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What If We Go Past The "X" Date?

Tyler Durden's picture




 

What if the Treasury were to go over the X date (date beyond which the Treasury cannot honor all its payments) without the debt ceiling being raised? As BofAML notes, the Treasury estimates the X date to be October 17, though they believe that the Treasury may have enough cash and incoming tax receipts to last a few more days. In either case, the date is not too far out. Market concerns over possible postponed payment have been rising as indicated by the performance of October and November bills. What are the options of for the Treasury?

Via BofAML,

In our view, most options are unviable – the most fair and sensible option would be to implement a delayed payment regime where no payments would be made until they could all be made on a day-by-day basis.

1. 14th Amendment will not be used

The White House has ruled out raising the debt ceiling using the 14th amendment (which states that the validity of the public debt of the United States cannot be questioned). National Economic Council Director Gene Sperling and Presidential Adviser Dan Pfeiffer have both rejected using this option this week. Also, earlier this year, the White House press secretary emphasized that the Administration did not believe that the 14th Amendment gives the president the power to ignore the debt ceiling.

2. Trillion dollar coins will not be minted

We do not believe the Treasury will even consider minting coins (which are not subject to debt ceiling) and asking the Fed to purchase them to temporarily get over the debt ceiling. The legality of this is questionable, and it would further deepen the distrust between the two political parties. It would also risk being the first step down a slippery slope of debt monetization. We believe it would be extremely unlikely the Fed would agree to accept platinum coins in return for making Treasury’s payments, as it would politicize the Fed and put its independence at risk.

3. Asset sales are unlikely

During the 2011 debt ceiling debate, Treasury officials rejected the option of selling gold reserves as it would undercut confidence in the US and destabilize the world financial system. Treasury officials determined that a “fire sale” of other assets like TARP assets would not maximize value for taxpayer and could be detrimental. These asset sales would also buy very little time. Since then, the Treasury has completely wound down its MBS portfolio and TARP assets now total less than $25bn.

4. Prioritization of payments: Treasury will be unwilling

Another option in case of a breach of the ceiling would be the prioritization of debt service payments by the Treasury. The idea of issuing scrips or IOUs to claimants (other than those who hold US Treasury debt) would be another manifestation of the same idea, wherein debt payments are deemed superior. However, this may be impossible from an operational standpoint. The Treasury makes 80-100 million payments per month, and modifying systems to pick and choose would be an operational nightmare. The administration would be accused of picking winners and losers and become the center of intense media and public scrutiny. In 2011 when a bill to prioritize debt payments was introduced, the proponents were accused of paying China instead of federal workers. In 2011, Treasury officials reportedly determined that there was no fair or sensible way to pick and choose among the many bills that are due every day.

5. Delayed payment regime most likely

We believe the most plausible option for the Treasury could be implementing a delayed payment regime. In such a scenario, the Treasury would wait until it has enough cash to pay off an entire day’s obligations and then make those payments on a day-to-day basis. For example, if the Treasury did not have enough cash to pay all of its obligations on November 1, 2013, it would wait until enough receipts flow in (perhaps not until November 3 or 4) and then make good on all payments for the 1st. Given that the US has a sizable monthly deficit, the delay would worsen by the day, but at least the Treasury would not have to pick winners and losers.

 

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Fri, 10/04/2013 - 18:37 | 4024093 Magnum
Magnum's picture

Isn't any prediction of what happens when EBT cards run dry, racist?

Fri, 10/04/2013 - 18:47 | 4024113 Millivanilli
Millivanilli's picture

Da puppets ain't gonna EVER do anything that requires backbone.   

 

They need this now that the pinprick strikes on Syria are off the table, for now...

Fri, 10/04/2013 - 18:52 | 4024130 wintermute
wintermute's picture

I know! They just need the government to run a balanced budget, making all payments out of tax receipts! Have they thought of that yet? Yeah, yeah, it's super-radical. But hell, worth a go. No more shutdown situations and debt limit fights ever. Someone should tell Congress this idea.

Fri, 10/04/2013 - 18:56 | 4024140 involuntarilybirthed
involuntarilybirthed's picture

Balanced?  So they could raise our taxes to match their spending habits and call it balanced?  Balanced at what tax level? 

