Skip to comments.U.S. Treasury, Fed planning for possible default -source
Posted on 10/09/2013 4:05:44 PM PDT by mdittmar
* Contingencies eyed if Congress fails to raise debt limit
* Treasury, Fed officials focused on default options
* Top Republican says Congress should see plans
* Officials stress failure to raise debt limit disastrous
By Tim Reid and Jonathan Spicer
WASHINGTON/NEW YORK, Oct 9 (Reuters) - U.S. Treasury and Federal Reserve officials worried about the growing possibility of a catastrophic default are crafting contingency plans to mitigate the economic fallout if Congress fails to extend America's borrowing authority, a source familiar with the plans said.
With just eight days before the Treasury Department says the U.S. will hit its $16.7 trillion borrowing limit, lawmakers and the White House remain far from a deal to extend it. Officials are examining what options might be available to calm financial markets if a U.S. debt payment is missed.
(Excerpt) Read more at reuters.com ...
The U.S. Treasury makes roughly 80 million payments a month.
There are two statements that show how good the Federal Government is at managing our money.
This is a load of bull. If the debt limit is reached, there is plenty of cash received available to make interest payments and NOT default.
The only reason a default happens is because dear leader CHOOSES to default.
So do you think a debt default is something that could actually happen and literally single-handedly cause a new Great Depression?
If Obama chooses to default and if said default does cause a Great Depression by itself, I just hope that the conservatives and their leaders can show to the public than Obama is wholly responsible for it.
Wow, Rooters, good attempt at scare-mongering!!
Obozo re raising the debt limit in 2006:
“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the US Government cannot pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. Increasing America’s debt weakens us domestically and internationally. Leadership means that, ‘the buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”
~ Senator Barack H. Obama, March 2006
Moody’s offers different view on debt limit
Not so, Moodys says in the memo dated Oct. 7.
We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact, the memo says. The debt limit restricts government expenditures to the amount of its incoming revenues; it does not prohibit the government from servicing its debt. There is no direct connection between the debt limit (actually the exhaustion of the Treasurys extraordinary measures to raise funds) and a default.
Seems to me that a good place to start would be to cancel the six trillion in spending that Obama forced upon us...
“So do you think a debt default is something that could actually happen and literally single-handedly cause a new Great Depression?”
Dear leader, the gop-e, and the corporate welfare queens would sure like you to think that’ll happen. Reality though is that revenues greatly exceed interest payments so there is no need to default. The question is whether dear leader CHOOSES to default.
That’s a gamble I’d take in a New York second: dear leader isn’t going to stiff his cronies in the Bankster Industrial Complex.
Upshot: failure to increase the debt ceiling equals instant balanced budget.
Call me cynical, but are they meeting to mitigate or to magnify the effect of a default?
so why are there are no hearings (or maybe there are I am unaware) to bring Treasury before Congress, grill them and ask them why they think we would default? Expose the scam and instruct Treasury on how to not default.
The only thing I was worried about is that Obama could threaten to choose to default and then try and make the American public believe the House GOP forced his hand in defaulting. I was worried because I was thinking that, given the GOP’s inability to articulate the facts to the public, something that conservative greats like Thomas Sowell have made note of an naseum, they would not be able to deal with the backlash and so would find themselves caving on Obamacare in the end anyway. And so the Republicans would not be prepared and equipped to sway the American public to their side if Obama threatened to actively choose to default.
However, it seems like at the very least Obama has outside handlers, if you will, that are not gonna let him do that. Which does help in keeping my hopes up through all of this.
Let’s say that GayMuzzie had some very plausible need to declare Martial Law:
How many here doubt that he would do it?
Or asking another way:
Let’s say there was widespread fear and disorder —is it plausible that Obama is the type that would NOT declare Martial Law..?
“A domestic security force just as big, just as well-funded as the US military..”
“If Obama chooses to default and if said default does cause a Great Depression by itself, I just hope that the conservatives and their leaders can show to the public than Obama is wholly responsible for it.”
