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The U.S. government can push back a default a month or more after the Aug. 2 deadline set by the...

The U.S. government can push back a default a month or more after the Aug. 2 deadline set by the Treasury Department, Wells Fargo chief economist John Silvia says. The Fed and Treasury can work together to generate enough cash "probably for the next two or three months," adding credence to reports that the U.S. is telling big banks a default won't happen. (earlier: I, II)
Comments (49)
  • kmi
    , contributor
    Comments (4042) | Send Message
     
    Damn I sure am happy Wells Fargo knows Treasury's books better than Treasury does.
    25 Jul 2011, 06:27 PM Reply Like
  • Windsun33
    , contributor
    Comments (4277) | Send Message
     
    They don't have to know their books, it is simple math.

     

    Incoming receipts = around $2 trillion a year.

     

    Debt service that has to be paid to avoid default = around $200 billion per year.
    25 Jul 2011, 10:04 PM Reply Like
  • kmi
    , contributor
    Comments (4042) | Send Message
     
    I'll point out that by this time the we have been juggling for almost 2 months. August 2 isn't the start of our problem.

     

    This guy Silvia thinks our one legged cow can roller skate for another month. And you think this is as simple as income minus debt. And both of you think that fiddling with the credit of the country is appropriate or warranted.
    25 Jul 2011, 11:34 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (3817) | Send Message
     
    But.... Isn't it that simple? The guv got all harsh on the credit card companies to "protect" the flock from doing exactly what they want to continue doing.
    25 Jul 2011, 11:46 PM Reply Like
  • kmi
    , contributor
    Comments (4042) | Send Message
     
    If it was that simple Treasury would only employ one guy and a calculator.

     

    It's taking some interesting acrobatics to keep the country afloat as it is, and now we want the jugglers to do it with one hand tied behind their backs.
    26 Jul 2011, 10:00 AM Reply Like
  • Poor Texan
    , contributor
    Comments (3531) | Send Message
     
    Oh goody! Another month of fun, games, drama and economic uncertainty.
    25 Jul 2011, 06:30 PM Reply Like
  • Stoploss
    , contributor
    Comments (1727) | Send Message
     
    Banks are nervous.. Warren's nervous, and should be.

     

    As long as they keep raiding govt pension funds, who cares.

     

    Anyone else find it odd there has not been a peep about it?
    25 Jul 2011, 06:53 PM Reply Like
  • Stoploss
    , contributor
    Comments (1727) | Send Message
     
    I bet a dozen doughnuts the crazy sobobozo hauls off and raises the debt ceiling all by his little hissy fitting self.

     

    Oh please, oh please..

     

    He would be a truly gutless wonder if he doesn't. HA!!!
    25 Jul 2011, 08:13 PM Reply Like
  • Uber Vandal
    , contributor
    Comments (296) | Send Message
     
    I am waiting for the raiding of IRA and 401(k) and 403(b) accounts next.

     

    But, it will not be called raiding, you will just need to put a percentage of your IRA into US securities. Perhaps 100%.

     

    After that, since only "the rich" have Roth IRA's, they will be taxed, too.

     

    Perhaps the best way to raise the money is just through inflation, by "readjusting" the CPI.

     

    If steak gets expensive, you buy hamburger. Hamburger gets expensive, you buy beans. Beans get expensive, you get tree bark. Tree bark gets expensive, it really won't matter anymore.
    25 Jul 2011, 10:55 PM Reply Like
  • CautiousInvestor
    , contributor
    Comments (3058) | Send Message
     
    They can push it back further than that as monthly tax receipts are about 10X net monthly interest payments.

     

    Obama, Geithner and others should be reassuring the world that we can meet our obligations without an increase in the debt ceiling while debating the package and charting the country's future.

     

    Instead, our purported leaders are fear mongering for overtly political and ideological reasons, resisting and fighting all attempts to constrain promiscuous spending laden with pork, waste and fraud.
    25 Jul 2011, 06:33 PM Reply Like
  • kmi
    , contributor
    Comments (4042) | Send Message
     
    Sweet, an opinion by a Treasury insider confirming all is well with the world and giving Obama and Boner the green light to continue bickering like school children.

     

    Or maybe it's just an opinion.
    25 Jul 2011, 06:41 PM Reply Like
  • JB1982
    , contributor
    Comments (100) | Send Message
     
    "we can meet our obligations without an increase in the debt ceiling"

     

    How? Wouldn't we have to stop paying somebody? If not bondholders then government vendors or social security recipients or somebody.

