Posts tagged debt ceiling

U.S. Chamber cavalry arrives to help Mitch McConnell

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Source: http://www.againstcronycapitalism.org

By

U.S. Chamber cavalry arrives to help Mitch McConnell

 

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The US Chamber says that McConnell is a “true conservative.”

I suppose, if securing a $3 billion earmark so that Senator Reid could declare victory (but oh so short lived) in the government shutdown is “conservative.”

And don’t forget completely wussing out on the debt ceiling deal. Very conservative.

This is Karl Rove and company here. This is the establishment thinking that the GOP might just win the Senate and they don’t want to lose a Senator who would become the Leader. The Chamber and much of the establishment need someone who will set an agenda in the Senate commensurate with their interests. God forbid McConnell be deposed by some small government Tea Party cretin.

Even if McConnell were to be primaried the establishment need not fear losing control completely in the Senate. Next in line for GOP leader is John Cornyn, a Bush guy.

But it would be an embarrassing blow and the Chamber has had quite enough embarrassment from the GOP caucus on the other side of the Capitol thank you very much.

(From The Washington Examiner)

“The people of Kentucky have a true conservative champion for American free enterprise in Senator Mitch McConnell. McConnell has a 92 percent lifetime score with the U.S. Chamber. We appreciate his efforts to fight back against the war on coal, and to protect Kentucky jobs from the harmful policies coming from Washington, D.C.,” said Chamber National Political Director Rob Engstrom.

Click here for the article.

Image credit: http://www.againstcronycapitalism.org


Nick Sorrentino
About Nick Sorrentino

Nick Sorrentino is the co-founder and editor of AgainstCronyCapitalism.org. A political and communications consultant with clients across the political spectrum, he lives just outside of Washington DC where he can keep an eye on Leviathan.

 

 

Another One Trillion Dollars ($1,000,000,000,000) In Debt

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Source: http://theeconomiccollapseblog.com

By Michael Snyder

Another One Trillion Dollars ($1,000,000,000,000) In Debt

 

George-Washington-CryingDid you know that the U.S. national debt has increased by more than a trillion dollars in just over 12 months?  On September 30th, 2012 the U.S. national debt was sitting at $16,066,241,407,385.89.  Today, it is up to $17,075,590,107,963.57.  These numbers come directly from official U.S. government websites and can easily be verified.  For a long time the national debt was stuck at just less than 16.7 trillion dollars because of the debt ceiling fight, but now that the debt ceiling crisis has been delayed for a few months the national debt is soaring once again.  In fact, just one day after the deal in Congress was reached, the U.S. national debt rose by an astounding 328 billion dollars.  In the blink of an eye we shattered the 17 trillion dollar mark with no end in sight.  We are stealing about $100,000,000 from our children and our grandchildren every single hour of every single day.  This goes on 24 hours a day, month after month, year after year without any interruption.

Over the past five years, the U.S. government has been on the greatest debt binge in history.  Unfortunately, most Americans don’t realize just how bad things have gotten because the true budget deficit numbers are not reported on the news.  The following is where the U.S. national debt has been on September 30th during the five years previous to this one…

09/30/2012: $16,066,241,407,385.89

09/30/2011: $14,790,340,328,557.15

09/30/2010: $13,561,623,030,891.79

09/30/2009: $ 11,909,829,003,511.75

09/30/2008: $10,024,724,896,912.49

The U.S. national debt is now 37 times larger than it was 40 years ago, and we are on pace to accumulate more new debt under the 8 years of the Obama administration than we did under all of the other presidents in U.S. history combined.

Of course all of the blame can’t be placed at the feet of Obama.  During the last two elections the American people have given the Republicans a solid majority in the U.S. House of Representatives, and the government cannot spent a single penny without their approval.

Unfortunately, House Speaker John Boehner and the Republicans that are allied with him have repeatedly turned their backs on the people that gave the Republicans the majority and they have authorized trillions of dollars of new debt which will be passed on to future generations of Americans…

Since John Boehner became speaker of the U.S. House of Representatives on Jan. 5, 2011, the debt of the federal government has increased by $3,064,063,380,067.72. That is more than the total federal debt accumulated in the first 200 years of the U.S. Congress–during the terms of the first 48 speakers of the House.

In fact, if all of that debt had been given directly to the American people, every household in America would have been able to buy a new truck

The $26,722 in new debt per household accumulated under Speaker Boehner would have been more than enough to buy every household in the United States a minivan or pickup truck–or to pay three years of in-state tuition (not counting room and board) at the typical state college.

Sometimes we forget just how much money a trillion dollars is.  In a previous article, I included some illustrations that I believe are helpful…

-If you were alive when Jesus Christ was born and you spent one million dollars every single day since that point, you still would not have spent one trillion dollars by now.

-If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.

