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Treasury Secretary Geithner says in letter to Congress US may go into default
www.examiner.com ^ | January 11th, 2011 | Kenneth Schortgen Jr

Posted on 01/11/2011 9:41:29 PM PST by Angelus

It is one thing for Sarah Palin, media pundits, or economic analysts to speak on the potential insolvency of the US government, but when the US Treasury Secretary says this in a formal letter to Congress, Americans had better take note.

Secretary Timothy Geithner on January 6th sent a formal letter to Congress specifying that if they do not agree to raise the debt ceiling when it is reached sometime in March, the US will (and the word used is WILL) default on its debt.

Lew Rockwell.com posted an article yesterday on this action taken by the Treasury Secretary, and pointed out that in fact, the government at this point in time is bankrupt, and simply trying to postpone the inevitable.

A few months back, Laurence Kotlikoff wrote that "The U.S. is bankrupt." Using the government’s numbers properly labeled, he found that the U.S. fiscal gap, which is the difference between the present value of projected spending and revenues, is $202 trillion. An IMF study of the U.S. finances found that it would have to double taxes to close its fiscal gap. This is an impossibility. It would destroy the struggling economy. Geithner’s statement confirms those of other analysts outside of the U.S. government.

(Excerpt) Read more at examiner.com ...


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: ceiling; debt; debtceiling; default
All I can say is that the past century of liberals expanding government and attempting to create a socialist utopia have caused this to happen.

The entitlement programs/benefit programs - Social Security retirement (SS), Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI), Medicare, Medicaid, Food Stamps, Subsidized Housing (Section 8 Housing), Temporary Assistance to Needy Families (TANF), Farm subsidies, that new federal program that gives free cell phones to welfare recipients etc… have mostly contributed to this disaster (a $14 Trillion disaster) but because these programs are sacrosanct it was impossible to get any type of reforms made. And not only did the Democrats halt reform efforts their goal has been to create even more entitlements i.e. Obamacare.

1 posted on 01/11/2011 9:41:34 PM PST by Angelus
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To: Angelus

It already is, this just props the problem up a little longer.


2 posted on 01/11/2011 9:45:01 PM PST by Secret Agent Man (I'd like to tell you, but then I'd have to kill you.)
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To: Angelus

Tax the gross assets of all ‘rats.


3 posted on 01/11/2011 9:45:06 PM PST by Paladin2
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To: Angelus

he’s jumping the gun that little pos


4 posted on 01/11/2011 9:45:06 PM PST by MissDairyGoodnessVT ( JC Webster's fav words: "the boiling pits of sewage" roflmao)
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To: Angelus

How do we “default” on our debts by raising the amount we are willing to go into debt??

One would think we’d be further from default by not taking on as much debt and cutting spending.


5 posted on 01/11/2011 9:45:18 PM PST by KoRn (Department of Homeland Security, Certified - "Right Wing Extremist")
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To: Angelus

The financial logistics of raising the debt ceiling to avoid defaults must be balanced with real and immediate cut backs in Federal spending starting with Obamacare.


6 posted on 01/11/2011 9:45:36 PM PST by Gene Eric (Your Hope has been redistributed. Here's your Change.)
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To: Angelus

Don’t forget massive pension/retirement payments agreed to by local, state and federal officials to government workers.


7 posted on 01/11/2011 9:46:02 PM PST by Secret Agent Man (I'd like to tell you, but then I'd have to kill you.)
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To: Angelus

The US obviously must go on a New Jersey diet x 10. But, if we actively use our resources (drill, Baby, drill) and get inexpensive energy back into the equation, America will prosper yet again.

Do all the right things and we have more than a chance; we will prevail!


8 posted on 01/11/2011 9:47:41 PM PST by One Name
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To: Angelus
Here we go. The admin trying to stampede the Republican House into more emergency financial management to stave off "disaster". The whole point is to either force the Republicans to cave, thus angering their base, or to do nothing so that they can blame the disaster (that they intend to precipitate anyway) on the Republicans.

I hope the Republican leadership is smart enough to see what's going on here and really take it to the administration.
9 posted on 01/11/2011 9:48:38 PM PST by Antoninus (Fair warning: If Romney's the GOP nominee in 2012, I'm looking for a new party.)
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To: Angelus
“This letter by Geithner, and the coming battle within Congress over raising the debt ceiling, will not end well no matter the outcome for the American people. If the debt ceiling is raised, then the Fed will print more money, and price inflation will climb much higher. If cap and trade is not passed sometime soon, then other forms of taxation will be imposed to pay the interest on the rising debt the government owes. We have been warned, in both a subtle and not so subtle way by the Treasury Secretary. The government is within months of insolvency, and the complete destruction of the dollar and our economic system is tied now to a single debate about to rage in Congress.”

