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Treasury Says Anything But A Debt Ceiling Hike Would Lead To Default, As M.A.D. Escalates A Notch
Zero Hedge ^ | 01/21/2011 | Tyler Durden

Posted on 01/22/2011 3:38:11 AM PST by Zeddicus

After in the past week, the blogosphere had been hobbled by one after another mindless oped claiming that the US can easily avoid default by just paying the interest on its obligations, and thus does not have to worry about the debt ceiling, we decided to put some sense to this debate when we pointed out that the "US Debt-to-Deficit Difference Hits Fresh Record, As Treasury Continues To Issue 50% More Debt Than Needed To Fund Deficit" meaning that i) it is not a debt ceiling, it is a debt target (© Lizzie363), and ii) the hundreds of billions of monthly obligations that are funded through debt, are "legal" obligations of the US government that have to be paid in full every month or a default will occur regardless. Neal Wolin, Deputy Secretary of the Treasury, has just released a statement on the Treasury's blog saying pretty much just that. Which, however is certainly not a good thing, as it merely confirms just how totally screwed this country is, and that absent a hike in the ceiling to $15.5 trillion (which we believe is where the debt ceiling will be through March of 2012 when it will be raised to $17 trillion), the dollar will be backed by several trillion in insolvent Federal Reserve Notes, er, assets (that should quickly end all debate about EUR-USD parity). It also confirms that Bernanke has no choice but to continue monetizing debt, through QE and to do that, he needs to make it palatable to the general public, which in turn will mean either a material economic deterioration, or, as the two are apparently identical in the Chairbeast's mind, the Russell 2000.

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


TOPICS: Business/Economy; Extended News; Government; Politics/Elections
KEYWORDS: debt; economy; obamacare; treasury
Well, now we'll see what our newly elected House is really made of. If they vote to raise the debt ceiling at all, under any circumstances, we've been sold out.
1 posted on 01/22/2011 3:38:13 AM PST by Zeddicus
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To: Zeddicus

You’re kidding I hope.


2 posted on 01/22/2011 3:41:32 AM PST by TN4Liberty (My tagline disappeared so this is my new one.)
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To: TN4Liberty

Kidding about what?


3 posted on 01/22/2011 3:57:38 AM PST by Zeddicus
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To: Zeddicus
A private citizen faced with a cash flow shortfall would cut expenses, scrounge for misplaced resources and have a garage sale.

What could the fed sell on a garage sale? Let's see, oil leases, mining leases, timber leases, land, buildings, surplus materials and so on and so on...

Why should the only things government sells be their votes, their souls and the American people down the river?

4 posted on 01/22/2011 4:11:29 AM PST by Aevery_Freeman (Fear God and Government - especially when one tries to become the other!)
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To: Zeddicus

What is M.A.D.? It isn’t explained in the article.


5 posted on 01/22/2011 4:19:30 AM PST by Rocky (REPEAL IT!)
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To: Zeddicus

About this... “If they vote to raise the debt ceiling at all, under any circumstances, we’ve been sold out.”

So you think there is no circumstance that would justify raising the debt ceiling? Not even in the short run? That’s absurd.


6 posted on 01/22/2011 4:20:35 AM PST by TN4Liberty (My tagline disappeared so this is my new one.)
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To: Zeddicus

Attach the Obamacare repeal to a debt ceiling bill...


7 posted on 01/22/2011 4:22:12 AM PST by Sir Francis Dashwood (Arjuna, why have you have dropped your bow???)
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To: TN4Liberty

Attach a total Obamacare repeal and huge spending cuts to a debt ceiling bill...

Dump the whole smelly business right into Dingy Harry’s lap...


8 posted on 01/22/2011 4:24:08 AM PST by Sir Francis Dashwood (Arjuna, why have you have dropped your bow???)
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To: Zeddicus
How about lowering the federal debt ceiling by reducing the size and scope of the federal government back to within the confines of their Constitutional authority by eliminating all federal agencies, federal programs, and federal acts not in compliance with any of the enumerated powers in Article 1 Section 8 of the Constitution. There are no enumerated powers to regulate the environment, communications, food, drugs, education, health, agriculture, alcohol, tobacco, firearms or income.

Federal agencies that must be abolished include but are not limited to the EPA, FCC, FDA, Department of Education, DHHS, Department of Agriculture and BATFE. Federal programs include but are not limited to Medicaid, Medicare and Social Security. Federal Acts include but are not limited to Unconstitutional Obamacare, the so called Food-Safety and Modernization Act and the Frank-Dodd Finance bill.

The debt will never be resolved until Congress returns to the limited government principles our founding fathers instilled in the Constitution.
9 posted on 01/22/2011 5:14:11 AM PST by Defend Liberty
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To: Defend Liberty
The debt will never be resolved until Congress returns to the limited government principles our founding fathers instilled in the Constitution.

^^ This.

If a person has maxed out their credit cards and can't even make the minimum payment, is it smart to INCREASE their credit limit so they can temporarily make the payments by racking up more debt?

10 posted on 01/22/2011 5:23:12 AM PST by Zeddicus
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To: Zeddicus

The Debt Ceiling is constantly being raised whenever the Debt bumps into it; making it no Ceiling at all. It is more of a group delusion. Why not just say there is no Ceiling. Or the Ceiling is whatever the Debt is at the moment. This is all such an economic house of cards.


11 posted on 01/22/2011 5:42:29 AM PST by 6SJ7 (atlasShruggedInd = TRUE)
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To: Rocky
The common meaning of M.A.D, is "Mutually Assured Destruction". A leftover phrase from the cold war.
12 posted on 01/22/2011 5:59:05 AM PST by WhatNot (God Bless our troops, especially the snipers.)
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To: Zeddicus

If that’s the best story the Treasury can come up with then forget about raising the debt ceiling.