     

    And it seems more like ideology is preventing a compromise from being reached rather than causing the fear mongering. The fear seems prudent as at this time if a deal is not reached we don't know who will stop getting paid only that somebody will be on the short end of the stick.
    25 Jul 2011, 07:13 PM Reply Like
  • Joe Morgan
    , contributor
    Comments (1500) | Send Message
     
    Obummer is the one who threatened to veto the Cut,Cap and balance deal....he doesn't wants to compromise unless the cuts comes from reducing troops overseas. The thing is that as the elderly population increases relative to the younger population, social security and Medicare would have serious funding problems. We need long term reform.

     

    By the way I support a big cut to the defense spending.
    25 Jul 2011, 08:56 PM Reply Like
  • Cincinnatus
    , contributor
    Comments (3653) | Send Message
     
    The point is servicing the debt isn't an issue. Yes, somewhere there would have to be shutdowns. Shutting down the Depts of Education and Energy would be a start.
    26 Jul 2011, 02:31 AM Reply Like
  • CautiousInvestor
    , contributor
    Comments (3058) | Send Message
     
    JB, yes were there an extended period in which the debt ceiling was not raised, which is unlikely, severe cutbacks would need to be made as we rely upon upon borrowing to fund 40% of our spending.

     

    As others have suggested, the Department of Education, the EPA, the Department of Energy, the Deaprtment of the Interior could all be scaled back, if not eliminated, to the benefit of the entire country. We could also begin addressing a recent GAO report which discloses a mother lode of waste and ineffciency through department and agency overlap, costing taxpayer about the same amount as our net interest expense ($200B).

     

    As to fear, the markets only care about the event of default and could care less if some sloth posing as a civil service worker is furloughed.
    26 Jul 2011, 08:44 AM Reply Like
  • kmi
    , contributor
    Comments (4042) | Send Message
     
    Awesome. Who has the authority to do these things and how can we get it done?

     

    Who is the arbiter of which checks get written and which dont?

     

    Who has the right to determine which paychecks get paid and which get IOUs?

     

    The Reps? The Dems? The President? Congress? Treasury?

     

    What kind of grade school crap is this. Stating something you want is different from having the U.S. Federal Government implement it just cause you think it is a good idea.
    26 Jul 2011, 10:05 AM Reply Like
  • Cincinnatus
    , contributor
    Comments (3653) | Send Message
     
    Obviously it's the sort of grade school crap you didn't bother to learn.
    26 Jul 2011, 10:20 AM Reply Like
  • kmi
    , contributor
    Comments (4042) | Send Message
     
    Sorry while you were in the sandbox comparing genital size I was busy getting an education.

     

    Are you seriously going to play the insult game with me? It's tired, so is your ignorance.
    26 Jul 2011, 10:44 AM Reply Like
  • CautiousInvestor
    , contributor
    Comments (3058) | Send Message
     
    kmi

     

    The framers of the constitution intended for there to be friction between the executive branch and congress which is why they gave the latter exclusive control over spending.

     

    Sadly, though,congress is comprised of two lousy political parties that are equally corrupt but in this instance the republicans enjoy the intellectual highground and offer a superior view of the future through containing spending and wanton accumulation of debt.

     

    And government shutdowns have been more helpful than harmful. In 1990 Bush followed through on the threat of a veto which effectively shut down several federal agencies for three days over a weekend. Fearing negative fallout from a more extensive government shutdown, congress and the president reached a compromise plan to reduce the federal deficit without the disputed surtax. In this light it was constructive.

     

    In 1995 a balanced budget dispute divided the branches of government as well as political parties, leading to an impasse and the expiration of federal funding. Without adequate funding, much of the federal government—including agencies, museums, national parks, and research laboratories— ground to a halt. Some 800,000 government employees deemed "nonessential" were sent home. "Nonessential" is truly classic.

     

    Politicians on both sides of the issue faced disapproval from their constituents, compromises were reached and a week after it started the shutdown was over. There was no default and the episode led to budget surpluses in the last three years of the Clinton presidency, the last time we have had surpluses. Again a constructive outcome.

     

    What are you so angry and what are you afraid of?
    26 Jul 2011, 12:08 PM Reply Like
  • Cincinnatus
    , contributor
    Comments (3653) | Send Message
     
    "Are you seriously going to play the insult game with me?"

     

    You're correct kmi, I couldn't beat you at that game and wouldn't try. You are one bad dud.