o.k.... now, what can we do? he says, “we have been warned”. Yeah, we got the message after we went to the town hall meetings and were thrown out.... we got the message when we wrote and called our congress people, to no avail.... we got the message, alright.... WE DON'T MATTER!! the current obamanation regime is beating all of us down and stomping us into the ground.

so, when an article ends with “you have been warned”, it kind of makes me mad! Because, we have tried, and tried, and tried...... and been abused and beaten back.

the US is bankrupt. I saw the obamantion say those exact words during the last year on a tv interview with a snicker... yeah. he thinks it's funny... well, it is anything but funny to us who love this country...to those of us who didn't just spend weeks in Hawaii on someone elses money....

what we can do is to pray that God will once again place His hand over this country and save us from ourselves.

10 posted on 01/11/2011 9:50:16 PM PST by bareford101 (. All Muslims lie to infidels to confuse them)
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To: Secret Agent Man

Not only is U.S. government debt spinning wildly toward a breaking point, but many U.S. states (such as California, Illinois, New York...) are in such horrific financial condition that they are beginning to resemble banana republics.


11 posted on 01/11/2011 9:51:22 PM PST by george76 (Ward Churchill : Fake Indian, Fake Scholarship, and Fake Art)
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To: One Name
Do all the right things and we have more than a chance; we will prevail!

1. Cut taxes.

2. Cut spending.

3. Deregulate.

4. Drill, baby, drill.

Not a chance, though, that this administration will do any of these things. They will do the exact opposite.

12 posted on 01/11/2011 9:52:04 PM PST by okie01 (THE MAINSTREAM MEDIA: Ignorance on Parade)
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To: Secret Agent Man

I’m sure we can count on a mad scurry on the part of our ‘leaders’ to cut everything, find accounting errors, waste, and cut PBS, NPR, NEA etc. loose immediately, right?

If they really want to honor Gabrielle Gifford, they will surely pass the salary cut she was proposing for congress, right?


13 posted on 01/11/2011 9:52:19 PM PST by Let's Roll (Save the world's best healthcare - DEFUND Obamacare!)
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To: george76

I think everyone needs to be on the lookout for a rather large false flag op in the near future. Because of this debt issue. The plates are falling.

I am not kidding. It’s the only thing that will get the pressure off Obama, the dems, etc. Focusing anger and blame on something else. Talking war-level type false flag op.


14 posted on 01/11/2011 9:55:43 PM PST by Secret Agent Man (I'd like to tell you, but then I'd have to kill you.)
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To: Angelus

What would actually happen if we defaulted?


15 posted on 01/11/2011 9:57:19 PM PST by funfan
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To: funfan

Yes...that IS the question...


16 posted on 01/11/2011 9:59:45 PM PST by goodnesswins (You deciding how to spend your health care $, that’s freedom. Govt deciding, thats a death panel)
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To: One Name
"Do all the right things and we have more than a chance; we will prevail!"

I disagree. We are already beyond the point of no return.

There is no (peaceful) way back from here...it's either hyperinflation or default.

The politicians will not have the will to default so, I expect we'll eventually see hyperinflation.

Just my opinion.

17 posted on 01/11/2011 10:01:58 PM PST by blam
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To: funfan

The problem is that we are allowed to run deficits at all. Republicans go back and forth on decisions to increase spending, but always vote to lower taxes. Democrats go back and forth on tax cuts, but always vote to increase spending.

The only coalitions that form are ones lower taxes, sometimes votes to increase spending, but never a coalition to cut spending overall. That’s just an unsustainable reality - we have been living in a fantasy world since WWII.


18 posted on 01/11/2011 10:03:21 PM PST by socalgop
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To: Angelus

“... the past century of liberals expanding government and attempting to create a socialist utopia have caused this to happen.”

Bike trails. It was the GD bike trails.


19 posted on 01/11/2011 10:07:28 PM PST by jessduntno ("'How fortunate for governments that the people they administer don't think." - Adolph Hitler)
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To: One Name; All

Your suggestions will not solve anything by March.


20 posted on 01/11/2011 10:08:07 PM PST by gleeaikin
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To: KoRn

Depends on your creditors.

Creditors can call you when you have a ‘shift’ in your behavior, even if the shift would pull you out of debt. Why? Because paying off your bills cuts into their revenue stream.

Bernanke’s not a friend of America. The worst thing for him is if America puts on the breaks on spending.


21 posted on 01/11/2011 10:09:24 PM PST by BenKenobi (Rush speaks! I hear, I obey)
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To: KoRn
How do we “default” on our debts by raising the amount we are willing to go into debt?

He needs to borrow money today to pay interest for the money he borrowed yesterday.

One would think we’d be further from default by not taking on as much debt and cutting spending.

