

<double click>

Thu, 10/03/2013 - 10:32 | 4018212 depression
depression's picture

POMO  starts in 15 minutes: Ben .vs. Barak

Thu, 10/03/2013 - 10:58 | 4018375 Ban KKiller
Ban KKiller's picture

But...but...the war profiteers. What about them? THEY must be paid!

Actually the war profiteers want chaos...and war and famine, and strife. 

Thu, 10/03/2013 - 10:25 | 4018174 rtalcott
rtalcott's picture

bullshit....sturm und drang...

Thu, 10/03/2013 - 10:27 | 4018176 AlaricBalth
AlaricBalth's picture

Fear is the strongest emotion used to keep the masses in line.

Thu, 10/03/2013 - 10:28 | 4018183 Dr. No
Dr. No's picture

Agree.  The headlines are heating up.  I know there has been talk of false flag event to really bolster the fear factor.

Thu, 10/03/2013 - 10:39 | 4018250 Headbanger
Headbanger's picture

Yeah but fear explodes into anger and rage when it hits the fight or flight threshold.

Which we may reach sooner than most expect.

Thu, 10/03/2013 - 11:15 | 4018471 lolmao500
lolmao500's picture

Fear and people being ignorants. When you know what the reality is, they can throw at you every scaremongering you can think of and you will laugh in their faces.

Thu, 10/03/2013 - 10:26 | 4018179 superflex
superflex's picture

Bring it

Thu, 10/03/2013 - 10:28 | 4018186 Mike in GA
Mike in GA's picture

These so-called leaders are big fuckin bullies.  Please let's start gathering rope.

 

Thu, 10/03/2013 - 10:30 | 4018191 LawsofPhysics
LawsofPhysics's picture

Not raising the debt ceiling does not equal default.  Missing a payment on debt would be a default.  But I digress, moar propaganda, most people don't understand basic math, much less credit markets.

Thu, 10/03/2013 - 10:34 | 4018224 Dr. No
Dr. No's picture

Rest assured a non-payment on debt will be catagorized as a "non-credit-event".

Thu, 10/03/2013 - 10:39 | 4018247 LawsofPhysics
LawsofPhysics's picture

When I look at my employee's paycheck, I see plenty of revenue streams for the .gov, they simply need to balance their checkbook, like the rest of us.

Thu, 10/03/2013 - 10:29 | 4018196 insanelysane
insanelysane's picture

I don't know how any of these gov people keep their job.  Life is pretty simple and easy when you just increase the debt limit every time you hit it and the same thing at the FED when they just print some more.  At some point, these idiots need to work for their money and figure out how to do it all with the revenue coming in.  Balanced budget time.

Thu, 10/03/2013 - 11:50 | 4018622 eclectic syncretist
eclectic syncretist's picture

A perfect analogy would be if the average citizen could set their own credit score to whatever they choose, and then go through life raising it ever higher so that they could continually access unearned money.

Thu, 10/03/2013 - 10:30 | 4018200 yogibear
yogibear's picture

Infinite debt and infinite printing.

Where did we see this movie in history previously?

Fed members, did you fail history?

Thu, 10/03/2013 - 11:49 | 4018620 XitSam
XitSam's picture

The Fed is a group of modern economists that understand and manage the modern economy. They know what they are doing and will not make the same mistakes as previous policy makers. Everything is under control and you should do what the Fed recommends because they know best. They are the top Phds in economics. You are a prole.

The problem is the above is satire but the Fed actually believes it is the truth.

Thu, 10/03/2013 - 10:31 | 4018201 GrinandBearit
GrinandBearit's picture

Good... let's get it on!

I have a very sharp axe and a large tree stump in my backyard ready and waiting.

Thu, 10/03/2013 - 11:49 | 4018626 XitSam
XitSam's picture

I was hoping you would use a dull axe.

Thu, 10/03/2013 - 10:31 | 4018202 One And Only
One And Only's picture

Uh. We already defaulted a few years ago. Correct me if I'm wrong guy but don't we have a central bank that is printing... 85 billion a month to purchase USTs and devaluing the USD in the process? How is that not a default? If u borrow 1 dollar from the bank but pay them back with 90 pennies what do you think they are going to tell me?