     

    I was just pointing out that had you paid any attention in grade school you'd have learned that "crap" and this wouldn't all be mystery to you.
    26 Jul 2011, 01:01 PM Reply Like
  • kmi
    , contributor
    Comments (4042) | Send Message
     
    CInvest:

     

    This is not the same. You may think it is the same as other shutdowns, but you haven't been paying attention. We are already two months into it, and we have jugglers pushing money around hoping to keep us solvent.

     

    Why am I angry? Because playing Russian Roulette with the credit of the American People is NOT acceptable. At the end of the day it may well be a non-event. What if it's not? What if its actually as calamitous as you you couldn't possibly have been prepared for? Why is it so hard to grasp?

     

    It's simple stuff.
    26 Jul 2011, 03:20 PM Reply Like
  • kmi
    , contributor
    Comments (4042) | Send Message
     
    Right-ey-O Cincinnatus I'll keep playing.

     

    Feel free to keep commenting and I'll keep abusing you for your assinine comments.
    26 Jul 2011, 03:24 PM Reply Like
  • CautiousInvestor
    , contributor
    Comments (3058) | Send Message
     
    kmi

     

    Why is it so hard to grasp? That is a question you should put to yourself as it's impossible to default unless we willfully choose to do so; monthly revenues are in place to service our debt. The numbers are in the public domain unlike details of the debt ceiling discussions.

     

    Beyond this, this is a unique event because our debt is approximately 100% of GDP and prior to the debt ceiling discussions the ratings agencies downgraded our outlook because of unsustainable trajectories of debt and deficits. In May we had too much debt do you believe increasing it in July will fix anything?

     

    As a country we are at a political inflection point; if we continue current policies we are doomed to stagnation and mediocrity. This notwithstanding, we have the most partisan and determined liberal in the white house since Roosevelt and he's either obtuse or blinded by ideology; he and basketball buddies do not understand that current debt and deficits are fundamentally at odds with the long-term health of the economy and his intermittent (monthly after the employment report) cries for growth and job creation.

     

    But there is inherent tension and conflict in his thinking; it's not coherent. And he's easily capable of pursuing ruinous and partisan policies at the expense of the country; he cannot be allowed to do this. Debt stunts growth and, realizing this, the agencies frown upon our unsustainable fiscal trajectory. We can recover from a government shutdown with a sensible fiscal and debt plan; we cannot survive however, with or without a shutdown, with unsustainable deficits and debt.

     

    It's very simple.
    26 Jul 2011, 04:11 PM Reply Like
  • Papaswamp
    , contributor
    Comments (2198) | Send Message
     
    If you have to raid other funds to pay the bills…you are in technical default.
    25 Jul 2011, 06:33 PM Reply Like
  • RiskAverseAlert
    , contributor
    Comments (174) | Send Message
     
    Damn straight a default won't happen! Any pol even using the word should be censured. Ridiculous! NOT ONE WORD DOES ANYONE DARE UTTER ABOUT THE TENS OF TRILLIONS OF TREASURY OBLIGATIONS BACKING THE HOPELESSLY INSOLVENT PONZI SCHEME THAT IS THE U.S. BANKING SYSTEM. Gutless cowards.
    25 Jul 2011, 07:18 PM Reply Like
  • tigersam
    , contributor
    Comments (1711) | Send Message
     
    There will be deal before this Friday.
    25 Jul 2011, 07:30 PM Reply Like
  • User 85235
    , contributor
    Comment (1) | Send Message
     
    If US Inc was a business, then it would be out of business or bought out at cents on the dollar. I am really disappointed that our elected officials have acted so irresponsibly and ineffectively. Please stop this drama! Americans, please do not contribute to any campaigns (Obama or your favorite Republican) until you see positive action from these jokers.

     

    Step 1: Raise the debt ceiling unconditionally. No ifs and buts.

     

    Step 2: Reduce causeless national spending. I am sure there are still several possibilities. For example, why defend allies that don't give a damn about us politically?

     

    Step 3: Tax the hell where possible. What do you mean no raising taxes? If you are a Citizen, consider it your privilege.

     

    Step 4: Plan for the future. Raise investment in education at every level, build quality infrastructure, support unique competencies, build a self-sufficient nation. Show me a vision to make America #1 in 2030!