Looks like everyone in the government is just trying to postpone the inevitable, rather than to avoid it. The reason is that those social programs are all that prevents, so far, the massive urban revolts. A huge percentage of the US population has no other income and is not capable of getting any. What do you think those people will do when the checks stop and they have nothing to eat and nowhere to live? So the government resigned to paying them the "blackmail money" in exchange for them doing nothing, drinking beer whole day, and doing small crimes just for fun.

The real root of such indecisiveness of the government is that in this democracy there is not a single official in charge who is not a temporary worker. We praise that as one of advantages - and it may well be - but it is also an Achilles' heel because every office holder is most interested in not solving problems now, with pain and blood maybe, but just pushing it forward, onto the next generation of politicians. So far it worked.

Can this be fixed? Yes, but only with one of the following two methods. One method is that we get a bloody dictator who will exterminate tens of millions of citizens. I don't think this is likely; though - thinking in abstract terms - such a "surgeon" could be better and more fair than the second option. Which is a complete destruction of the society, total anarchy, in process of which tens of millions of citizens will be indiscriminately killed by forces of nature and by other citizens. However the dice falls, there will be rivers of blood. This is simply because no country on Earth can afford to infinitely feed tens of millions of people who do nothing (at best.)

22 posted on 01/11/2011 10:12:08 PM PST by Greysard
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To: funfan

“What would actually happen if we defaulted?”

You had better learn to speak chinese!!!


23 posted on 01/11/2011 10:21:15 PM PST by dalereed
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To: funfan; goodnesswins

Throughout history, governments default and then reschedule debt. Means other governments/countries avoid doing business with the defaulter until it is shown they have debt under control (makes the locals have to pay very high prices and taxes). That’s the best case scenario. The worst case scenario is war breaks out against the defaulter and the victor(s) carve the country up into little pieces then distribute them amongst themselves to satisfy the debt outstanding.


24 posted on 01/11/2011 10:21:31 PM PST by Razzz42
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To: Razzz42

Oh, thanks....I kinda thought it would be something like that....sweet nightmares.


25 posted on 01/11/2011 10:32:15 PM PST by goodnesswins (You deciding how to spend your health care $, that’s freedom. Govt deciding, thats a death panel)
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To: JDoutrider

*


26 posted on 01/11/2011 10:46:51 PM PST by JDoutrider
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To: Razzz42; funfan; goodnesswins
Throughout history, governments default and then reschedule debt. Means other governments/countries avoid doing business with the defaulter until it is shown they have debt under control

The USA is not your average Argentina or Russia. The latter could default on their debts and all that happens is that they don't get new ones. Nobody wanted their currency to begin with, so the fallout is limited to their national borders. Your scenario works fine with them.

However the US dollar is the world's currency. The default will drop its value like a stone. Why countries and people buy US debt? Because it pays interest and preserves wealth (well, that's how it is supposed to be anyhow.) If the country defaults there is no interest any more; and what do you do with your worthless paper now? You try to sell it. But nobody is buying. It's like buying and selling sand in the middle of Sahara desert. Now someone (namely, me) shows up on the market and wants to pay this "sand" for some real goods - food, oil, or whatever. Will you sell me your stuff for these worthless exchange tokens?

The world will of course immediately stop trading in USD, and will switch to alternatives overnight. What that means to the USA is that we can't buy anything for our USD - oil, fruits, services, and of course our Chinese toys. China will still sell them, but for RMB - and the exchange rate will be set by Bejing; likely to be on par with Weimar or Zimbabwe currencies.

That makes sense because what you want in a fair trade is a fair exchange of value. Someone in China worked for a month and dug up this much ore. You (simplifying here) need to work also for about a month to make a fair offer. Since the USD will be representing pure paper and no labor, the owner of real goods will want something of a known exchange (or direct) value in return.

This all means that the USA will stop in its tracks where foreign trade is concerned. And primarily this is about fuels because America can't exist without them. The reserves will not last, and they will probably not be offered to the public. Once the transportation industry stops, hunger sets in. Once hunger is in, the government loses control. What happens after that we saw in the movies.

27 posted on 01/11/2011 11:03:25 PM PST by Greysard
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To: Angelus

No problem Timmy. Just repeal Obamacare and you will get your precious little debt limit increase.

Your move.


28 posted on 01/11/2011 11:11:25 PM PST by bigoil
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To: JDoutrider

*


29 posted on 01/11/2011 11:22:36 PM PST by B4Ranch (Do NOT remain seated until this ride comes to a full and complete stop! We're going the wrong way!)
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To: Greysard

Not good. So what should the US do I really do not have much faith in our congress or our Treasury Secretary


30 posted on 01/11/2011 11:44:20 PM PST by funfan
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To: funfan
So what should the US do

If the US only had enough collective brains, I'd recommend to go with the strongman scenario. At least people will make a personal choice to live or to die.

