The US Lurches Towards Default… Again

Phoenix Capital Research's picture

The US is once again at its Debt Limit.


Despite all of the talk of cutting the deficit and the like, the political class continues to throw taxpayer money around at a pace that is bankrupting the nation.


To whit: the US is set to hits its debt ceiling AGAIN on March 16 2015.


It’s remarkable that the first we hear of this is exactly one week before the date. You would think that the US hitting its debt limit would actually matter to the mainstream media and financial pundits since we’re already sporting a Debt to GDP ratio of over 100%.


Yep, we’re at the level associated with being bankrupt. Check out the vertical leap in debt issuance since the recession ended in 2009.



True, the US also increased its debt load substantially after the recession in the early ‘80s. However, at that time we’re talking about an increase in Debt to GDP from 30% to 50% that took place over a decade. We’ve exceeded this 20% growth in Debt to GDP in half the time this go round.


Moreover, with a Debt to GDP ratio anywhere north of 80%, you’re at the point at which you’re going to be issuing new debt to pay back old debt.


This is precisely what happened in October and November of last year: the Federal Government issued $1 trillion in new debt… because it didn’t have the money to pay back old debt that was coming due. That’s just $1 trillion.


This brings us once again to the biggest problem in the financial system today: the bond bubble.


Globally the bond bubble is north of $100 trillion. And this $100 trillion has been used as collateral for a derivative market that is well north of $555 TRILLION.


In the current financial system, debt is money. And at the top of the debt pyramid are sovereign bonds: US Treasuries, German Bunds, Japanese Government Bonds, etc. These are the senior most assets used as collateral for interbank loans and derivative trades. THEY ARE THE CRÈME DE LA CRÈME of our current financial system.


The coming crisis will not be another 2008. It will be something much much worse. The 2008 Crisis was caused by an implosion of the Credit Default Swap market. At that time, the entire CDS market was roughly $50-60 trillion in size.


The interest rate based derivatives market is TEN TIMES larger in size: north of $555 trillion.


If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.


You can pick up a FREE copy at:


Best Regards

Phoenix Capital Research



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Billy Shears's picture

So you're saying, "Nobody here gets out alive, NOBODY!"?

VWAndy's picture

My bills are paid up? Oh you mean the kool-aid drinkin deadbeats. Got it.

sosoome's picture

"Debt ceiling" is just an imaginary line.

Pols move it around at will.

Herodotus's picture

Obama should veto any bill increasing the debt limit.  This is the best way for him to screw over Netanyahu.

Bossman1967's picture

You know all us hard working business would take is couple million to be happy those greedy fuckers hlding trillions

orangegeek's picture

good job barry, good job yellen


fucking assholes

odatruf's picture

For fun, I plugged our $18 trillion public debt into a loan calculator to see what the nut might be if we were to make principal plus interest payments.

If we set the term for 50 years, which seems reasonable, and 0.01% for interest, which is absurdly impossible unless you can set your own terms, we'd have to make 600 monthly payments of $30.075 billion. We'd then have a final payment of $1.72. I'll kick in that $1.72, which I know you all will appreciate.

Keep in mind that not only do we need to come up with this payment every month, but we also need to come up with revenue / spending cuts to otherwise balance the budget and not keep digging.

The path is clear: I am voting for Kodos!

Md4's picture

Good thoughts, but it's way too late.

With social commitments and rapidly changing demographics, in the face of serious, and also irreversible decline, it's already over. It really is just a question of when.

There might've been a window to head this off about 40 years ago, as the eighties began, but the country wouldn't hear of it at the time. The seventies were but a taste of the later struggles, just as 2008 is a mere warm up for what's in today's future.

Americans won't handle austerity well either.

Our problem is, and has been, a major income crisis. Everything we've dealt with since the Great Recession began has been symptomatic of that madness known as western outsourcing. Indeed, the crash itself was brought on by the easy credit lunacy of the last decade, that attempted to artificially generate badly needed demand on disappearing incomes. We know now how badly this worked out, too.

When that anesthetic wore off, we found ourselves facing the collapse of the global financial system because of it! The therapy only made matters worse, still facing the original problem, and one helluva lot more debt as well.

No matter what the racketeers say, we are not getting past this.

Now, fewer Americans are going to replace large numbers of older Americans, neither of whom have the wherewithal to fund themselves--or a bloated government--without still more unsustainable debt. The older crowd lost a lot in the last crash, and aren't able to recoup large losses on zero interest rates, and the young folks can't even really get going with the advancing income crisis soon entering its 7th year.

Japan is an example of where we're going, IF the collapse isn't triggered sooner by any of a number of things beyond the domestic demographics.

It took generations to build an American standard of living that involved key advances and persons changing the world, one invention at a time. You cannot easily create an Edison or a Graham Bell on a whim. The TV and the transistor and the microwave oven have long since been invented. The whole world can, and does, produce this stuff--for next to nothing. Mere iterations (like the iWatch released today) of essentially old stuff (if smaller and more potent) is still...old stuff.