We are doing the exact same thing that Greece did, only on a much larger scale.  What we are doing is not even close to sustainable, and it will inevitably end very, very badly.  The following is what Michael Pento, the president of Pento Portfolio Strategies, told RT the other day…

“That $17 trillion everybody says its 107 percent of GDP, that’s true. But who really cares about the percentage of GDP? It’s the percentage of the debt as a percentage of the revenue – its 700 percent of our revenue. Deficits are growing at 30 percent of our revenue every year added to the deficits we have already. So it’s unsustainable. What is going to happen eventually – a currency and bond market collapse! And it’s not going out 20 years, as I also heard someone mention. In 2016 we’ll probably be spending 40 percent of all of our revenue just to service our debt. That is what the interest payments will equal.”

The U.S. debt situation is so bad that even the Prime Minister of Cyprus is scolding us…

“The U.S. has been fortunate in the sense that it’s like a bank, it prints the money that other people accept. So you can live beyond your means over an extended period of time without being punished by the market.”

Unfortunately, we will not be able to live way beyond our means forever.  Reality is going to catch up with us at some point.

Right now, the rest of the world is lending us giant mountains of money at interest rates that are far below the real rate of inflation.  This is extremely irrational behavior, and this state of affairs will probably not last too much longer.

But if interest rates go up, it will absolutely cripple the U.S. economy.  For much more on this, please see this article.

And what would make things much, much worse is if the rest of the globe starts moving away from using the U.S. dollar.  At the moment, the U.S. dollar is the de facto reserve currency of the planet and this creates a tremendous demand for U.S. dollars and U.S. debt.

If that changes, it will be absolutely catastrophic for the United States, and unfortunately there are already lots of signs that this is already starting to happen.  I wrote about this in my recent article entitled “9 Signs That China Is Making A Move Against The U.S. Dollar“.

But don’t just take my word for it.  Just a couple of days ago a major U.K. newspaper came to the same conclusions…

China has overtaken the US as the world’s largest oil importer and goods trading nation. Over the next five years, it will surpass the rest of the world combined in its consumption of base metals.
 
Given the scale of the country’s consumption of fossil fuels and raw materials, it is only a matter of time before the renminbi replaces the dollar as the primary currency for trading commodities and resources such as crude oil and iron ore.
 
The debt ceiling farce in Washington and China’s growing reluctance to continue underwriting the US economy by buying up its bonds and adding to America’s near $17 trillion (£10.5 trillion) debt mountain suggests that this tectonic shift in the global trade system could be just around the corner.

So what will happen when the rest of the world decides that they don’t need to use our dollars or buy our debt any longer?

At that point the consequences of decades of incredibly foolish decisions will result in an avalanche of economic pain that the American people are not prepared for.

Earlier today, I came across a photograph that perfectly captures what America is heading for.  The following photo of Mt. Rushmore crying has not been photoshopped.  It was taken by Megan Ahrens and it was posted on the Tea Party Command Center.  If George Washington was alive today, this is probably exactly how he would feel about the nation that he helped establish…

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Image credit: http://theeconomiccollapseblog.com

Peter Schiff: US lost ability to produce, can’t live without debt

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Source: http://peterschiffblog.com

Peter Schiff: US lost ability to produce, can’t live without debt

 

10-21-2013 7-02-44 PM

RT video capture

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Produced by RT

Published on Oct 20, 2013

Addicted to debt, moving from one quick fix to the next — this is how the world sees America’s debt ceiling saga. With its craving only temporarily satisfied, we’re guaranteed to see a rerun of the debt tragicomedy in early 2014. Is it possible to break the vicious cycle, or is it a question of postponing the inevitable? To canvass these issues, Oksana is joined by ‘Dr Doom’ Peter Schiff, an investment broker who predicted the 2008 crisis.

Debt Ceiling Deal: DC Wins, Americans Lose

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Source: http://the-free-foundation.org

By Ron Paul

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Debt Ceiling Deal: DC Wins, Americans Lose

 

Washington, DC, Wall Street, and central bankers around the world rejoiced this week as Congress came to an agreement to end the government shutdown and lift the debt ceiling. The latest spending-and-debt deal was negotiated by Congressional leaders behind closed doors, and was rushed through Congress before most members had time to read it. Now that the bill is passed, we can see that it is a victory for the political class and special interests, but a defeat for the American people.

The debt ceiling deal increases spending above the levels set by the “sequester.” The sequester cuts were minuscule, and in many cases used the old DC trick of calling reductions in planned spending increases a cut. But even minuscule and phony cuts are unacceptable to the bipartisan welfare-warfare spending collation. The bill also does nothing to protect the American people from the Obamacare disaster.

As is common in bills drafted in secret and rushed into law, this bill contains special deals for certain powerful politicians. The bill even has a provision authorizing continued military aid to opponents of the Ugandan “Lord’s Resistance Army,” which was the subject of the widely-viewed “Kony 2012” YouTube videos. Most of these unrelated provisions did not come to public attention until after the bill was passed and signed into law.

Members of Congress and the public were told the debt ceiling increase was necessary to prevent a government default and an economic crisis. This manufactured fear supposedly justified voting on legislation without allowing members time to even read it, much less to remove the special deals or even debate the wisdom of intervening in overseas military conflicts because of a YouTube video.