But this won't happen. The country, like a sick man who is afraid of doctors, is lying on its cot, suffering increasing pains and steadfastly refusing to go to the hospital. Eventually the man won't be able to go even if he wants to. He dies.

The US is a pampered society. It wil not accept life-saving measures because they will cause "inconvenience" today. Any politician sane enough to suggest that would be laughed out of even primaries by any number of sweet-lying candidates. So the can-kicking contest will continue until the road ends with a chasm.

31 posted on 01/11/2011 11:56:23 PM PST by Greysard
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To: Angelus

Here is the US is bankrupt article mentioned

http://www.bloomberg.com/news/2010-08-11/u-s-is-bankrupt-and-we-don-t-even-know-commentary-by-laurence-kotlikoff.html


32 posted on 01/12/2011 12:41:57 AM PST by DontTreadOnMe2009 (So stop treading on me already!)
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To: Greysard

Thank you for your explanation of “buying debt.” So clear, even I get it! That’s a gift!


33 posted on 01/12/2011 12:55:28 AM PST by WestwardHo (Whom the gods would destroy, they first drive mad.)
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To: Angelus
Treasury Secretary Geithner says in letter to Congress US may go into default

Hat Tip: http://curmudgeonlyskeptical.blogspot.com/


34 posted on 01/12/2011 1:10:31 AM PST by Iron Munro (When a society loses its memory, it descends inevitably into dementia - Mark Steyn)
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To: Angelus

Wait! we have two months to slash spending below GDP. Then their would be no default.


35 posted on 01/12/2011 1:14:51 AM PST by Revel
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To: Angelus

I’m going to copy that letter and give to my brother-in-law. He can reword it and send it to VISA to up his credit limit. That way everything will be okay. Right?


36 posted on 01/12/2011 1:20:10 AM PST by 21twelve ( You can go from boom to bust, from dreams to a bowl of dust ... another lost generation.)
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To: okie01

I’d say that deregulation automatically reduces spending as there would be less regulations for government personnel to oversee.

Thus eliminating the need to either:

1. (under a conservative) Have the oversight organization in the first place

2. (under a libtard) raise the rate of spending for the organization


37 posted on 01/12/2011 3:01:41 AM PST by gogogodzilla (Live free or die!)
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To: funfan

Well, for one thing... China would be massively screwed, since they own the largest share of our debt.

That said, it would also destroy any remaining value to our dollar and make all imports (like oil, for one) not just expensive, but prohibitively expensive. It’d also end the dollar being thought of as the world’s ‘reserve’ currency, as no country would buy it.


38 posted on 01/12/2011 3:04:57 AM PST by gogogodzilla (Live free or die!)
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To: Angelus

The ever expanding economic pie where masses reproduce and grown the industrial er green service sector.

Strangly the only ever expending economic activity matching population expention was/is everlasting credit explosion.


39 posted on 01/12/2011 3:06:29 AM PST by Flavius (A)
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To: gogogodzilla

Reserve currency? It is a fiction that the US Dollar is worth a dollar. There will not be a replacement for it, the sun will rise and the government will have to pay it’s debts. Your only kicking the can down the road by raising the debt.


40 posted on 01/12/2011 4:28:52 AM PST by reefdiver ("Let His day's be few And another takes His office")
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To: jessduntno

Bike trails. It was the GD bike trails.

Funny line.


41 posted on 01/12/2011 4:55:40 AM PST by 11johara28
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To: Angelus

It was also the received wisdom that a bankrupcy would destroy GM.


42 posted on 01/12/2011 5:33:30 AM PST by Ford4000
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To: Angelus

The expansion of socialism was bi-partisan plus driven by the media and that is why it happened. With the “fairness doctrine”, there was no effective opposition voice and the socialists in both parties ran roughshod over the constitution for decades.

The Rinos and Democrats want to return to those days and Obama will go for using the FCC to silence the opposition with or without a new unfairness doctrine.


43 posted on 01/12/2011 6:23:27 AM PST by SaraJohnson
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To: Greysard
"The US is a pampered society. It wil not accept life-saving measures because they will cause "inconvenience" today. Any politician sane enough to suggest that would be laughed out of even primaries by any number of sweet-lying candidates. So the can-kicking contest will continue until the road ends with a chasm."

Yup.

When will it reach the chasm is the only question.

44 posted on 01/12/2011 7:15:13 AM PST by blam
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To: Greysard

If the Govt cut spending would you still have to raise the debt ceiling?


45 posted on 01/12/2011 9:16:25 AM PST by HenpeckedCon (What pi$$es me off the most is that POS commie will get a State Funeral!)
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