Thu, 10/03/2013 - 10:33 | 4018215 LawsofPhysics
LawsofPhysics's picture

Bingo.  I believe someone sat before congress and acutally said "we will never directly monetize the debt" as well..

tick fucking tock.

Thu, 10/03/2013 - 10:36 | 4018231 Pig Circus
Pig Circus's picture

Uh. We already defaulted a few years ago.

 

Exactly, it's all a bunch of bullshit. I need some crazy pills before I lose my fucking mind. Yeah it might be too late for me. You bitches hurry and find yours.

Thu, 10/03/2013 - 10:31 | 4018206 FieldingMellish
FieldingMellish's picture

God help any rating agency that threatens a downgrade.

Thu, 10/03/2013 - 10:32 | 4018207 Mercury
Mercury's picture
  • *TREASURY: DEFAULT IMPACT COULD BE PROFOUND, LAST A GENERATION
  •  

    Impact of Federal reserve policy could last a generation.

    Thu, 10/03/2013 - 11:17 | 4018484 lolmao500
    lolmao500's picture

    Only one generation? You're quite the optimist.

    Thu, 10/03/2013 - 10:32 | 4018208 Jason T
    Jason T's picture

    it's 100% inevitable we default ..no nation in the history of the world has ever repaid their debt.. except Romania in 1982!

    Thu, 10/03/2013 - 10:37 | 4018241 Bobbyrib
    Bobbyrib's picture

    Right, it just depends on the timing of when we default and how (actual non-payment, or paying in $ with $ being the equivalent of 1 ply).

    Thu, 10/03/2013 - 11:22 | 4018518 ForWhomTheTollBuilds
    ForWhomTheTollBuilds's picture

    Canada would have done it in the 90s, but Greenspan heard about it and came to Canada to talk to the govt about how dangerous and stupid it is for a country to have no debt ("how do you make monetary policy if you have no soverign bonds to buy or sell?" he asked.).

     

    True story.

    Thu, 10/03/2013 - 10:32 | 4018213 Devotional
    Devotional's picture

    hang on, wait a minute ... does this mean people (sheeple) will finally wake up to the ponzi scheme?

    B-R-I-N-G it OOOOON!

    Thu, 10/03/2013 - 10:34 | 4018216 KenShabby
    KenShabby's picture

    Get cracking then!

    Thu, 10/03/2013 - 10:34 | 4018225 freedogger
    freedogger's picture

    Only a generation? Then DEFAULT already. With the present system and situation, I have already given up on my generation, my children's futures and even any hope that the grand children's lives will be free from tyranny and endless suffrage.

    Thu, 10/03/2013 - 10:49 | 4018295 madcows
    madcows's picture

    Without a doubt, default would help everyone from here on out.  However, the FED would be really pissed, seeing as how they have enslaved the entire nation to make themselves fat and happy.  Nothing like being a parasite living off debt serfs

    Thu, 10/03/2013 - 10:39 | 4018228 Seize Mars
    Seize Mars's picture

    When they say, "The United States has never defaulted on its obligations," I think they meant "The United States has always defaulted on its obligations."

    Thu, 10/03/2013 - 10:37 | 4018232 Mrs. Cog
    Mrs. Cog's picture

    What the (complicit) treasury has already done will impact far more than a generation. It's a game changer.

    Thu, 10/03/2013 - 10:35 | 4018233 NEOSERF
    NEOSERF's picture

    Nothing like starting a war to get Congress working together...really inconvenient that Rouhani was so smart to see this coming and opened the dimplomatic doors...doesn't stop Israel from coming to Obama's aid however...expect launch by this weekend...

    Thu, 10/03/2013 - 10:45 | 4018281 Headbanger
    Headbanger's picture

    That's a great observation. It could also be that the real global power brokers want Obama gone and have arranged to remove Iran from the cross hairs to disable him from starting a war there to save hid political ass. He's just a political bozo now. Putin looks like he's the "go to man" for the real world power brokers now.

    Thu, 10/03/2013 - 10:35 | 4018235 sudzee
    sudzee's picture

    No problem. Trillion in new 100's being issued next week. Just a coincidence I guess.

    Thu, 10/03/2013 - 10:37 | 4018242 101 years and c...
    101 years and counting's picture

    but, on the bright side, wall st and the Fed would not be blamed for the market crash.  and then ben can ride in and offer to double the size of his printers so lloyd and jamie dont have to miss a year end bonus payout.