Congress should have ignored the hysterics. A failure to increase government’s borrowing authority would not lead to a default any more that an individual’s failure to get a credit card limit increase in would mean they would have to declare bankruptcy. Instead, the failure of either an individual or a government to obtain new borrowing authority would force the individual or the government to live within their means, and may even force them to finally reduce their spending. Most people would say it is irresponsible to give a spendthrift, debit-ridden individual a credit increase. Why then is it responsible to give an irresponsible spendthrift government an increase in borrowing authority?

Congress surrendered more power to the president in this bill. Instead of setting a new debt ceiling, it simply “suspended” the debt ceiling until February. This gives the administration a blank check to run up as much debt as it pleases from now until February 7th. Congress can “disapprove” the debt ceiling suspension, but only if it passes a resolution of disapproval by a two-thirds majority. How long before Congress totally abdicates its constitutional authority over spending by allowing the Treasury permanent and unlimited authority to borrow money without seeking Congressional approval?

Instead of seriously addressing the spending crisis, most in Congress would rather engage in last-minute brinksmanship and backroom deals instead of taking the necessary action to reign in spending. Congress will only take serious steps to reduce spending when either a critical mass of Americans pressures it to cut spending, or when investors and foreign countries stop buying US government debt. Hopefully, those of us who understand sound economics can convince enough of our fellow citizens to pressure Congress to make serious spending cuts before Congress’s reckless actions cause a total economic collapse.

A Caesar In Our Future?

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Source: http://paulcraigroberts.org

By Dr. Paul Craig Roberts

A Caesar In Our Future?

 

What Happens If The Shutdown Causes The Treasury To Run Out Of Money

In a speech to the Commonwealth Club, San Francisco, November 23, 2010, Peter Dale Scott gave a history of the various directives concerned with government continuity during a state of emergency. He showed that these directives could be used to supersede the Constitution. http://www.globalresearch.ca/continuity-of-government-is-the-state-of-emergency-superseding-our-constitution/22089

The ease with which both the Bush and Obama regimes were able to set aside the due process protections of the Constitution that prohibit indefinite detention and execution without conviction in a trial indicate that Professor Scott’s concern is justified that these directives could result in executive branch rule.

Scott describes how the executive branch efforts to provide government continuity in the aftermath of a nuclear attack dating from the Eisenhower administration were gradually converted into executive or national security (later Homeland Security) orders that confer secret powers to the White House for any event that the executive branch considers to be an emergency.

Generally these various executive orders and directives refer to “national emergencies,” or “national disasters.” However, President Bush’s National Security Presidential Directive/NSPD 51 and Homeland Security Presidential Directive/HSPD-20 issued on
May 9, 2007 use the term “Catastrophic Emergency.” http://georgewbush-whitehouse.archives.gov/news/releases/2007/05/20070509-12.html

The directives speak of “enduring constitutional government” which the president maintains by coordinating “as a matter of comity with respect to the legislative and judicial branches,” but it is up to the president and his advisor, the National Continuity Coordinator, to decide what constitutes constitutional government during a catastrophic emergency.

What comprises a catastrophic emergency? It is reasonable for a president to regard a government shutdown, which can threaten everything from national security to default and economic collapse, as a catastrophic emergency, and to take such steps as are necessary to prevent it, such as raising the debt ceiling, on his own authority.

The Federal Reserve also has the power to prevent a government shutdown. If banks are too big to fail, so is the federal government. If the Federal Reserve on its own authority can issue more than $16 trillion in loans to US and European banks in order to prevent their failure, the Federal Reserve can issue a loan to the US government.

I don’t expect either of these two possibilities to come into play. A shutdown and default of US debt obligations would terminate the US as a superpower and dethrone the dollar as world reserve currency. Neither Congress nor President Obama desire such an outcome. Also, Congress would not want a presidential directive to be implemented that subordinates their position and possibly eliminates their meaningful participation in governance. Therefore, I expect a resolution of the current standoff prior to the Treasury running out of money.

I did interviews on this subject with King World News and with Greg Hunter. The interviews are played to the sensational side, but I do not expect it to go that far. However, it could.

My interview with King World News is relatively short, but Eric King knows how to bring it to the most controversial point. What everyone should wonder is, “How did we, a free people protected by the US Constitution, become one step away from rule by Caesar?
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/10/8_Former_US_Treasury_Official_-_President_To_Seize_Total_Power.html

My interview with Greg Hunter of USA Watchdog is, in my opinion, one of my best. The interview covers a broad range of issues or possibilities and makes it unnecessary for me to write a column about the government shutdown and its implications and possible consequences. http://usawatchdog.com/paul-craig-roberts-obama-could-govern-as-a-dictator/

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Below is the interview with Greg Hunter on USAWatchdog.com.

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Reprinted with permission from www.paulcraigroberts.org


 

About Dr. Paul Craig Roberts

Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. His latest book, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is now available.

