China and Japan Warn US On Default (Government Waste $11 Million Grant Helped 2 People)

The standoff between President Obama, Senate Majority Harry Reid and House Speaker John Boehner continues unabated.

China said “the clock is ticking” and urged politicians in Washington to “ensure the safety of the Chinese investments.” On Tuesday, Japan’s finance minister Taro Aso called on “the United States to resolve its debt ceiling stand-off without delay”.

Two senior White House economic officials said on Monday that President Barack Obama would not back down from his refusal to negotiate with Republicans in Congress, increasing worries that the debt ceiling limit would be reached on October 17 without an agreement, raising the threat of a default.

Then in a Financial Times editorial, they blame Republicans for a potential default.

Let’s see. President Obama demands the unconditional surrender of House Republicans, despite their meager offers of cutting the medical devices tax and removing crony waivers for friends of the Administration and businesses. This despite the staggering wasteful spending in Washington DC (see Senator Tom Coburn’s government waste page).

My favorite waste of the day is “Part of an $11 million grant intended to provide business attire to 400 low-income job-seekers helped only two people.”

The list of government waste is endless, yet I don’t see ending waste from either party in the standoff. Since China and Japan are both massive wasters of government funds (e.g., China ghost cities and Japan paying people to sit in an office doing nothing), they probably aren’t interested in the waste argument.

Of course, the Federal Reserve is the big owner of Treasury debt followed by China and Japan. Followed by the Caribbean, OPEC and Brazil.

The Fed’s balance sheet is still growing rapidly, so I am sure that they are concerned as well.

Over the past week, investors have been seeking shelter in the short-end of the Treasury curve raising the 1 month Treasury by 7.1 basis points.

I think the Republicans would take the repeal of the medical device tax and capitulate. Will Obama throw them a bone to end the stalemate and avoid default?

The standoff between President Obama, Senate Majority Harry Reid and House Speaker John Boehner continues unabated.

Financial Times has an interesting piece of the debt ceiling and budget standoff in Washington DC. According to the article, China said “the clock is ticking” and urged politicians in Washington to “ensure the safety of the Chinese investments.” On Tuesday, Japan’s finance minister Taro Aso called on “the United States to resolve its debt ceiling stand-off without delay”.

Then in a Financial Times editorial, they blame Republicans for a potential default.

My favorite waste of the day is “Part of an $11 million grant intended to provide business attire to 400 low-income job-seekers helped only two people.”

Of course, the Federal Reserve is the big owner of Treasury debt followed by China and Japan. Followed by the Caribbean, OPEC and Brazil.

The Fed’s balance sheet is still growing rapidly, so I am sure that they are concerned as well.

And the US has a lot of debt maturing this year and in 2013.

Over the past week, investors have been seeking shelter in the short-end of the Treasury curve raising the 1 month Treasury by 7.1 basis points.

I think the Republicans would take the repeal of the medical device tax and capitulate. Will Obama throw them a bone to end the stalemate and avoid default?

The tack of so many articles like this is that if the debt ceiling is not raised, there will be a default on the debt. In this case, we have both China and Japan claiming that will be the problem. If we personalize the situation, the real problem should be evident.

A homeowner with a mortgage is obligated to pay interest and a small portion of the principal each month. The homeowner that spends more than he earns may borrow money to make up the difference because he refuses to cut his cable service. When he hits his credit card debt limit and can’t borrow more, he must either pay the mortgage or the cable bill. He can’t have it all, so either he chooses to have a home or entertainment.

Defunding ObamaCare would reduce spending as would eliminating so many of the government gifts to political loyalists that pass as grants. We see stories of government waste and fraud every day that are really payoffs to friends. Either we cut that out or put the country deeper in hock.

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