    Thu, 10/03/2013 - 10:40 | 4018252 Money 4 Nothing
    Money 4 Nothing's picture

    Senate was a no show 2 times in a row for negotiations.

     

    Obama Care is in full effect and.totally funded.

     

    Congress can not pass a budget or.raise the debt ceiling durung a govt shut down. Its illegal.

     

    NASA skylab cameras are turned off.

     

    USDA site is off line. Read the 2014 amended budget for them. Farmer subsidies were defunded.

     

    Pentagon spent 5 billion dollars for weapons grenades etc. Moments before the govt shutdown.

     

     

     

    Thu, 10/03/2013 - 10:43 | 4018273 CPL
    CPL's picture

    Funny thing about contracts is they can be broken if you know your client won't pay.  A promise to delivery is only as good as the money offered.  So five billion in a month might buy a pack of gum.

    Thu, 10/03/2013 - 10:41 | 4018263 CPL
    CPL's picture

    It's well over 100% GDP right now, in fact the 'debt' will only grow worse on the present course.  Once a country is 100%+ in interest versus GDP, that's the end game.  It's done, cannot pay with something you don't have.  There is no wiggle room.  The Piggy bank is empty and they are offering to sell the broken bank.

    Thu, 10/03/2013 - 11:02 | 4018390 viahj
    viahj's picture

    wouldn't it be when interest on the debt exceeds tax receipts, somewhere around 60-70% GDP?

    Thu, 10/03/2013 - 10:44 | 4018265 Seasmoke
    Seasmoke's picture

    Well they should have thought about that in 2008 when they lied about what TARP would be used for. Moral hazard is a bitch. And the 5 year paper over the fraud is coming to an end.

    Remember one thing. It was the people on the top floors of the WTC that didn't make it out. Most of us are already on the lower floors. Let Lloyd and Jamie decide if they should jump, the rest of us cant be hurt much more anyway. As Silverstein said... Pull it.

    Thu, 10/03/2013 - 10:42 | 4018266 thelibcentury
    thelibcentury's picture

    Again, saying the US has never defaulted on its obligations is laughably false. 1971 was a full default.

    Thu, 10/03/2013 - 10:43 | 4018267 New American Re...
    New American Revolution's picture

    Lies.

    Thu, 10/03/2013 - 10:46 | 4018287 SgtShaftoe
    SgtShaftoe's picture

    I have a not so sneaking suspicion that the government shutdown and the debt ceiling are all an orchestrated kabuki coordinated set up for some sort of event.  A dollar devaluation coming?  Currency wars about to get serious?

    Thu, 10/03/2013 - 10:47 | 4018290 F. Bastiat
    F. Bastiat's picture

    Jack Lew is a rather typical Bolshie.

    Thu, 10/03/2013 - 11:46 | 4018604 Debt Slave
    Debt Slave's picture

    So many bolshevik rats, so few real men.

    Thu, 10/03/2013 - 10:48 | 4018297 mantrid
    mantrid's picture

    if this time default could last a generation

    then how long is gonna last it next time? two generations??

    Thu, 10/03/2013 - 10:53 | 4018310 JR
    JR's picture

    Each passing decade the Leviathan government becomes massively and tyrannically larger.
    That’s why - from media to bankers to favorite Fed customers - the alarm bells are being sounded. Goldman Sachs with its NY Fed, Treasury, EU and Bank of England controls, actually speaks as the U.S. Treasury.

    And to listen is to follow the tyrants to the end of a great nation.

    This government slowdown is a slowdown on the Leviathan public sector; it hardly effects the real economy, the private sector as anyone with eyes can see.

    JacK Lew and the Treasury are not the American economy. They are the tyrants; they are Orwell’s pigs walking on hind legs pretending to be the farmers in the farm house.

    At some point, Americans, through their elected representatives, have got to say stop to the Leviathan. If it’s not over Obamacare or the debt limit then, pray, when will it ever be?

    Each new banker insider has he own creative ways of complying with the owners of the Federal Reserve System. With Lew’s experience, he appears to present a seamless transition from the insider corruption.

    It’s critical that the international bankers not be faced with any kind of independence on honesty or the entire apple cart would topple. Only a trusted confederate can be appointed.