Debt Ceiling Delusions – Peter Schiff

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Source: http://www.europac.net

Friday, October 11, 2013

Debt Ceiling Delusions

 

Peter Schiff is the CEO and Chief Global Strategist of Euro Pacific Capital

The popular take on the current debt ceiling stand-off is that the Tea Party wing of the Republican Party has a delusional belief that it can hit the brakes on new debt creation without bringing on an economic catastrophe. While Republicans are indeed kidding themselves if they believe that their actions will not unleash deep economic turmoil, there are much deeper and more significant delusions on the other side of the aisle. Democrats, and the President in particular, believe that continually taking on more debt to pay existing debt is a more responsible course of action. Even worse, they appear to believe that debt accumulation is the equivalent of economic growth.

If Republicans were to inexplicably prevail, and the federal government were to cut spending so that its expenditures matched its tax revenues (a truly radical idea) the country’s financial mess would be laid bare. The government would have to weigh the relative costs and benefits of making interest payments on Treasury debt (primarily to foreign creditors) or to trim entitlements promised to U.S. citizens. But those are choices we will have to make sooner or later anyway. In fact we should have dealt with these issues years ago. But generations of mechanistic debt ceiling increases have allowed us to perpetually kick the can down the road. What could possibly be gained by doing it again, particularly if it is done with no commitment to change course?

The Democrats’ argument that America needs to pay its bills is just hollow rhetoric. Paying off one’s Visa bill with a new and bigger MasterCard bill can’t be considered a legitimate payment of debt. At best it is a transfer. But in the government’s case, it doesn’t even qualify as that. Treasury debt is primarily bought by the Fed, foreign central banks, and major financial institutions. None of that will change with a debt ceiling increase. We will just go to the same people for greater quantities. So it’s like paying off your Visa card with a bigger Visa card.

According to modern economists, an elimination of deficit spending will immediately cause a dollar for dollar decrease in GDP. For example, if the government stopped sending food stamp payments to poor people, then grocery stores would lose business, employees would be laid off, and the economy would contract. But this one dimensional view fails to appreciate that the purchasing power of the food stamps had to come from somewhere. The government can’t create something from nothing. Taxation transfers purchasing power from people living in the present to other people living in the present. In contrast, borrowing transfers purchasing power from people living in the future to people living in the present. The good news for politicians is that future people don’t vote in current elections (and current voters don’t seem to appreciate the cost to their future selves of current policy).

The Obama Administration has congratulated itself for turning around the contracting economy that it inherited from President Bush. But even if you take the obscenely low official inflation statistics at face value, we only grew at an anemic 1.075% annual pace from 2009 to 2012 (far below the between 3% and 4% that the U.S. averaged post World War II). Sadly, this growth pales in comparison to the accumulation of new debt that we are borrowing from the future.

U.S. GDP is measured at roughly $15 trillion per year. 2% growth means that each year the GDP is approximately $300 billion larger than the prior year. But in the less than five years since Obama took office, the federal government has added, on average, about $1.3 trillion per year in new debt, a pace that is four times higher than the growth. If the deficit were subtracted from GDP, America would be shown to be stuck in a severe recession that Washington can’t acknowledge. But such a reality is more consistent with the dismal job prospects and stagnant incomes experienced by most Americans.

The belief that deficits add to the economy, and that debt can be dealt with in an imaginary future (that never seems to arrive) is the foundation upon which the President can chastise the Republicans as irresponsible suicide bombers. Using this logic, he can argue (with a straight face) that borrowing is the equivalent of paying. That the President can make this delusional argument is not so surprising (no lie too great for the typical politician to attempt). What is alarming is that the media and the public have swallowed it so willingly. As they call for limitless increases in borrowing, Democrats have offered no plan to reduce the current debt and they are unwilling to negotiate with Republicans on that topic. Yet somehow they have been perceived as the party of fiscal responsibility.

While the Republicans have a dismal track record of their own when it comes to budgetary management, it can’t be disputed that the minor dip in that rate of increase in spending that resulted from the recent Sequester, happened only because they dug in on the issue. Without the 2011 debt ceiling drama, there is no chance that any spending would have been touched.

Democrats had warned that the $85 billion in sequestration cuts slated for fiscal year 2013 (about 2% of the Federal budget) would be sufficient to bring on economic Armageddon. But guess what? We survived. Recently, Senate Majority Leader Harry Reid continued with such rhetoric by declaring that there are no more cuts to be found anywhere in the $3.8 Trillion dollar federal budget. (Apparently he missed last week’s 60 Minutes piece on the spreading epidemic of federal disability fraud.)

We have to acknowledge what even the Republicans haven’t fully grasped. We are in such a deep debt hole that there is no solution that does not involve serious economic pain. Tea Party Republicans rightly believe that government spending is a drag on economic growth. As a result, they conclude that immediate spending cuts will help with the “recovery”. But they are confusing real economic growth with the delusional expansion created by deficit spending (which is actually damaging the real economy). If they cut the deficit, this phony economy may likely implode and cause widespread distress.

So even though a reduction in government borrowing and spending does help the economy, it won’t feel very helpful tomorrow. The more we borrow and spend today, the more we will suffer tomorrow when the bills come due. Ironically, cutting government spending now helps the economy by allowing the economic adjustment to happen sooner rather than later. But this type of long-term thinking is very difficult for politicians to consider.