Fri, 10/04/2013 - 19:07 | 4024173 bania
bania's picture

We'd hit the "Y" date?

Fri, 10/04/2013 - 21:15 | 4024571 Tom Servo
Tom Servo's picture

Forgot one option: bank holiday, and subsequent theft of the 401k/ira honeypot via a "bail in" using a modified Cyprus template. 

 

Because, Obama.

Fri, 10/04/2013 - 23:16 | 4024864 hidingfromhelis
hidingfromhelis's picture

We passed the "Why?" date a long time ago!

Sat, 10/05/2013 - 10:40 | 4025462 malikai
malikai's picture

100%

Fri, 10/04/2013 - 18:57 | 4024142 max2205
max2205's picture

Take your PMs...yes

Borrow your 401ks pensions...yes

 

Devalue the dollar...yes

 

Raise taxes...yes

 

Tank the market....yes

 

Cut soc sec and snap...yes

 

Cut federal spending.....OF COURSE NOT

Fri, 10/04/2013 - 22:09 | 4024702 Moustache Rides
Moustache Rides's picture

This post made me smile.  : )

 

+1000

Fri, 10/04/2013 - 18:50 | 4024124 90's Child
90's Child's picture

If the EBT runs dry for once it will be them "axe'n where da money be"

Fri, 10/04/2013 - 18:51 | 4024128 JohnG
JohnG's picture

 

 

Yes.  By default.

Which is racist.

GOTO Yes.

 

 

*shakes head, takes shot....*

Fri, 10/04/2013 - 18:38 | 4024094 Rainman
Rainman's picture

Bullsheet....I got their "X " date right here next to the Cntrl + ALT+ Print

Fri, 10/04/2013 - 18:43 | 4024107 involuntarilybirthed
involuntarilybirthed's picture

ZH news for the weekend?    What will it be?  Recommendations? 

Fri, 10/04/2013 - 18:54 | 4024132 TeamDepends
TeamDepends's picture

Don't make any long-term plans.

Fri, 10/04/2013 - 23:50 | 4024744 HardlyZero
HardlyZero's picture

Stay short stocks, and only long precious metals.

Next weekend even moreso.

In two weeks duck and cover.

Fri, 10/04/2013 - 18:44 | 4024108 Sid James
Sid James's picture

If it looks like a banana republic, smells like a banana republic and acts like a banana republic, it probably is a banana republic.

Fri, 10/04/2013 - 19:57 | 4024321 NidStyles
NidStyles's picture

All we are missing is the swarmy guy with the funny accent and cigars...

Fri, 10/04/2013 - 20:58 | 4024525 alphamentalist
alphamentalist's picture

clinton?

Sat, 10/05/2013 - 01:38 | 4025083 GMadScientist
GMadScientist's picture

Kissinger.

Fri, 10/04/2013 - 21:53 | 4024664 radiotom
radiotom's picture

Obama is from Kenya and he smokes.

Fri, 10/04/2013 - 18:51 | 4024111 FieldingMellish
FieldingMellish's picture

They will be unwilling to sell the gold reserves because there aren't any.

Fri, 10/04/2013 - 18:49 | 4024120 SilverIsMoney
SilverIsMoney's picture

Burn you tyranical whore, BURN!

Fri, 10/04/2013 - 22:37 | 4024758 HardlyZero
HardlyZero's picture

7th sign or 9th gate...they all lead to Whore of Babylon.

After the X date ?  Reset to zero year ?

Fri, 10/04/2013 - 18:49 | 4024123 andrewp111
andrewp111's picture

I don't believe this:

We believe it would be extremely unlikely the Fed would agree to accept platinum coins in return for making Treasury’s payments, as it would politicize the Fed and put its independence at risk.

The Fed has no choice but to accept US legal tender. The clear language of the statute allows the Administration to mint proof platimun coins of any face value. If the President really wanted to do this, the Fed would have to take the coin. Otherwise, the Fed officials would get a bayonet up their asses and a Marine General would be put in command of the Fed. This won't happen because the President doesn't want to do it, not because it can't be done. Obama's excuse a few years ago that the Fed would refuse the coin is nothing more than an excuse. Obama won't do this because the bankers don't want debt monetization, and Obama listens to the TBTF bankers. Period.

