Sunday, January 29, 2006

U.S. Government has Exceeded its Debt Ceiling--Is it a Default?

If you look at my running debt-clock (right side of blog, beneath my profile) and then look the notes beneath it, you will quickly come to the realization that something is wrong... The United States has exceeded its maximum authorized debt limit--and the rift between the ceiling and actual expenditures is growing larger by the second.

How can our government leaders exceed the National debt ceiling without some kind of explanation? Why are there no national press reports? Where is CNN? What are the implications? When will the Debt Ceiling Be Increased?--(Certainly, we won't wait till March)

I just sit here baffled and dumbfounded... In an effort to find answers to these questions, I decided to go searching through the web for answers. What did I find?--a mere 2 links:

Financial Sense University has this link: U.S. IN TECHNICAL DEFAULT. Snippets below:

In a shocking development, the Treasury Department website is openly stating that as of January 24, 2006 our national debt stood at $8,185.3 billion and on January 26th at $8,190.5 billion. Yet the US national debt ‘ceiling’, the maximum amount of debt the US government may hold at any one time, stands at $8,184 billion – a full $5.5 billion less. Although called upon by John Snow, Congress has not yet passed an expansion of the debt ceiling and so the US government is now operating in technical default.

Hammer of Truth has anther link: Fed Debt Limit Breach: U.S. in Technical Default. Snippets:

On January 24th, the U.S. government went into technical default according to the government’s own debt watch website. Economist Dr. Chris Martenson is sounding the klaxons and wondering why it hasn’t hit the financial press yet, saying “But the silence is all the more troubling because there is an unprecedented level of government borrowing on the books for 1Q06 with next 2 weeks (Feb 1st to Feb 9th) an especially busy period of time. An ambitious ~$70-$80b in Treasury paper will hit the market.” He suggests emergency congressional action may be needed to avoid a full-fledged default.

Hopefully, our elected leaders will let us know their plan VERY SOON.


41cadillac said...

As congress has done in the past the limit will be raised.

I still really wonder if a 1929 Crash is indeed in store for USA in the near future???

Found this on "The Housing Bubble 2"

The paragraph about Santa Barbara Association of Realtors stating they will no longer release statistics is really interesting.

"The Santa Barbara News Press ran this report on area home sales. "Home sales across most of Santa Barbara County fell last month, but median prices appear to be holding steady. On the South Coast, which has ranked as the most overpriced home market in the nation this year by at least two research firms, resales for single-family homes were flat in December compared with a year ago, according to data reported to the Santa Barbara MLS. For all of 2005, sales dropped more than 12 percent."

"The paper dropped this little bombshell in the fourth paragraph. "Over the past several years, the News-Press has obtained sales and median price data for the South Coast from the Santa Barbara Association of Realtors. The group recently told the News-Press that it now refuses to make this data available to the newsroom. Other associations of Realtors across the county willingly continue to share sales and price information with the paper."

arlingtonVa said...

Where is CNN?

This is what I keep asking. I watched CNBC this mornging where they gave accolades to the outgoing Chairman Greenspan?

What's with big media? They happened to 'Woodward and Bernstein' sort of investigative journalism. They are all just entertainers now.

41cadillac said...

Low saving rate:

"The lowest annual savings rate since a decline of 1.5 percent in 1933, a year in which the country was struggling to cope with the Great Depression."

The Commerce Department said Monday that consumer spending rose by 0.9 percent in December, more than double the 0.4 percent rise in incomes.

To finance the increased spending, Americans dipped further into their savings, pushing the savings rate for all of 2005 into negative territory at minus 0.5 percent. That was the lowest annual savings rate since a decline of 1.5 percent in 1933, a year in which the country was struggling to cope with the Great Depression.

"Dipped further into their savings", or took out money from the house ATM." That is more likely.

contrarian2day said...

Cadillac, I agree the limit will be raised, but (1) something should be mentioned about this in the media (2) when raised, we'll quickly exceed that limit aslo. When is enough, enough?

Media these days are retarded, and only report to play on emotions. Example: Nancy Grace... Do people really want to watch a 30+ something reporter cry incessantly while trying to figure out the same murder mystery for 30 consecutive days? it's baffling.

Anyway, far too many economic issues at play these days and we could be in store for a perfect storm.

Some of the Problems on the horizon:

(1) Enormous U.S. Trade Deficit
(2) Massive Debt(currently default)
(3) Severe Oil supply issues
(4) World-Wide Housing Bubble
(5) New U.S. Fed Chairman
(6) Stock Market Bubble
(7) Derivatives Bubble
(8) Negative US savings rate
(9) Tremendous Consumer Debt
(10)Rising Inflation
(11)Loss of Jobs/Outsourcing
(12)Dollar issues(looming crisis)
(13)Central Bank confidence loss
(14)Corporate Bankruptcies
(15)Pension Crisis (look at PBGC)
(16)Social Security Crisis
(17)Huge personal Bankruptcy #'s
(18)Lack of Gvt fiscal control
(19)Gvt Corruption/special interest
(20)Complete denial of issues
(21)Irrational exuberance
(22)Ignorant/oblivious Americans
(23)I could go on....

Bottom Line: I'm sorry to say that I believe the final fallout, could make 1929 look like a walk in the park...

41cadillac said...

Great List of Tragedies on the way!

"Bottom Line: I'm sorry to say that I believe the final fallout, could make 1929 look like a walk in the park..."


Maybe I can even get a reduction in my rent!

Yesterday I took a walk in the outdoor mall "The Grove" witch is part of Los Angeles old Farmers Market next to CBS TV studios on Fairfax Avenue.

Anyway, I went into "Apple Computer" store to get a general feeling for the consumer.

I suggested to one of the Store Clerks that USA citizens have spent more than they have earned since May of 2005.

She said, " I believe you are right and I am one of them."

She did not seem to concerned.

Here we go!!

Out at the peak said...

I just started buying physical silver/gold coins. What does that really say about my economic outlook?

(I have to figure out a better hiding place than a safety deposit box obviously.)

contrarian2day said...

Peak, even if the fallout is not as bad as I suggest, gold/silver are on an up trend and I think you'll do well.

I think you madee a wise decision.

41cadillac said...

Oil is black Gold.

Out at the peak said...

41cadillac: Don't worry, I have way more money in oil than metals. :)

My word verification is dnvugovt.
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