Unfortunately our debts don’t leave us much in the way of choices. We can choose to pay now or try to pay later. But the longer we wait the steeper the bill.

Peter Schiff is the CEO and Chief Global Strategist of Euro Pacific Capital, best-selling author and host of syndicated Peter Schiff Show. 


12 Very Ominous Warnings About What A U.S. Debt Default Would Mean For The Global Economy

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Source: http://theeconomiccollapseblog.com

By Michael Snyder

 

12 Very Ominous Warnings About What A U.S. Debt Default Would Mean For The Global Economy

 

Ominous-Clouds-Photo-posted-on-Instagram-by-annekejong-300x300A U.S. debt default that lasts for more than a couple of days could potentially cause a financial crash unlike anything that the world has ever seen before.  If the U.S. government purposely wanted to damage the global financial system, the best way that they could do that would be to default on U.S. debt obligations.  A U.S. debt default would cause stocks to crash, would cause bonds to crash, would cause interest rates to soar wildly out of control, would cause a massive credit crunch, and would cause a derivatives panic that would be absolutely unprecedented.  And that would just be for starters.  But don’t just take my word for it.  These are the things that top financial experts all over the planet are saying will happen if there is an extended U.S. debt default.

Because they are so close together, the “government shutdown” and the “debt ceiling deadline” are being confused by many Americans.

As I wrote about the other day, the “partial government shutdown” that we are experiencing right now is pretty much a non-event.  Yeah, some national parks are shut down and some federal workers will have their checks delayed, but it is not the end of the world.  In fact, only about 17 percent of the federal government is actually shut down at the moment.  This “shutdown” could continue for many more weeks and it would not affect the global economy too much.

On the other hand, if the debt ceiling deadline (approximately October 17th) passes without an agreement that would be extremely dangerous.

And if the U.S. government is eventually forced to start delaying interest payments on U.S. debt (which could potentially happen as soon as November), that would be absolutely catastrophic.

Once again, just don’t take my word for it.  The following are 12 very ominous warnings about what a U.S. debt default would mean for the global economy…

#1 Gerald Epstein, a professor of economics at the University of Massachusetts Amherst: “If the US does default, that will make the Lehman Brothers bankruptcy look like a cakewalk”

#2 Tim Bitsberger, a former Treasury official under President George W. Bush: “If we miss an interest payment, that would blow Lehman out of the water”

#3 Peter Tchir, founder of New York-based TF Market Advisors: “Once the system starts to break down related to settlement and payments, then liquidity disappears, as we saw after Lehman”

#4 Bill Isaac, chairman of Cincinnati-based Fifth Third Bancorp: “We can’t even imagine all the things that might happen, just like Henry Paulson couldn’t imagine all the bad things that might happen if he let Lehman go down”

#5 Jim Grant, founder of Grant’s Interest Rate Observer: “Financial markets are all confidence-based. If that confidence is shaken, you have disaster.”

#6 Richard Bove, VP of research at Rafferty Capital Markets: “If they seriously default on the debt, what we’re really talking about is a depression”

#7 Chinese vice finance minister Zhu Guangyao: “The U.S. is clearly aware of China’s concerns about the financial stalemate [in Washington] and China’s request for the US to ensure the safety of Chinese investments.”

#8 The U.S. Treasury Department: “A default would be unprecedented and has the potential to be catastrophic: credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008 or worse”

#9 Goldman Sachs: “We estimate that the fiscal pull-back would amount to 9pc of GDP. If this were allowed to occur, it could lead to a rapid downturn in economic activity if not reversed quickly”

#10 Simon Johnson, former chief economist for the IMF: “It would be insane to default, but it’s no longer a zero-percent probability”

#11 Warren Buffett about the potential of a debt default: “It should be like nuclear bombs, basically too horrible to use”

#12 Bloomberg: “Anyone who remembers the collapse of Lehman Brothers Holdings Inc. little more than five years ago knows what a global financial disaster is. A U.S. government default, just weeks away if Congress fails to raise the debt ceiling as it now threatens to do, will be an economic calamity like none the world has ever seen.”

A U.S. debt default could be the trigger for the “nightmare scenario” that so many people have been writing about in recent years.  In fact, it could greatly accelerate the timetable for the inevitable economic collapse that is coming.  A recent Yahoo article described some of the things that we would likely see in the event of an extended U.S. debt default…

A default would upend money markets, destroy bond funds, slam the brakes on lending, cause interest rates to spiral, make our banks insolvent, and deal a blow to our foreign trading partners and creditors around the globe; all of which would throw the U.S. and the world into economic disarray.

And of course stocks would crash big time.  Deutsche Bank’s David Bianco believes that if the U.S. government starts missing interest payments on U.S. Treasury bonds, we could see the S&P 500 go down to 850 by the end of the year.

There would be almost immediate panic among ordinary Americans as well.  In fact, it is being reported that some banks are already stuffing their ATM machines will extra cash just in case…

With just 10 days left to raise the debt ceiling and congressional Republicans threatening to force the government to default on its obligations, banks are taking some dramatic steps to prepare for the economic chaos that would result should the brinkmanship continue.
 