Dear leader could CHOOSE to default. However, I’d be willing to bet that he WON’T. What dear leader hates about the debt ceiling is that if it’s crossed is not default, it’s that we get an instant balanced budget. He gets to decide who gets paid, but ultimately the amount of expenditures would have to drop dramatically.
What we have here FRiends is the debt ceiling briar patch, and we’re b’rer rabbit.
No,won’t happen,money was real then,this is all monopoly money and everyone knows it,they’ll all play along for a while longer.
“...to FUNDAMENTALLY TRANSFORM the American way of life as we know it...”
“Never let a crisis go to waste —it gives you the opportunity to do things you normally could not get done..”
“so why are there are no hearings (or maybe there are I am unaware) to bring Treasury before Congress, grill them and ask them why they think we would default?”
EXACTLY. So why do you think the HoR is not calling hearings?
Dat’s why de’ bought all dem dar bullets earlier dis year, donyacha’ know.
If there is a default it will be because Lew has already over spent the debt ceiling by so much they can not possibly keep up the spending unless the ceiling is increased to cover their tracks.
They have overdrawn the debt ceiling and are in bad trouble
In banking terms, they have overdrawn the line so bad it ill not be renewed when it becomes known
Boy, ain’t that the truth. We definitely deserve a whole lot more than what this asshat has dealt us. So with O’bomba, now that he has the power, it’s pass the buck - into the hands of al Qaeda and illegal aliens, This was planned from the start - the destruction of our great nation from within and straight from the top. I hope this limp wrist commie pinko bastard rots in hell.
“The only thing I was worried about is that Obama could threaten to choose to default and then try and make the American public believe the House GOP forced his hand in defaulting.”
OK. Let’s assume that happens. And I DON’T think it will. Dear leader defaults on the debt. We’re effectively in debt repudiation mode. At that point, the ability of the Federal government to borrow more is severely circumscribed regardless if it wants to. Net effect: lots of economic pain and an instant balanced budget.
Net effect if the debt ceiling crossed and dear leader chooses NOT to default: some economic pain due to an instant balanced budget.
Sole authority to borrow money rests with Congress. All bills for raising revenue (including credit) must originate in the House.
Refusing to raise the limit won’t BREAK the system - it will REVEAL the truth of matters, that the system has already been broken.
In order to keep feeding the banksters and the tax thieves, Obama will have to mount a coup. Good.
Bring it on. If not now, when?
The President has no such authority. There is, in fact, no such thing as "martial law" in the United States.
Fear Mongering 101
Come on....the only way we default is if they don’t pay the interest on the debt. There is plenty in revenues to pay this....
Ugh....I loathe the Democrats and their “the sky is gonna fall”...”emergency”....mantra in order to push their Socialist...”collective” agenda.
One cannot rule out incompetence on the part of the president.
Sponsor: Sen Reid, Harry [NV] (introduced 10/8/2013)
See,harry already introduced a Bill to save us,the House will extract a few concessions then all will be fine,for a little while;)
Considering dear leader’s passion for inflicting pain, I’d bet he would, not only for spite but to drive home his agenda for destruction.
The Sekester has flushed out the scare mongers. The shutdown has exposed the frauds. The debt limit will shine light the criminals. Let the sunshine and fresh air melt Dingty and his ‘Rat plantation.
Martial law on the national level may be declared by Congress or the president. Under Article I, Section 8, Clause 15, of the Constitution, Congress has the power “[t]o provide for calling forth the Militia to execute the Laws of the Union, suppress insurrections and repel Invasions.” Article II, Section 2, Clause 1, of the Constitution declares that “[t]he President shall be Commander in Chief of the Army and Navy of the United States, and of the Militia of the several States, when called into the actual Service of the United States.” Neither constitutional provision includes a direct reference to martial law. However, the Supreme Court has interpreted both to allow the declaration of martial law by the president or Congress.
It is pretty simple.
“There is no direct connection between the debt limit (actually the exhaustion of the Treasurys extraordinary measures to raise funds) and a default.”