    Glenn Greenwald had the facts in 2012 on Lew: here is a quote:

    “In 2010, Lew became head of the Office of Management and Budget when Peter Orszag left and then, a couple months later, accepted a multi-million dollar position as a high-level Citigroup official. Lew has spent many years in various government positions, but he has his own substantial ties to Citigroup. Here is what Lew was doing in 2008 at the time the financial crisis exploded, as detailed by an excellent Huffington Post report from last year: [Lew] oversaw a Citigroup unit that profited off the housing collapse and financial crisis by investing in a hedge fund king who correctly predicted the eventual subprime meltdown and now finds himself involved in the center of the U.S. government’s fraud case against Goldman Sachs.  . . .

    “Lew (like so many key Obama officials) also participated in the orgy of Wall Street de-regulation that took place in the 1990s when he served as Clinton’s OMB head; after leaving Citigroup to join the Obama administration, he unsurprisingly said in response to questioning from Sen. Bernie Sanders that he does not believe deregulation contributed to the financial crisis.”

    Thu, 10/03/2013 - 10:53 | 4018312 ebworthen
    ebworthen's picture

    As if the FED hasn't already screwed us all over with $85 Billion PER MONTH and the Treasury with 0.05% backdoor money to juice the banks and Wall Street.

    And CONgress bailing out the banks, insurers, and bankrupt corporations for their malfeasance.

    Moral and social contract broken Mr. Lew; U.S. citizens have already been defaulted on.

    Go fuck yourself.

    Thu, 10/03/2013 - 11:08 | 4018436 Money 4 Nothing
    Money 4 Nothing's picture

    Lack Jew said were broke and we have no moar monies for nothing

     

     

     

     

     

     

    Thu, 10/03/2013 - 10:57 | 4018353 Inthemix96
    Inthemix96's picture

    Could be worse my American friends.

    You lot could have the thieving, arse-clenchingly stupid, thieving swines we have as your overlords, sorry 'Public Servants' that we have here masquerading around in their own self-importance, while screwing the rest of the population into the ground, all the while making sure the 'Square Mile' is kept sweet.

    Oh, wait.....

    Scratch that.  They are all the same then??  Fucking in-bred, thieving, never done a days work in their entire lives, cunts.

    Around the world bitchez, they be fucking all of us, all of the time, while telling you its raining, and pissing down your back just to prove it.

    Evil, twisted, hateful fucking cunts, to a man.

    Thu, 10/03/2013 - 10:56 | 4018357 22winmag
    22winmag's picture

    No treasure in the treasury. What a joke...

    Thu, 10/03/2013 - 10:56 | 4018358 Mad Muppet
    Mad Muppet's picture

    Guess it's time to go down into the bunker and make some popcorn. Sit back and watch it all fall apart.

    Thu, 10/03/2013 - 10:59 | 4018371 eddiebe
    eddiebe's picture

    If there is a crisis imminent, the banksters will want to pre-empt it. Is this the trigger?

    Thu, 10/03/2013 - 11:04 | 4018408 Randoom Thought
    Randoom Thought's picture

    Probably better to fix in now and blame it on Obomber instead of waiting. It can only get worse.

    Thu, 10/03/2013 - 11:11 | 4018447 Vooter
    Vooter's picture

    Hmmm...it looks like SOMEONE doesn't know how to balance their checkbook! LOL...

    Thu, 10/03/2013 - 11:12 | 4018457 Watching in Bal...
    Watching in Baltimore's picture

    We heard all of this when the TBTF's were in trouble they scared everyone with that same talk that everything will collapse if congress dose not act and what we got was the US tax payer stepped in and bailed out all their rich butts so they could continue robbing and stealing from those same tax payers.  I say let the cards fall where they will.  I think our so called leaders and the TBTF have already saddled the next two generations with debt.

    Thu, 10/03/2013 - 11:21 | 4018506 I Write Code
    I Write Code's picture

    Mr. Trillion Dollar Deficits and Continuing Resolutions and *this* time it's different, yo.

    Well that's how it works mister, here you are spending money you don't have and then bang you ain't doing that no mo.

    Thu, 10/03/2013 - 11:21 | 4018515 lindaamick
    lindaamick's picture

    Since I believe that Repub/Dem fights are pure theater (witness NSA positions, Defense positions, and Financial positions...they are virtually the same in both parties), I am beginning to think maybe this shutdown show is to distract from the fact that US citizens can not access the Healthcare Marketplace.