Sat, 10/05/2013 - 09:16 | 4025355 yatikto
yatikto's picture

Obama won't do it because it would be the end of the dollar as a global currency.   That would be jumping the shark x1000.

 

Fri, 10/04/2013 - 18:52 | 4024127 RobD
RobD's picture

"The administration would be accused of picking winners and losers"

 

Like that has ever stopped them lol.

Fri, 10/04/2013 - 18:55 | 4024133 involuntarilybirthed
involuntarilybirthed's picture

Not sure this is on subject or not:

Bernanke says that Washington needs to get the fiscal stuff under control.  The House repubs are trying to get moar cuts to do so.  Senate/WH want spending as usual, probably moar?  What actually is Bernanke suggesting?  If it is spending then lets cut spending. That will piss off those with their hands out and please those saying hands off.  Where do we start?

Fri, 10/04/2013 - 19:14 | 4024200 Dadburnitpa
Dadburnitpa's picture

"Bernanke says that Washington needs to get the fiscal stuff under control."

Just as the dealer says that the junkie needs to get his habit under control.

Fri, 10/04/2013 - 22:40 | 4024775 HardlyZero
HardlyZero's picture

...and Ben is the dealer ?   This is starting to look more like a Dead concert or ZombieLand every day.

Fri, 10/04/2013 - 18:56 | 4024141 FieldingMellish
FieldingMellish's picture

Delayed payment is default. Period.

Fri, 10/04/2013 - 19:03 | 4024156 The Shootist
The Shootist's picture

Super Mario Draghi would have us believe Greece never defaulted.

Fri, 10/04/2013 - 19:43 | 4024282 Nick Jihad
Nick Jihad's picture

Which just goes to show that "default" does in fact span a spectrum, from delays, to haircuts, to bail-ins, to outright repudiation.

Fri, 10/04/2013 - 19:48 | 4024294 FieldingMellish
FieldingMellish's picture

Indeed. Anything that disrupts the timeliness or the amount of the payment is a default.

Fri, 10/04/2013 - 19:04 | 4024162 GrinandBearit
GrinandBearit's picture

Good... we'll have real zombies walking around by Halloween.

Fri, 10/04/2013 - 19:09 | 4024165 NoDebt
NoDebt's picture

Ah, the old 'California Solution'.  Send out IOUs until you get to next year's budget.  Very crafty.

And dead wrong.  Obama WILL do this under "emergency powers" despite his assurances to the contrary. 

Second choice is "prioritization of payments".  And if you think you've seen funky government accounting before, strap in, the twists and turns to this solution would be so crazy you might just head down to the DC mall and light yourself on fire.

Fri, 10/04/2013 - 19:06 | 4024170 JR
JR's picture

“Obamacare will cost taxpayers an estimated $2.6 trillion over the next 10 years.”

So the bankers will be giving us a daily warning on the exteme danger of not giving them their green light for debt. But everyday those warnings arrive, Americans are seeing the sticker shock of the strongest step this country has ever taken into banker-backed socialism, ObamaCare. 

Obamacare Facebook Erupts with Citizen Sticker Shock | BREITBART | Oct 4, 2013

On Thursday, the government's official Obamacare Facebook page was riddled with people expressing sticker shock over the government's high cost premiums after struggling for hours to wade through the technical failures vexing Obamacare exchanges all across the country.  

"I am so disappointed," wrote one woman. "These prices are outrageous and there are huge deductibles. No one can afford this!" The comment received 169 "likes." 

"There is NO WAY I can afford it," said one commenter after using the Kaiser Subsidy Calculator. "Heck right now I couldn't afford an extra 10$ [sic] a month...and oh apparently I make to [sic] much at 8.55/hour to get subsidies."

Another person shared a link found on the federal government's main Obamacare page listing premium estimates for small business employers:

The information is not very complete as I don't see anything about deductible or other detailed info, but it does given an actual price as to the "Premium." It is VERY SCARY!! For example, my insurance plan right now for my spouse and I costs $545 a month with 100% coverage after my $2500 deductible. We are both 32 years old. When I looked at this site for 80% coverage it says it will be $954.78 a month!!!! So compare my old Plan: 100% coverage for $545 a month To New Plan: 80% Coverage for $945 a month. This is only only an estimate but it is VERY Scary for me to see this kind of increase in rates and reduction in benefits!