     

    Mr. Obama & Republicans,

     

    It is time to act to succeed, not hope to succeed. The stupidity of past years of management - Cliton/Bush - is also to blame. Let not political rhetoric drive the right decisions needed.
    25 Jul 2011, 08:00 PM Reply Like
  • Windsun33
    , contributor
    Comments (4277) | Send Message
     
    ".. Raise investment in education at every level, build quality infrastructure, .."

     

    We have been doing that for decades, and have ended up with one of the most expensive prublic school systems per student in the world, and in by far the most expensive universities in the world - so much so that student debt is now about 10x what it was just 11 years ago.
    25 Jul 2011, 10:08 PM Reply Like
  • Neil459
    , contributor
    Comments (2644) | Send Message
     
    "Step 1: Raise the debt ceiling unconditionally. No ifs and buts."

     

    You just lost all credibility. If this happens, there will never ever be any reduction in spending. Your savings will become worthless as more money is printed and American will become another two-bit third world country that has to confiscate private funds and business so the politicians can survive the lynching they will get when they say no more free money. Which they have to say sometime, look at Europe. Even they understand it can't go on forever.
    25 Jul 2011, 08:09 PM Reply Like
  • bob adamson
    , contributor
    Comments (4558) | Send Message
     
    Pushing back the default horizon would be a good thing in the unlikely event that this would serve to facilitate an orderly political solution to the debt ceiling issue. Conversely, however, this would be a very bad think if it merely took the pressure off those charged by reason of their elective office with responsibility to come to grips with this political crises and thereby allowed the current uncertainty, administrative confusion and political toxicity to deepen.
    25 Jul 2011, 08:37 PM Reply Like
  • enigmaman
    , contributor
    Comments (2686) | Send Message
     
    Lets see if Obama will be honest tonight with the American people and tell them what they are telling the banks, that default isnt going to happen, and that August 2nd isnt a real drop dead date either, odds anybody????

     

    Ill bet you that Obama will do his best to demagogue the Republicans and scare the hell out of Grandma and Grandpa about not getting there SS checks and maybe even cause the market to drop more then it did today, you know to be fair, something for everybody "redistribution"
    25 Jul 2011, 08:51 PM Reply Like
  • enigmaman
    , contributor
    Comments (2686) | Send Message
     
    You would have lost had anybody taken my bet, hail our Demagogue in chief Obama
    25 Jul 2011, 09:11 PM Reply Like
  • kmi
    , contributor
    Comments (4042) | Send Message
     
    I am consoled by the fact that you know exactly how this will play out and that you have such specific knowledge of Treasury's books that you can guarantee that.
    25 Jul 2011, 09:16 PM Reply Like
  • enigmaman
    , contributor
    Comments (2686) | Send Message
     
    KMI- thank you, seeing Obama for what he really is, a shallow egotistical megalomaniac requires nothing more then listening to him like tonight as he employed his Svengali techniques to try and sway his tax paying audience.
    25 Jul 2011, 09:43 PM Reply Like
  • bankingqueen
    , contributor
    Comments (135) | Send Message
     
    Just talked to Bernie Madoff, he was laughing uncontrollably. When I asked what was so funny, he replied Ponzi!!! Btw he was watching obama and reid speak on T.V. I asked him if he had any other comment? He stated I dont have anything on those crooks.
    25 Jul 2011, 09:17 PM Reply Like
  • Bozerdog
    , contributor
    Comments (464) | Send Message
     
    Why was it so easy and quick for the same politicians to give trillions to the banks a couple years ago, and now they can't agree to pay our bills? Serious question, not looking for a one sided answer.
    25 Jul 2011, 10:49 PM Reply Like
  • enigmaman
    , contributor
    Comments (2686) | Send Message
     
    its not a question of paying our bills its a question of "at what point do you say no to the gov. taking on more debt they we can afford?" Tarp kept our financial system working and has been almost entirely paid back by the banks with interest, so harm no foul. The difference now is the government is spending more then it takes in. Would you lend them money knowing this, especially without a definite plan in place to get its spending under control. Because in the end it is the taxpayer that is on the hook for the bill not the government.
    26 Jul 2011, 07:35 AM Reply Like
  • Bozerdog
    , contributor
    Comments (464) | Send Message
     
    Right I understand that point. Still just as the banks went extremely in debt and had to pay it back, why can't our country...we have done it before.
    26 Jul 2011, 08:14 AM Reply Like
  • enigmaman
    , contributor
    Comments (2686) | Send Message
     
    Boz- the difference is banks make money Governments spend money. As far as the government paying its own way, never has never will, taxpayers and tax paying business always have to pick up the tab for the Government. If your referring to a balanced budget, it happened only one time under B Clinton with a republic controlled congress. The difference between then and now is B Clinton wasn't an ideologue as is Obama, which infuriated his party and base.
    26 Jul 2011, 09:19 AM Reply Like
  • kmi
    , contributor
    Comments (4042) | Send Message
     
    No, no one lends to someone who has no ability to pay. Government taxes. And a stronger economy means more revenue. I can make dumbed down simplistic statements like that too.