    In Georgia, which is using the Federal Marketplace, the site has been unavailable since the startup on Tuesday. 

    After clicking on LOGIN, a message appears warning that traffic is heavy.  After several minutes a new message appears that the system is down.

    Maybe after a "big fight" in congress and then "negotiation", there will be postponement of Healthcare Marketplace startup.

     

     

    Thu, 10/03/2013 - 12:10 | 4018706 The Alarmist
    The Alarmist's picture

    It's only a default if they stop paying interest on the public debt outstanding and repaying principle on the public debt maturing ... the rest of the "obligations" are bullshit.  Congress + President are sovereign ... if they (Congress and POTUS) wanted to, they could pass a statute tomorrow to make the SS/Medicare nightmare go away.  

    Thu, 10/03/2013 - 12:07 | 4018708 Atomizer
    Atomizer's picture

    Here is an idea, why not seize all personal assets from the Senate & Congress to bail-in emergency relief by avoiding default.

    Your signatures are on the documents which have led us into this mess [Contract agreement]. Don’t like that idea huh? Ever heard of this word, Fiduciary responsibility? It is widely enforced in the serfdom realm. You’re no different muppets.

    Thu, 10/03/2013 - 12:13 | 4018721 The Alarmist
    The Alarmist's picture

    Don't forget POTUS and the Cabinet.  BHO is worth a few million, which keeps things running for a few minutes or so.  John F. Kerry is worth a billion, which is good for an hour or two.

    Thu, 10/03/2013 - 12:10 | 4018711 ableman28
    ableman28's picture

    Okay folks, dumping my stocks as the equity market tanks.  Thought about buying Treasuries to stay safe but now realize that I might not get paid.  Was gonna go liquid but thinking the dollar could be worthless soon.  It finally happened, placed my first large PM order.  Hiyo SILVER away!

    Thu, 10/03/2013 - 12:15 | 4018741 Atomizer
    Atomizer's picture

    Rome collapsed on treasury extraction.

    Thu, 10/03/2013 - 12:21 | 4018784 polo007
    polo007's picture

    http://www.safehaven.com/article/31295/ready-for-qe-five-its-already-here

    Ready for QE Five? - It's Already Here

    The sad truth is that the primary function of the Fed and Treasury has now become the sustention and expansion of disastrous asset bubbles. In fact, while Mr. Bernanke officially acknowledges QEs one through three, the truth is he has embarked on QE V. What's QE five all about? Putting a lid on U.S. Treasury yields.

    The reason for this is our anemic economic recovery has been predicated upon artificially boosting consumption, which is 70% of US GDP. That consumption is, in turn, predicated on borrowing; because we don't have any real income growth on the part of the consumer. The borrowing has been predicated on government's ability to build upon the asset bubbles in stocks, bonds and real estate. And the creator of all these bubbles is our central bank, which is the progenitor of this deadly-addictive cycle. The Fed does this by providing ultra-low interest rates and through the massive monetization of government debt.

    To prove we have learned nothing from the previous Great Recession; we now have a situation where the FHA will most likely need a $1 billion bailout for the first time in its 79 year history. But why do taxpayers have to bail out the FHA, which provides insurance to lenders such as banks and other financial institutions? The reason is because our government has once again compelled lenders to make loans with next to nothing for a down payment, to individuals who can not afford to purchase a home--doesn't this all sound chillingly familiar? Therefore, we have subjected ourselves to yet another bubble in housing, where home prices are once again rising at double-digit rates and marginal home owners are just a few points higher in interest rates from foreclosure.

    It's not just house prices which are in back in a bubble. Stock prices are also growing at double-digit annual rates. These double-digit gains in stocks are taking place in an environment of little earnings and revenue growth. Meanwhile, Treasury bonds offer only half of their average yields going back over 40 years. So, for the first time in our lives we have three bubbles that exist together -- equities, bonds and real estate. But the real catastrophe this time is that these bubbles will become exponentially larger than previous episodes. Therefore, when they burst the devastation will be many times worse.

    Thu, 10/03/2013 - 12:48 | 4018963 world_debt_slave
    world_debt_slave's picture

    and, uh, they didn't have anything to do with this, jus task King Hank w/ Jester GW

    Thu, 10/03/2013 - 12:46 | 4018965 NoWayJose
    NoWayJose's picture

    If the Republicans don't stand firm on Obamacare and spending NOW, the country as we know it won't make it to the next generation.