And how come I have not heard any Republican leaders expressing that fact.
See how it works;)
I heard Hussein’s press conference today and now he is saying seniors risk not getting their social security checks. That is a new threat thrown in today. Make our seniors worry they will die without that money to buy food and medicine.
When the Rats are imploding. Keep quiet.
Sekester ... Nothing happened
Shutdown ... Nothing happened except Rat petulance
Debt limit ... Nothing will happen except a Rat smack down
“EXACTLY. So why do you think the HoR is not calling hearings?”
Because they are cowards and scared the dems would make THEM look bad for having hearings on a shutdown that dems would say was caused by Republicans etc Hearings WOULD work but only if conservatives were running them
If you go out and read Moody’s you just might be asking some even more pointed questions...like if current income is making a payment obligations and lower the actual debt principal like Moody’s infers...
Then the debt ceiling should be lowered and not raised, because we don’t need it raised at all.
So in other words.....they are saying....We need to raise the debt ceiling so that we can borrow the money we need just to pay the interest on what we have already borrowed. That doesn’t sound like a recipe for disaster at all.
People may find out that they don’t need the Federal Government,they can do fine on their own, that is what is scaring the hell out of the dems and RINOS!
All this does is expose all the sticky fingers, parasites, frauds, and dead wood that we are all paying for. FReepers knew it was bad but this is gluttony. They don’t need anymore money, credit, or time. Every taxpaying American should get a windfall profit check from the gov’t. CommieCare is DOA.
Default can’t happen here. Conservative financial experts have showed us the magic money tree! It doesn’t need no stinking production or exports!
[”Conservative.” Heh. That’s funny. In the politics and business of 2013, there are no conservatives.]
S&P is more conservative (honest) than Moody’s, BTW.
Texas Monthly hosted a Q&A with Dallas Fed Chair Richard Fisher at SMU on Monday. I attended. One of the questions he was asked was how can we default if we take in 200BN/month and debt servicing is in the range of 20BN/month.
This is a paraphrase of his answer: maybe we can pay the debt servicing and maybe not, but it doesn’t matter; the result will be the same - an unthinkable black swan disaster.
October is one of the lowest receipt months for the government and at the same time, about 1/3rd of annual expenses are funded during that month. There’s no guarantee that there actually would be money there to pay.
EVEN if there were cash on hand to pay for debt servicing, there is certainly not the money to pay debt servicing, SS, Medicare and the Military, not to mention everything after that. No matter how you prioritize and no matter whether you agree with it or not, great swaths of the economy are propped by the government and the inability to raise the debt limit will cause a serious of cascade failures that will rattle the markets, create worldwide stress fractures, and send interest rates through the roof.
It would be an unthinkable black swan disaster. His words.
Whether we fail to pay the debt directly in October, or have to refinance future debt in a post-black swan interest rate environment, the result is the same: both paths lead to default.
Don’t shoot the messenger.
Do you understand how much 1 trillion is?
we need to borrow more money from a privately owned "bank" that creates money that does not exist out of thin air so that we can pay the privately owned bank interest on the imaginary debt on the imaginary money it just pulled out of its imaginary arse.
but we as individual citizens need to give them 50% of everything we earn to borrow this imaginary money so they can spend it on frivolous political extortion exercises to shift power
I get it
You earned your money. Your labor is real. Fiat currency has always been fiat currency. We abolished slavery a while back. The Democrat Plantation needs more slaves.
1. The debt has to be bigger than they admit to.
2. Revenues are less than they admit to.
There are people in jail for violating accounting rules. Math doesn't lie.
Thanks for the numbers.
More scare tactics from our own government. Do they not care about how the markets may react to their propaganda?
I think we will default because it is Obama’s objective.
the Proverb in the Bible "the borrower is slave to the lender" is a universal truth, we are being sold into slavery to the rest of the world by politicians .
Perhaps this was the reason the founders installed the second amendment, we are supposed to rise up and turn this back around, like Jesus turning over the moneychangers tables at the temple