13 posted on 01/22/2011 6:03:27 AM PST by devere
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To: TN4Liberty

He’s serious, I’m serious, every Freeper who has taken an objective look at our circumstances is serious.

We are $9T in (publicly held) debt. Our GDP is $14T. Countries default at about 100% Debt to GDP ratio. At the Republicans deficit of $1.1T per year we will default in five years. In fact it will be sooner because as interest rates increase, due to servicing the existing debt, our Debt will be increasing exponentially.

If we can’t do it now, with this House, it can’t be done. The only way a “temporary” increase in debt makes sense is if it is after the budget cutters have won and seniors have seen the light and liberals have given up. The only way to do that is to hold the line now, service the debt, make minimum payments on defense and let the rest squeeze into what’s left. Senator Toomey and Governor Pawlenty have seen the light.


14 posted on 01/22/2011 6:33:02 AM PST by MontaniSemperLiberi (Moutaineers are Always Free)
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To: Zeddicus

A debt ceiling hike merely postpones the default and insures that the catastrophe, when it occurs, will be much worse than if the natural course of events were allowed to occur earlier. When you shovel ever more sand to build the dike ever higher you are simultaneously digging the hole deeper. When the tide finally washes over the levee it will inundate everything in one huge cataclysm that will be ever so much more devastating than if the leakage had been properly taken care of earlier.


15 posted on 01/22/2011 6:48:42 AM PST by arthurus (Read Hazlitt's "Economics In One Lesson.")
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To: MontaniSemperLiberi

Our publicly held debt is actually much larger

title and link only due to copyright

Obama’s $6.3 Trillion Scam Is America’s Shame

http://www.bloomberg.com/news/2010-02-03/obama-s-6-3-trillion-scam-is-america-s-shame-jonathan-weil.html

And that doesn’t even count all the recent bad loans the banks have off loaded unto the taxpayers through the GSE’s and even the put backs they sued BOA over were only settled to taxpayers for ONE CENT on the dollar and there are a whole lot more of them from the other TBTF banks in the portfolio.

BofA Freddie Mac Putbacks Resolved for 1¢ on $

http://www.ritholtz.com/blog/2011/01/bofa-putbacks-freddie-mac/

http://finance.fortune.cnn.com/2011/01/03/is-fannie-bailing-out-the-banks/

Unlimited credit for GSEs seen as backdoor bailout

http://www.reuters.com/article/idUSTRE6044YU20100105


16 posted on 01/22/2011 7:20:41 AM PST by FromLori (FromLori">)
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To: Sir Francis Dashwood

“Attach a total Obamacare repeal and huge spending cuts to a debt ceiling bill...

Dump the whole smelly business right into Dingy Harry’s lap...”

Now we are talking.


17 posted on 01/22/2011 8:31:45 AM PST by Georgia Girl 2 (The only purpose of a pistol is to fight your way back to the rifle you should never have dropped.)
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To: Rocky
M.A.D = Mutually Assured Destruction.
18 posted on 01/22/2011 8:33:02 AM PST by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
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To: Sir Francis Dashwood; Georgia Girl 2
Attach a total Obamacare repeal and huge spending cuts to a debt ceiling bill... Dump the whole smelly business right into Dingy Harry’s lap...

I called my CongressCritter's office with that very idea about 2 weeks ago, though I put it a bit differently. Bohner should announce publicly that the price of a debt ceiling increase is the total repeal of Obamacare. And the Repeal Bill gets signed into law first. THEN and ONLY then do they get their 6 month debt increase.

Period. End of story. Negotiations over.

L

19 posted on 01/22/2011 8:35:40 AM PST by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
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To: Lurker

“I called my CongressCritter’s office with that very idea about 2 weeks ago, though I put it a bit differently. Bohner should announce publicly that the price of a debt ceiling increase is the total repeal of Obamacare. And the Repeal Bill gets signed into law first. THEN and ONLY then do they get their 6 month debt increase.”

I’m down with that.


20 posted on 01/22/2011 9:05:01 AM PST by Georgia Girl 2 (The only purpose of a pistol is to fight your way back to the rifle you should never have dropped.)
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To: Lurker

Oh. Back to the cold war. Thanks.


21 posted on 01/22/2011 9:21:12 AM PST by Rocky (REPEAL IT!)
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To: Lurker

That is perfect.


22 posted on 01/22/2011 9:22:53 AM PST by Sir Francis Dashwood (Arjuna, why have you have dropped your bow???)
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To: Aevery_Freeman
A private citizen faced with a cash flow shortfall would cut expenses, scrounge for misplaced resources and have a garage sale. What could the fed sell on a garage sale? Let's see, oil leases, mining leases, timber leases, land, buildings, surplus materials and so on and so on... Why should the only things government sells be their votes, their souls and the American people down the river?

The Republican-controlled house, by it's power over the debt ceiling, has the potential power to make Obama do whatever they want.

Their willingness to use that power will be seen as the measure of their seriousness.

Don't raise the debt ceiling. Just pass a budget that lives within the debt ceiling.

23 posted on 01/22/2011 9:28:27 AM PST by PapaBear3625 ("It is only when we've lost everything, that we are free to do anything" -- Fight Club)
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To: Zeddicus

These tax payer shake down artists aka, bansters like Geithner, need to go to prison. They should not threaten our country with a crash if we don’t meet their demands. Enough of that nonsense.

I still want to know who was doing the electronic run on our banks during the last election which led to TARP. I want to know who did it and why.


24 posted on 01/22/2011 11:59:21 AM PST by SaraJohnson
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