A single mother of two said she is in school and working full-time while living "75% below the poverty level." She said she was shocked to learn she did not qualify for a healthcare subsidy. "Are you F'ing kidding me????" she wrote on the government's Obamacare Facebook page. "Where the HELL am I supposed to get $3,000 more a year to pay for this 'bronze' health insurance plan!?!??? And I DO NOT EVEN WANT INSURANCE to begin with!! This is frightening," she wrote.

Amid scores of comments expressing frustration with technical failures, one woman said she is "just amazed you could even get to the point of seeing pricing" and that she had been trying to access the system for three days to no avail. 

Obamacare sticker shock will not affect millions of low-income Americans; a New York Times analysis published on Wednesday found that Obamacare "will leave out two-thirds of the poor blacks and single mothers and more than half of the low-wage workers who do not have insurance, the very kinds of people that the program was intended to help."

Obamacare will cost taxpayers an estimated $2.6 trillion over the next 10 years.

http://www.breitbart.com/Big-Government/2013/10/03/Obamacare-Facebook-Erupts-With-Citizen-Sticker-Shock

Fri, 10/04/2013 - 20:07 | 4024355 NidStyles
NidStyles's picture

My bet is on it costing even more than that.

Fri, 10/04/2013 - 20:29 | 4024432 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Here is another little tidit how the poor are getting fucked by Obamacare and in general concerning health insurance.

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/17/obamas-last-c...

In states that refuse the Medicaid expansion, residents whose incomes are above the poverty line ($11,490 for an individual) will still have access to tax credits for purchasing private insurance on the exchanges. Those below the poverty line, however, will not receive help obtaining coverage. That lessens the law’s reach, and creates an unexpected messaging problem: How does the White House tell certain citizens that they earn too little to qualify for any help?

“How do you explain this in a way that seems fair and reasonable, that the higher-income people get help but you don’t?” said Mike Perry, a founding partner at polling firm PerryUndem Research. “Advocates on the ground are really struggling with that group. They want to have a positive message but don’t know what to say.”

Here is another current story on this via CNN.

http://www.cnn.com/2013/10/03/health/obamacare-medicaid-gap-gupta/

Let me try to explain: In a state that has chosen not to expand Medicaid, Yvonne is in the staggering position of now making too much money to qualify for Medicaid, and too little to obtain subsidies through the Affordable Care Act.

This wasn't how it was supposed to go down for Yvonne and others like her all over the country. When you imagine the people likely to benefit the most from the Affordable Care Act, you probably think of someone just like her.

By obtaining a real job with enough income, Yvonne has disqualified herself from her state's Medicaid program. But in order to qualify for subsidies in South Carolina, she needs to get above the poverty line, and she is not quite there. Yvonne and an estimated 7 million others now find themselves in a coverage gap.

The tax subsidies available through the health exchanges were intended to make private insurance coverage affordable for those between the poverty line and four times as much -- people who now shoulder the responsibility, by law, of purchasing their own coverage.

...

Obamacare nazi says no soup for you!

Fri, 10/04/2013 - 20:36 | 4024460 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

http://thenewsdoctors.com/obamacare-crystallization-of-the-pr-presidency/

Some of the comments blasting NSYNC for shilling Obamacare on twitter are good. I think an interesting blog could be done here highlighting just who is shilling this damn thing on social media like famous people and such.

Fri, 10/04/2013 - 23:23 | 4024878 JFKFC
JFKFC's picture

ObamaCare will cost $2.6 trillion over the next ten years? Why doesn't the Tea Party bitch about QE4EVA costing $1 trillion per year? That's 4x as much as the ACA.
Just sayin.