The Financial Times reports that one major U.S. bank has started stuffing its automatic teller machines with extra cash in preparation for a possible bank run from panicked depositors. The New York Times reports that another bank is weighing a plan to advance funds to customers who rely on Social Security and other government payments that could stop in the event of a default.

Let’s hope that cooler heads will prevail and that a U.S. debt default will be avoided.

Unfortunately, it appears that the Democrats are absolutely determined not to be moved from their current position a single inch.  They have decided to refuse to negotiate and demand that the Republicans give them every single thing that they want.

And who can really blame them for adopting that strategy?  After all, it has certainly worked in the past.  Whenever Democrats have stood united and have refused to give a single inch, the Republicans have always freaked out and caved in eventually.

Will this time be any different?

The funny thing is that once upon a time, Barack Obama was adamantly against any increase in the debt limit.  The following comes courtesy of Zero Hedge

Obama Debt Ceiling

But now Obama says that it is so unreasonable to be opposed to a debt limit increase that any negotiations are out of the question.

So which Obama is right?

If the Democrats will not negotiate, a debt default could still be avoided if the Republicans give in.

And that is what they always do, right?

Perhaps not this time.  Just check out what John Boehner had to say on Sunday

“I, working with my members, decided to do this in a unified way,” the speaker said — with demands to defund, delay or otherwise alter the Affordable Care Act.
 
Boehner had expected that the Obamacare fight would come during the next vote to raise the debt ceiling, “but, you know, working with my members, they decided, let’s do it now,” he said. “And the fact is, this fight was going to come, one way or another. We’re in the fight. We don’t want to shut the government down. We’ve passed bills to pay the troops. We passed bills to make sure the federal employees know that they’re going to be paid throughout this.”
 
“You’ve never seen a more dedicated group of people who are thoroughly concerned about the future of our country,” he said of House Republicans. “It is time for us to stand and fight.”

But will the Republicans really stand and fight?

In the past, betting on the intestinal fortitude of the Republican Party has been a loser every single time.

So we’ll see.  Boehner insists that this time is different.  Boehner insists that he is not going to fold like a 20 dollar suit this time.  In fact, when he was asked if the U.S. government was headed toward a debt default if Obama continued to refuse to negotiate, Boehner made the following statement

“That’s the path we’re on.”

The mainstream media has certainly been placing most of the blame at the feet of the Republicans, but at least the U.S. House of Representatives has been trying to get an agreement reached.  The House has voted 26 times since the Senate last voted.  Harry Reid has essentially shut the Senate down until the Republicans fold and give the Democrats exactly what they want.

The funny thing is that this could probably be solved very easily.  If the Democrats agreed to a one year delay to the individual mandate, the Republicans would probably jump at it.  And because of epic technical failures, hardly anyone has been able to get signed up for Obamacare anyway.  So a one year delay would give the Obama administration time to get their act together.

Unfortunately, the Democrats seem absolutely obsessed with the idea that they will not give the Republicans one single inch.  They seem to believe that this will be to their political benefit.

But this is a very dangerous game that they are playing.  The U.S. government must roll over 441 billion dollars of short-term debt between October 18th and November 15th.

If a debt ceiling increase is not in place by that time, it will send interest rates soaring.  Borrowing costs for state and local governments, corporations, and ordinary Americans will go through the roof and economic activity will be hit really hard.

And as detailed above, we could potentially be looking at a financial crash that would make 2008 look like a Sunday picnic.

So let us hope for a political solution soon.  That will at least kick the can down the road for a little bit longer.

If a debt default were to happen before the end of this year, that would bring a tremendous amount of future economic pain into the here and now, and the consequences would likely be far greater than any of us could possibly imagine.

Image credit: http://theeconomiccollapseblog.com

Debt Ceiling Humor: “I Therefore Intend To Oppose The Effort To Increase America’s Debt Limit”

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Source: http://www.zerohedge.com

By Tyler Durden

Debt Ceiling Humor: “I Therefore Intend To Oppose The Effort To Increase America’s Debt Limit”

 

Just because it never, ever gets old…

Obama Debt Ceiling

Growing Up In America — Paul Craig Roberts

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Source: http://www.paulcraigroberts.org

By Dr. Paul Craig Roberts

Growing Up In America

 

Things Are Bad And Getting Worse

Terrible things are happening faster than we can keep up with them. Monsanto, widely regarded as a criminal enterprise, is expanding its monopoly over seeds and food production into Chile and Latin America. http://rt.com/news/chile-protest-monsanto-law-634/ Monsanto has given up for now on monopolizing Europe’s agriculture, but has brought the EU around to allowing it to market GMO food products. Money speaks, which perhaps is the reason that Chile’s former president, Michelle Bachelet, introduced the pro-Monsanto legislation that one of the legislative chambers has passed. There are mass demonstrations in Chile against the legislation that destroys Chile’s sovereignty over its food production, but just as Monsanto can purchase the US government it also can purchase the Chilean government. In our day and time, governments are just another commodity to be bought and sold by powerful corporations.