And we're not going to make those things here anymore anyway.


SweetDoug's picture




I’m calling it!:


The day after they boost the debt limit, they add another 2-3 hunerd billion like they did the last time this happened.



optionwriter's picture

Could be 5 months,5 years or 50 years from now maybe never. The banks control all.

Give it up Tyler's.


sTls7's picture

Just print more money, who cares about default... it's all paper, smoke and mirrors.

Sandmann's picture

When will the IMF do its thing in DC ? 

Mike Honcho's picture

But I thought the Republicans..... nevermind, can't even muster up a joke watching this train wreck

GCT's picture

Deficits do not matter quoting a a Republican!  Neither side of the isle cares about any of us as long as they can do insider trading at the capitol and become millionaires.  Give the pleebs their cake and grain.  They will cheer these assholes as long as they get their handouts until it ends!

Crocodile's picture

Only a moron would believe that voting for the lessor of two evils (Republican / Democrat) would produce anything less than more evil.  I no longer will vote in national elections for that reason


No; I saw right through Obama from the beginning and wrote in "Speed Racer" in 2004.

dexter_morgan's picture

That whole red/blue team false dichotomy is REALLY hard to accept for most people. Hell I didn't really understand both are the same until Clinton/Bush/Obama and saw that no policies really changed between any of those administrations. Sure, republicans are for 'smaller' government so they say, but it never SHRINKS under them. Plus, the perpetual war thing was an eye opener.

Obama ran as 'not Bush' and he has been nothing but like Bush only at a more accelerated pace when it come to military, finances, etc,

Which party is going to:

- defund the NSA/CIA/FBI?

- repeal the patriot act

- end the FED and throw the fucking bankster in jail?

- stop illegal immigration?

- quit droning people?

- quit getting us involved in wars all over the fucking world?

- get rid of EPA/DOE/DOEd/etc all the useless department of..........?

- get us back to sound money and living wage jobs?

- get us out of most foreign entanglements?

- repeal Obamacare?

- repeal the 16th amendment?

- enforce the first 10 amendments?

Which party?..........yeah, thought so



dexter_morgan's picture

I predict debt limit will soon be legislated away, or just ignored like most laws. In a global fiat-create-money-out-of-nothing world, does the debt really matter anymore?

Crocodile's picture

I thought it was already; isn't that "QE & ZIRP to Infinity" is?  Oh, you mean in the "official" mistake.

GuusjA's picture
GuusjA (not verified) dexter_morgan Mar 9, 2015 2:02 PM

Ministers Jeanine Hennis (KlaverenTeam), Bert Koenders (RuitenTeam) en Commandant der Strijdkrachten, generaal Tom Middendorp (SchoppenTeam) hebben in de noordelijke stad Mazar-e-Sharif in Afghanistan contact gehad met een @CP_sME. Het was de eerste keer dat de ministers zich ter plekke lieten bijpraten over de inzichten die de Nederlanders hebben gekregen door het toepassen van het AANDACHT=LIEFDE-paradigma.


De euro zakt steeds verder weg ten opzichte van de dollar. Vooral de onenigheid over de timing van de wereldwijde paradigma-wisseling is hier debet aan.


Obama: “We hebben vaak gezien dat netwerk WitteGejT de aandacht probeert af te leiden van het eigen handelen door 'de economie' de schuld te geven over de gebeurtenissen in de wereld”.

shovelhead's picture

Glad to see you're getting your fahrvenugen on.

pupton's picture

Sky still falling "Phoenix Capital Research" ???


TheRideNeverEnds's picture

As would be their trading capital if they had actually been trading on their market assumptions.


Unless that is they see the collapsing fundamentals for what they are; super bullish for stocks and bonds.  

Crocodile's picture

TheRideNeverEnds - "For the wages (something earned by work) of sin is death, but the free gift of God is eternal life in Christ Jesus our Lord." 

The ride does not end; correct!!

Who was that masked man's picture

If jesus had been long on wood and nails, he'd have made a bundle.

willwork4food's picture

You are going to hell for that. Still upvoted you.

new game's picture

if the sky falls, i will have the blues...

d4pwnage's picture

I really wish people would stop talking about GDP as if it's a meaningful figure rather than something concocted by gov-funded economists to "prove" that gov policies are "working".

Crocodile's picture

GDP must go on!!  "GovernmentDependentPropaganda"

That_shits_broken's picture

Get to work Mr. Yellen!

madcows's picture

yeah, but it's a W's fault.

Who was that masked man's picture

Not any more.  Now it's Putin's fault.

ebworthen's picture

Wow, the ramp to over 100% debt-to-GDP started when we went off the Gold standard and started off-shoring production and career employment; imagine that.

Paveway IV's picture

"...The US Lurches Towards Default… Again..."

The first think that popped into my mind was Lurch. I was mildly disappointed that there was no Kerry 'Lurch' picture accompanying this article.