Sat, 10/05/2013 - 10:18 | 4025428 JFKFC
JFKFC's picture

Negged because I pointed out that Bernanke is outspending ObamaCare at a rate of 4:1? Not that I'm a Barry cheerleader, but I am a fan of common sense. As Tyler pointed out last week, if we go past X Date, the credit card that Uncle Sam lent to Barry gets declined while Benny's Amex Black keeps on spending on our behalf. How do you blame "the nigger," as many of you so eloquently call him, for that spending?
I mean seriously. $3 trillion worth of the debt you blame on the Kenyan Muslim Socialist was Benny's helicoptering of subsidies on Wall St. Like I said, I'm a fan of common sense. If you're gonna hate on spending, the least you can do is prioritize that hate based on facts instead of sounding like a bunch of intellectually challenged Tea Bagging fucktards.

Y'all might wanna get used to all of the niggers, spics, chinks, jews, muslims & fags aboard this little pale blue dot of a spaceship hurtling through space, because all of them, as well as whitey, have no fucking idea what's going on.... and the last time I checked, we're all in this shit together with nowhere else to go.

Sat, 10/05/2013 - 11:07 | 4025488 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

You don't raise the debt ceiling Benny can't create credit it is as simple as that. Bottom line Benny can't print uncontrollably to infinity for any whim. He is limited by how much in dollar value of bonds the Treasury issues at each auction. If they can't issue new bonds Benny can't print and QE gets a 100% taper. I suspect though they have contingency plan in place to syphon liquidity out of the shadow system and into the stock market to keep it levitated if this is the case assuming they don't raise the debt ceiling for an extended period of time. If the liquidity tide pulls back we are going to find out just how naked everyone is and I don't think they will allow it without turning some of that leveraged fake money in derivatives in the shadow system into liquid fake money to pump up the stock market if they can do it. As long as it stays strictly on the balance sheets of the primary dealer's balance sheets the FED can syphon it back out later on replacing it with liquid 'real' money once the new bond issuing continues.

Sat, 10/05/2013 - 10:20 | 4025430 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Because they are not Libertarians. I've said it before and I'll say it again the Tea Party (the one that is in Congress) is nothing more than Libertarian alcoholics anonymous for RINOs still the 12 step program. Democrats need their own Marxist 12 step recovery program also. Most will fall off the bandwagon but those that make it through will turn full Libertarian at the end. The other key distinction is they still believe in the R/D divide when there really isn't one. You are either in the club or you ain't that R/D stuff is more about difference how they approach it not that the approach in general is wrong.

Sat, 10/05/2013 - 10:37 | 4025454 moneybots
moneybots's picture

"ObamaCare will cost $2.6 trillion over the next ten years? Why doesn't the Tea Party bitch about QE4EVA costing $1 trillion per year? That's 4x as much as the ACA."

 

Where is the QE coming from?  The FED buying government deficits.

Fri, 10/04/2013 - 19:08 | 4024171 buzzsaw99
buzzsaw99's picture

Owebomba feels he can start wars without congress but paying the bills on time would be unconstitutional? Ho Lee Fuk Wi Tu Lo

Fri, 10/04/2013 - 19:11 | 4024187 Tenshin Headache
Tenshin Headache's picture

They will reconsider the legal aspects, and Obama will claim authority to raise the debt ceiling under the 14th Amendment. The question is, does he wait until the downgrade to establish sufficient authority?

Sat, 10/05/2013 - 00:08 | 4024963 HardlyZero
HardlyZero's picture

President Lincoln tried fiat Greenbacks.  It only worked (well) for a few years.  That was back when USA had physical Gold and Silver in the vaults.  No more.   And real-estate is bust so it will be hard to find capital to base/back any new fiat currency.

No exit.

Fri, 10/04/2013 - 19:15 | 4024202 AllWorkedUp
AllWorkedUp's picture

If we go past "X" date doesn't gold go to $300 and the world collapse?

Seriously though, I believe a false flag is coming soon, real soon. Maybe a grid shutdown to be blamed on Iran. Maybe a pocket nuke.

Finish us already.

Fri, 10/04/2013 - 19:15 | 4024204 eddiebe
eddiebe's picture

"Never let a good crisis go to waste." I wonder what they have planned for us? I can't help but think that this whole hoopla about Obama care and debt-ceilings is not what this is about. 

Fri, 10/04/2013 - 19:51 | 4024304 Nick Jihad
Nick Jihad's picture

I get the sense, that people on both sides have decided that we have reached a fork in the road.