And then there is Fukushima. Media have led us to think that this nuclear crisis is over,
but it appears that it is only beginning. The risk of apocalypse is high. You can read here http://rt.com/news/fukushima-apocalypse-fuel-removal-598/ one assessment of the risks to all of us. Here another http://www.counterpunch.org/2013/08/13/the-fukushima-nightmare-gets-worse/print And here another http://www.lewrockwell.com/2013/08/russia-today/chain-reaction-at-fukushima/ And another http://www.commondreams.org/headline/2013/08/10-0
And here http://www.globalresearch.ca/fukushima-japanese-government-big-business-and-corporate-media-tried-to-hide-a-grave-threat/5346197

As soon as Egypt gets a democracy with an elected president, Washington has the military, which is dependent on Washington for money and equipment, to overthrow the democracy, just as Washington does in Honduras and elsewhere. The Egyptian government that democracy produced was Islamist. The Muslim Brotherhood is moderate, not radical, but the moderate Islamists showed lack of enthusiasm for supporting the Washington-Israeli policy of genocide for Palestine. Washington finds “freedom and democracy” unacceptable when it does not support Washington’s foreign policy.

This fall Congress will again be confronted with the debt ceiling limit. To keep this specter at bay, the US Treasury has been employing questionable means. The crisis that has been kicked down the road is likely to worsen, because the economy is likely to renew its decline in ways that cannot be disguised by manipulated statistics. Sooner or later the world will realize that the US cannot pay its bills and that the world’s reserve currency is being ruthlessly printed in order to prop up busted banks and the US Treasury. The house of cards that US economic policy has constructed in the 21st century can collapse at any time.

Since so much that is distressing awaits us, I propose a bit of respite and in this column
take us back to happier times.

Growing Up In America
cars make a difference

It was 1955 when I came of driving age. What a glorious year on the automotive scene. The first V-8 engined Chevrolet appeared in the striking art work of the 1955 Bel Air hard top coupe. Often two-toned, usually pastels, this car, stock from the dealer, had the acceleration to match the souped up flathead V-8 Ford engines that were ensconced in the hot rods of the day.

The small block V-8 found its way into the Corvette, saving the Corvette from extinction.

Ford came out with its new overhead valve V-8, installed in the 1955 Thunderbird, still a show-stopper today. The Thunderbird existed as a two-seater for 3 years. The 1955 and 1956 Ford Fairlane hard top coup looked like it was doing sixty sitting still.

The dramatic styling and energetic engines appeared everywhere in Detroit’s lineup, in the Mercury, the Pontiac, Oldsmobile, the Buick Century. So many two-tones, acceleration times cut in half. Life was good.

Not to be outdone, Chrysler produced the 1955 Chrysler 300 with a 300 horsepower Hemi engine. This car was the high speed king, reaching 130 mph. In 1956 the 300 Hemi delivered 355 horsepower capable of 140 mph. By 1957 the 300 Hemi produced 390 horsepower, outrunning the Ferraris of the day.

Every style of every marque was distinctive. There was no mistaking one model for another. Driving on city streets and country highways was a feast for the eyes. Style and color were everywhere.

Even in those days driving occupied much of a person’s time. To be among striking designs and color combinations that excited the imagination was good for the psyche. We were a different people.

Decades ago a rare piece of fiction in Road & Track resulted in a premonition of the brutal and indistinguishable appearance of today’s SUVs and oversized pickup trucks.

It was the only piece of fiction, aside from a cartoon strip feature, that I recall ever appearing in R&T. The magazine is about road tests, car reports, and race results.

Perhaps the explanation for the fictional story is that a prescient car guy realized the brutal design implications of the looming car safety standards and wrote a story set in the future.

In the story, a man has a lovely sports car from the past that, unlike the mandated safety vehicles, is fun to drive, but he can no longer take it out during normal hours. Under federal safety mandates, vehicles had become massive hulks, brutal in appearance, and capable of smashing the cars of the past without injury to themselves or their drivers. Drivers of the safe machines patrol on the lookout for cars from an earlier, more elegant time. It was a sport to corner them and to crash into them, thus terminating their existence and removing the offense to the ugliness of the safe cars mandated by the government.

To avoid the demise of his car, he only took it out at 3:00 AM in order to avoid encounters with safe cars. But one early morning two of the hulks were waiting for him. The safe cars approached from both ends of the road, leaving him no way out. But the agility of his car and his skills as a driver permit his escape. Henceforth his enjoyment of his car is confined to visits in the garage and memories of past drives.

I don’t remember if the story was illustrated or whether the image of the SUV was created by the writer’s words, but years later when I saw the first SUV, now with names, such as Titan, to go with their brutal appearance, I instantly recalled the R&T story.

The young have no memory of the past. They cannot know how exciting automobiles once were. The excitement created by the explosion of styles, colors, and performance in 1955 is gone from the world. It was a 15-year experience, with the muscle cars of the 1960s keeping the thrill alive.