    Thu, 10/03/2013 - 14:02 | 4019296 moonstears
    moonstears's picture

    Sir, I posit that BOTH sides of our fantastic "leadership" WANT Obamatax, uh...I mean Obamacare. The rest is smoke and mirrors. JMO

    Thu, 10/03/2013 - 13:08 | 4019076 DOT
    DOT's picture

    And this puke of a report includes repayment of over collected taxes as a "program".

    What if no one over pays? Will the gobmint have more cash on hand?

    Thu, 10/03/2013 - 13:42 | 4019218 TweedleDeeDooDah
    TweedleDeeDooDah's picture

    Default.

     

    If not now, WHEN?

    Thu, 10/03/2013 - 13:49 | 4019246 Bagbalm
    Bagbalm's picture

    The government is Constitutionally obligated to service all public debt before anything else according to the 14th amendment. They have enough income to do so. If they default it will be because they want to and it will be a violation of the highest law of the land.

    Thu, 10/03/2013 - 14:16 | 4019353 NO SOLICITING
    NO SOLICITING's picture

    I wish I could buy our politicians for what they are worth and sell them for what they think they are worth!

    I would buy with Fiat and Sell for PMs.

    There is your 100 Percenter trade.

    Thu, 10/03/2013 - 15:24 | 4019730 ThisTimeIsDifferent
    ThisTimeIsDifferent's picture

    In 1857 after the failure of Ohio Life Insurance and Trust Company, the financial panic quickly spread overseas and caused the first international economic crisis.

    By 1859, the financial crisis had burned out and economy had begun to stabilize. 

    Just two years!

    http://en.wikipedia.org/wiki/Panic_of_1857

     

    Thu, 10/03/2013 - 16:20 | 4020096 Stuck on Zero
    Stuck on Zero's picture

    Default now and avoid the rush in a few years.

     

    Thu, 10/03/2013 - 17:18 | 4020364 Dewey Cheatum Howe
    Dewey Cheatum Howe's picture

    BTW the biggest check on all this is a little law called the Antideficiency ACT of 1870 which determines what Federal employees are prohibited from authorizing expenditures on including the President.

    http://www.gao.gov/legal/lawresources/antideficiencybackground.html

    Antideficiency Act Background

    The Antideficiency Act prohibits federal employees from

    •  
      • making or authorizing an expenditure from, or creating or authorizing an obligation under, any appropriation or fund in excess of the amount available in the appropriation or fund unless authorized by law. 31 U.S.C. § 1341(a)(1)(A).
      • involving the government in any obligation to pay money before funds have been appropriated for that purpose, unless otherwise allowed by law. 31 U.S.C. § 1341(a)(1)(B).
      • accepting voluntary services for the United States, or employing personal services not authorized by law, except in cases of emergency involving the safety of human life or the protection of property. 31 U.S.C. § 1342.
      • making obligations or expenditures in excess of an apportionment or reapportionment, or in excess of the amount permitted by agency regulations. 31 U.S.C. § 1517(a).

    Federal employees who violate the Antideficiency Act are subject to two types of sanctions: administrative and penal. Employees may be subject to appropriate administrative discipline including, when circumstances warrant, suspension from duty without pay or removal from office. In addition, employees may also be subject to fines, imprisonment, or both.

    ...

     

    Here is an interesting take on this I've heard put forth concerning Obama and his meeting with Dimon (JPM), Blankenfein (GS) and Moynihan (BOA). The meeting was a feeling out to establish a line of credit in the case that debt ceiling isn't raised to pay for government spending. This is highly illegal because of this very law and one of the reasons the Treasury is running on such a low staffing level as to not violate it in any manner.

    The other more likely reason is simply this, they hit the debt ceiling limit and then the Treasury can't issue new bonds while it plays out, what happens next is cold turkey taper on QE and the stock market craters once the liquidity dries up since the FED can issue money without the Treasury first issuing the bonds. The debt ceiling being breached and not extended essentially puts the brakes on the money printing press if not extended. That would explain all the jawboning by the Treasury, Obama and the everyone else on Wall Street concerning the debt ceiling.

     

    Do NOT follow this link or you will be banned from the site!