Fri, 10/04/2013 - 23:57 | 4024937 HardlyZero
HardlyZero's picture

Brass and lead.   And if ACA death panels get involved with security, then probably Soylent Green.

Fri, 10/04/2013 - 19:15 | 4024207 Son of Loki
Son of Loki's picture

Stick it to the wealthy bondholders first, like China. They can afford to lose a few trillion.

Fri, 10/04/2013 - 19:30 | 4024256 A Lunatic
A Lunatic's picture

There is a 100% certainty that the debt ceiling will be raised.

Fri, 10/04/2013 - 23:59 | 4024943 HardlyZero
HardlyZero's picture

Yes.  Too bad.

Fri, 10/04/2013 - 19:54 | 4024308 y3maxx
y3maxx's picture

You gonna see all states secede leaving Bernanke and Obozo left holding the bag. Let those two pay all the foreign debt owed to foreign countries, the IRS and to their partners in crime, Al Ciada (CIA).

Fri, 10/04/2013 - 19:57 | 4024327 Hannibal
Hannibal's picture

Treasury can simply ignore the Fed-Banksters-COngress "dept limit" stalemate, and just send out US Treasury checks (backed by nothing but thin air as usual) to pay for whatever Govt ows to whomever.  Simple!

 

Fri, 10/04/2013 - 20:03 | 4024343 Hannibal
Hannibal's picture

Trash the ObamaCare fraud, immediately and unconditionally include everyone into MediCare A & B for a flat $150 p.month per person to fund itSimple!

Fri, 10/04/2013 - 20:14 | 4024388 involuntarilybirthed
involuntarilybirthed's picture

The gov would just give 60% of them the $150 (for votes), transportation, free phone to call in appointments, EBT cards and free child care while their at it.  The $150 would not cover 1/4 of the actual cost, prescriptions would kill us.  Not so Simple at a cost to the rest of us.

Sat, 10/05/2013 - 10:54 | 4025473 moneybots
moneybots's picture

"Trash the ObamaCare fraud, immediately and unconditionally include everyone into MediCare A & B for a flat $150 p.month per person to fund itSimple!"

 

Or we can take the government fraud out of it all together and end the anti-trust exemptions that the medical/pharmaceutical/insurance industries have which allow price fixing and subject them to the free market, as well as get rid of all the government mandates, which drive up costs.

Fri, 10/04/2013 - 20:08 | 4024354 Hannibal
Hannibal's picture

Bet "the X date" won't affect the war mongering machine.

Fri, 10/04/2013 - 20:08 | 4024358 One And Only
One And Only's picture

"What if the Treasury were to go over the X date (date beyond which the Treasury cannot honor all its payments) without the debt ceiling being raised?"

This is like paying off a credit card with a credit card. It's a retarded way to live life and we should stop.

The debt ceiling should not be raised. This is the only issue in which I agree with Obama.

Fri, 10/04/2013 - 20:21 | 4024407 Dixie Frank
Dixie Frank's picture

OOOOOOOOhhh the drama!  Let me guess... CONgress will work up until the last minute to work out a compromis budget that is draconian and horrible!!  It will increase the debt limit to $19 trillion and will increase federal spending by 4% vs the NEEDED 7% increase.  Oh God, the babies will all starve and the oceans will rise, oh God!!

 

 

Sat, 10/05/2013 - 01:21 | 4025008 HardlyZero
HardlyZero's picture

They are caught in a box.  

Since they recently lost control of the interest rates (especially the 10 year), that is why the conservatives and TEA party has decided to stand their ground now.

The box means that any further increase in the debt ceiling will result in higher interest rates as more fiat currency will be printed and cause more uncertainty on the debts.  The interest rates are out of control.

There is NO EXIT, except to deal with it NOW, which means take some massive hits on the interest rates now and possibly default.

Better now than later...later it will be 10x worse with another 10x debt piled on top.

Now out of interest rate control.

No exit.

It will be much better in 2 weeks to selectively default or delay or re-structure, than to wait 2 years and lose complete control of interest rates (going to 20% or 30% ?) and default on entire debt and ruin entire economy.

Fri, 10/04/2013 - 20:22 | 4024409 arkel
arkel's picture

In point number 2, they write:

It would also risk being the first step down a slippery slope of debt monetization.