When the Jaguar E-Type appeared in 1961, no one could believe that such an extraordinarily beautiful and fast car could be had for $5,000. Enzo Ferrari, the master car-maker of all time, declared the E-Type to be the most beautiful car in the world. One sits in permanent exhibition in the Museum of Modern Art in New York City. Who could imagine a SUV being there, or an over-sized pick-up truck? If we had called for our Saturday night dates in such vehicles, our dates would have been mortified and would have refused to come out of the house.

Anyone who has sat in the driver’s seat of an E-Type, the first modern car with all independent suspension and 4-wheel disc brakes, looking over the long and louvered bonnet (hood), and starting the powerful engine with its Jaguar growl finds today’s vehicles utterly depressing.

Another extraordinary design of the era was the Lamborghini Miura. It came 5 years after the E-Type and was an equal show-stopper.

Today if you have a quarter of a million dollars to spend on a car, you can purchase cars that can outperform these icons of the 1960s. But if you drive up in your Audi A-8, your AMG Mercedes, your Porsche turbo, your Ferrari Italia, the audience will flock to the E-Type and to the Miura. Style, when it was not dictated by Washington, was brilliant. There will never again be anything like it.

Today cars from the fifties and sixties, including the 1954 Oldsmobile Super 88 coupe, if in reasonable condition, are more valuable than most new cars. A good Miura goes for $1 million. A Series 1 E-Type, produced in much larger numbers than the Miura, goes for $125,000 if in good condition. I have a friend who in the mid-1960s bought and sold for $9,000 a Ferrari 250 GTO. This Ferrari, an aggressive and beautiful take-off on the elegant E-Type, won the world championship for three years in the early 1960s. There were only about 36 of them produced. One sold recently for $35 million. Try to imagine, short of dollar hyperinflation, any vehicle of our time ever fetching $35 million as a used car.

Seeing a car, rather than a SUV or monster pick-up truck, is becoming a rare event. Recently, I made a count on a stretch of Interstate highway, and 75% of the traffic consisted of SUVs and over-sized pick-up trucks. Americans want to appear brutal like their vehicles, and their police, and their governments.

SUVs were an unintended consequence of federally mandated fleet gas milage standards. Auto makers complied with the mandate by eliminating station wagons. People looking for station wagon replacement settled on delivery vans and panel trucks. These vehicles, classified as light trucks, were exempt from the gas milage standards, and the SUV was born.

The unintended consequence of safety standards is to take beauty out of almost all vehicles. How many attractive vehicles do you see today? I recently made a 370 mile trip and saw one car worthy of notice. It was a $300,000 600HP Bentley coupe, a rare and unusual car. When I came of driving age, beautiful and colorful cars emitting wonderful sounds were everywhere. We were surrounded by them. They were Chevrolets and Fords. They weren’t for the mega-rich. The working class could afford them.

Think about this for a minute. People spend much of their lives in passenger vehicles. They commute to work and back to home. They travel to shop. They travel to vacation destinations. They take children to school and back to home. All of this time that they spend in vehicles they never see anything beautiful or artistic unless some unusual remnant from the past or a rare modern day supercar, whose cost exceeds their lifetime earnings, happens by.

This was not true in my day. We were surrounded by color, style, and attractive designs. Literally everyone could afford it. The epitome of style was the two-door hard top coupe. Such a vehicle would cost, perhaps, $400 more than the base model that lacked the elegant touches.

Today, in our brutalized transportation existence, in which no make or model can be identified from any other and in which a two-tone paint job doesn’t exist, anyone with a collection of 1950s and 1960s two-door hard top coupes is a wealthy person not merely in money but also in spirit.

Today a person with a beautiful car from the past does not yet have to worry about being chased down and destroyed by a modern safe-car hulk, but he has to worry about where he parks it. Beauty and style elevate. Ugliness uglifies. People who drive barbarian cars can themselves become barbarians.

Terrible things happened in the 1950s and 1960s. McCarthyism got loose for a short period. President John F. Kennedy and his brother Bobby were murdered, as was Martin Luther King, perhaps by their own government. The reliance on fear to keep the profitable cold war going and the elimination of those who would change course are antecedents of the present. We still suffer from them.

The difference is that then enough Americans had a frame of mind that had space for the optimism that permitted blacks to be legislated into full citizenship and for the protests that brought to an end the military/security complex’s profitable aggression in Vietnam.

Perhaps elegant cars had a civilizing influence and contributed to that frame of mind. Get Washington out of car design. It might help to restore our humanity from the brutality that surrounds us.

Reprinted with permission from www.paulcraigroberts.org


 

About Dr. Paul Craig Roberts

Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. His latest book, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is now available.

Debt Ceiling Quietly Raised $51 Billion With No Vote

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Source: http://www.westernjournalism.com

By

Debt Ceiling Quietly Raised $51 Billion With No Vote

 

Obama’s unelected bureaucrat, Treasury Secretary Jack Lew, just unilaterally hiked the national debt of the United States another $51 billion dollars. And how did he do it? Simple. He just did it. No Senate. No Congress. No problem.

 

7-26-2013 6-03-15 AM

CleanTV video capture

 

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H/T Joseph Gruber

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