     

    Obama is a compromiser. 6 months ago he was Carter today he is an idealogue? Hilarious. 6 months ago folks were pining for strong leadership and today he is too opinionated? Funny.
    26 Jul 2011, 10:09 AM Reply Like
  • Cincinnatus
    , contributor
    Comments (3653) | Send Message
     
    Leadership would be defined as say proposing a budget, or admitting that SS isn't sustainable in it's present form. Being an ideologue doesn't imply leadership. "Too opinionated" is a pointless, meaningless term that's too dumbed down and simplistic a statement to waste time uttering.
    26 Jul 2011, 10:27 AM Reply Like
  • kmi
    , contributor
    Comments (4042) | Send Message
     
    Good job appropriating my position for your own use.

     

    Obama doesn't have to propose a budget, he has to pass one. No sense shooting blanks which is what I hope you do.
    26 Jul 2011, 10:46 AM Reply Like
  • Bozerdog
    , contributor
    Comments (464) | Send Message
     
    OK but going back to your original statement. So Tarp kept the banking system alive until the money could be paid back? Some probably think TARP should have had more stipulations, or a higher interest rate, more cuts in bank executive salaries so on and so forth but TARP was passed and for all intensive purposes it was paid back. In the same regard some people think the raising of the debt ceiling should have more stipulations, ie more cuts, keep taxes low etc. Seems to me like the same thing....
    My theory: Everyone in congress and the white house knows we aren't going to default and are using this as a political/campaign issue. If it were serious like when TARP was allocated it would be a done deal.
    26 Jul 2011, 11:00 AM Reply Like
  • bob adamson
    , contributor
    Comments (4558) | Send Message
     
    Bozerdog -

     

    Your theory is fine but....

     

    All the key players may have started with the assumption you describe but might they by now have painted themselves so securely into a corner rhetorically that it will become next to impossible to craft a timely settlement to the debt ceiling issue, particularly because that issue is now so intertwined into the debates about the role of government that each side, in its own way, cares deeply about.
    26 Jul 2011, 11:27 AM Reply Like
  • Cincinnatus
    , contributor
    Comments (3653) | Send Message
     
    kmi, again had you paid any attention in school you'd know this.

     

    By law Obama has to submit a budget to Congress each year. It's up to Congress to pass the budget.

     

    I suggest going back to complete a GED and try to pick some of this stuff up.
    26 Jul 2011, 01:09 PM Reply Like
  • kmi
    , contributor
    Comments (4042) | Send Message
     
    Pay more attention Cin and maybe you'll get it.

     

    Obama has been presiding over talks. He knows what will pass and what won't. He'll do it on his time, not yours.

     

    Maybe you should ask an adult to explain this to you.
    26 Jul 2011, 03:25 PM Reply Like
  • Cincinnatus
    , contributor
    Comments (3653) | Send Message
     
    "He knows what will pass and what won't. He'll do it on his time, not yours."

     

    If you're speaking of his diet, then I agree he knows what will pass and he should indeed do it on his own time. Thanks for the clarification.
    26 Jul 2011, 03:36 PM Reply Like
  • Neil459
    , contributor
    Comments (2644) | Send Message
     
    "Obama has been presiding over talks. He knows what will pass and what won't. He'll do it on his time, not yours. "

     

    This is pure BS. When he was supposed to submit the budget, his party was in charge of the House. He chose to ignore the law then, just like he is choosing to ignore the law now.
    27 Jul 2011, 11:41 AM Reply Like
  • bob adamson
    , contributor
    Comments (4558) | Send Message
     
    One myth that needs debunking is that if the US were now to default on some part of its sovereign debt, then this would be unprecedented. While there are many good reasons to avoid such a default now, particularly if it occurs in an unplanned and uncoordinated fashion, such defaults in the past were as American as apple pie as the following article illustrates.

     

    www.theglobeandmail.co.../
    26 Jul 2011, 04:34 PM Reply Like
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