First step? Have these guys heard of a little thing called QE?

Sat, 10/05/2013 - 01:54 | 4024951 HardlyZero
HardlyZero's picture

Yes.  But look at the sponsor company.  They are all deep in the debt pit with their protectors, blackmailers, and held hostage all at the same time.   What else they going to say ?

Since 1971 its been monetized, really since early 1960's.   But they were running out of Gold in 1971.  Now they don't have Germany's Gold....they probably suppress it just in case they need to print some fiat and buy some cheaper Gold to 'stabilize' the markets and give back to their 'owner'.

Its like (physical) possession is 90% of the law...if you don't hold it you don't own it.

Sat, 10/05/2013 - 19:18 | 4026637 saulysw
saulysw's picture

Arkel, I agree with you entirely. That was some very nice double-speak, implying with certainty that no debt monetization has been done yet. I call Bullshit on that too.

Fri, 10/04/2013 - 20:32 | 4024443 logicalman
logicalman's picture

You may get a hint at how I try to assess the world from my name.

Having watched the political/financial madness for many years, what stands out to me is that logic has been thrown out of the window and the 'rules' by which the financial edifice is held together are changed in an ad hoc manner to continue the subterfuge. I have no idea how this continues, or for how long it will, but it has to stop at some point.

For me, the sooner, the better.

 

Sat, 10/05/2013 - 08:00 | 4025298 Proofreder
Proofreder's picture

People do NOT make decisions based on logic and reason.  People make decisions based on emotion, although many will claim that reason and facts underlie their emotional decision - this is classic self-deception.

Read Goebbels about the Big Lie ... 

Hitler's master of propaganda prompted the government controlled press to:

... never allow the public to cool off; never admit a fault or wrong; never concede that there may be some good in your enemy; never leave room for alternatives; never accept blame; concentrate on one enemy at a time and blame him for everything that goes wrong; people will believe a big lie sooner than a little one; and if you repeat it frequently enough people will sooner or later believe it.

Faux news comes to mind.

If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.

Sat, 10/05/2013 - 08:15 | 4025310 logicalman
logicalman's picture

MOST People do NOT make decisions based on logic and reason.

FIFY

Sat, 10/05/2013 - 10:55 | 4025467 moneybots
moneybots's picture

people will believe a big lie sooner than a little one; and if you repeat it frequently enough people will sooner or later believe it.

Faux news comes to mind."

 

I was watching Chris Hayes, All In and he was repeating the lie "the republican shutdown."  It is a partial government shutdown.

Fri, 10/04/2013 - 22:16 | 4024692 Moustache Rides
Moustache Rides's picture

"(14th amendment: which states that the validity of the public debt of the United States cannot be questioned)." 

 

I'm sorry.. wtf does that even mean?  Jesus Christ, no wonder we are so far up shit creek.

Sat, 10/05/2013 - 00:35 | 4025002 HardlyZero
HardlyZero's picture

It just means all debts are real and can not be written off somehow.  What this means going forward is the existing debt will pound the markets severly when they are not fully paid, or paid on time, or written off, or devalued, or defaulted.   The debts must be paid and are real debts, and can not be ignored.

Its just holding the government to the debts.  Without that statement then 100 years ago we would have been a Banana Republic.

Sat, 10/05/2013 - 00:59 | 4025029 Moustache Rides
Moustache Rides's picture

ahh.. thanks for the info : )

Fri, 10/04/2013 - 22:22 | 4024728 Smiley
Smiley's picture

I may be a jaded cynic but I just don't care anymore.  I'm so sick of hearing how much I must sacrifice in order to help others and keep the nation strong.  This isn't the country I grew to love and cherish, and if I have to chose between a total collapse or non stop chiseling away at my freedom and wealth...BURN BABY BURN!  You can only combat an infestation for so long before you realize your best course of action is just to burn the damn thing down, pour a fresh foundation, and build a new home.

Sat, 10/05/2013 - 03:14 | 4025164 etresoi
etresoi's picture

GET OUT WHILE YOU CAN !

Fri, 10/04/2013 - 22:23 | 4024732 lakecity55
lakecity55's picture

remember, the sheik has vowed to 'kill the dollar.'

that is why the perfect  storm of shutdown, ceiling and deathcare are all converging!

boom!!

Fri, 10/04/2013 - 22:25 | 4024739 BAINES03
BAINES03's picture

You would think someone writing a detailed article about the debt ceiling would know what the word "regime" means...

Sat, 10/05/2013 - 01:41 | 4025085 GMadScientist
GMadScientist's picture

"My fellow Americans, I assure you that this situation is under control; now, what we're gonna do...is...get the treasury...to issue a kind of...platinum putter and then I, personally, will 'make it rain'."

http://www.youtube.com/watch?v=04LXZ64EbWY

Sat, 10/05/2013 - 10:08 | 4025416 yatikto
yatikto's picture

Another notch to the shadow economy.   No matter how draconian the system is, people adapt and learn how to go around it.

I don't buy the spending argument anymore.  Where were they when federal police was established?  Where were they when federal building were retrofitted with bulletproof glass? What industry isn't subsidized by the government?  So to cry wolf now??

Yet this whole debate is by new blood in Republican party. However, they will be overrun when time is "X", that is certain.  They have their moment in the sun, but in time big boys will show up and life will go on in "new normal".

 

 

 

Sat, 10/05/2013 - 10:21 | 4025434 moneybots
moneybots's picture

"What if the Treasury were to go over the X date (date beyond which the Treasury cannot honor all its payments)"

 

Promises.

Sat, 10/05/2013 - 10:40 | 4025459 moneybots
moneybots's picture

"The White House has ruled out raising the debt ceiling using the 14th amendment (which states that the validity of the public debt of the United States cannot be questioned)."

 

The validity of existing debt cannot be questioned.  That has nothing to do with creating NEW DEBT.  The White House won't be using the 14th amendment, because it can't.

Sat, 10/05/2013 - 11:20 | 4025515 moneybots
moneybots's picture

"For example, if the Treasury did not have enough cash to pay all of its obligations on November 1, 2013, it would wait until enough receipts flow in (perhaps not until November 3 or 4) and then make good on all payments for the 1st. Given that the US has a sizable monthly deficit, the delay would worsen by the day, but at least the Treasury would not have to pick winners and losers."

 

Debt and Promises

The two are not the same.  The government is obliged to pay its debts, not its promises.  The 17 trillion in debt must be serviced.

The debt ceiling does not cause default, which is the propaganda game being played by the politicians.  The tax receipts are enough for the government to pay its debt obligations.  Tax receipts are not enough to pay all its promises, however.

To default, the government would have to deliberately choose to put  promises ahead of debt obligations.

 

 

Sat, 10/05/2013 - 11:57 | 4025566 arrogantchef
arrogantchef's picture

This is all so F ing Bullshit. Estimates - Income 250B per month less interest on the debt of 30B less 70B social security and medicare = 150B left over each month for "essential services" prioritize and F ing figure it out. All this talk of "defaulting on the debt" and not being able to "pay our bills" just pisses me off. But the sheeple will fall for it, including John BONER. He will cave and cry like a girl on TV. Mark my words

 

Sat, 10/05/2013 - 12:38 | 4025686 Overdrawn
Overdrawn's picture

If US goes beyond the X date, Obama is going to close the world.  

So far,  King Putt has apparently decided to close 1100 square miles of ocean. 

Apparently he furloughed the fish... Because people are no longer allowed to fish there... He's actually deployed paramilitary agents there to enforce his NO FISHING zone... 

Seemingly, we cannot afford to do nothing, but we *can* afford to create a new paramilitary fleet of rangers to enforce the no fishing edict... 

No word on why he didn't shut down the gulf and with it, the tropical storm... 

Apparently he want's the storm to still be 'open for business'... 

 

http://www.liveleak.com/view?i=4d0_1380986788

Just before the weekend, the National Park Serviceinformed charter boat captains in Florida that the Florida Bay was "closed" due to the shutdown. Until government funding is restored, the fishing boats are prohibited from taking anglers into 1,100 square-miles of open ocean. Fishing is also prohibited at Biscayne National Park during the shutdown. 

 

http://www.breitbart.com/Big-Government/2013/10/05/Feds-Try-to-Close-the-OCEAN-Because-of-Shutdown

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