Congress will fall for it, once they get done posturing for the electorate.

They all just keep lying: that failure to raise the debt ceiling means default. And the media don't explain it because reporters are even dumber than their readers/viewers/listeners.

The only thing that could possibly concentrate Boehner's attention is the possibility of a serious primary challenge next year.

Well, even though they may not pay attention, I'll write my congress critters and tell them they should oppose any increase in the debt limit and instead cut the budget. The budget can be balanced by changing just two items. Eliminate the wars in Iraq and Afghanistan and repeal the Bush era tax cuts. Yes, you may not get all the revenue back, as I'm sure some will then seek the shelter of municipal bonds, but it will still be enough to balance the budget.

Yes, as Gen says, this will cause a decline in the GDP, as we won't be paying companies to make guns and bombs, and there will be less money for people and business to spend after taxes, but better to take the 12% now and get it out of the way, rather than let the debt build up until the whole thing blows up and we are forced to take a 50% decline!

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The budget can be balanced by changing just two items. Eliminate the wars in Iraq and Afghanistan and repeal the Bush era tax cuts.

No it can't. Do the math before being stupid.

Obama has expanded the "spend" side of the ledger by an enormous amount in the last two years. You can't even get HALF of the deficit back with those two changes.

Tax the Rich at 100% and then lets eat them!
And then use their Corporate Jets to Bomb Libya in a kinetic nonmilitary nonreactionary action!

Snippet from Tim Geithner's letter to Senator DeMint

At its core, your letter is based on an untested and unacceptably risky assumption: that if the United State were to continue to pay interest on its debt — yet failed to pay legally required obligations to its citizens, servicemen and women, and businesses — there would be no adverse market reaction and no damage to the full faith and credit of the United States. Again, this idea is starkly at odds with the judgment of every previous Administration, regardless of party, that has faced debt limit impasses.

“Prioritization” also fails to account for how payments on principal would be made if investors were to lose confidence in U.S. creditworthiness. In August of this year, for example, more than $500 billion in U.S. Treasury debt will mature. Under normal circumstances, investors who hold Treasuries purchase new Treasury securities when the debt matures, permitting the United States to pay the principal on this maturing debt. Yet in the scenario you advocate, in which the United State would be defaulting on a broad range of its other obligations, there is no guarantee that investors would continue to re-invest in new Treasury securities. In fact, some market participants have already indicated that they would be disinclined to do so. As one of the major ratings agencies concluded in a recent report, failure to pay non-debt obligations “would signal sever financial distress and potentially imminent debt default,” prompting the U.S. sovereign rating to be place on “Rating Watch Negative.”

If investors chose not to purchase a sufficient volume of new Treasury securities, the United States would be required to pay the principal on maturing debt, and not merely the interest, out of available cash. Yet the Treasury would be unable to make these principal payments without the continued confidence of market participants willing to buy new Treasury securities. Your proposal assumes markets would be unconcerned by our failure to pay other obligations. But if this assumption proved incorrect, then the United States would be forced to default on its debt.

This is the same basic tactic as cities and states that demand more tax by threatening to cut the services which impact the public quickly - first responders instead of regulatory bureaucrats and redundant mid-level executives.
We'll kick the table over if we are losing the game!

If they want to pull a Blazing Saddles Sheriff defense and hold the gun to their head - Well, SHOOT!

Returns are pretty slim pick'ns. Turbo Tim wants to please his masters. A default( ish ) event will goose returns good and hard. Not to mention result in a lot of churning profits as everyone runs around, trying to get on the good side of the regime.

So, the Treasury either causes more debts, for profit and at the expense of younger generations( financial pedophilia ), or they default, a bit, just to provide reasoning for relitive******rates.

The sheeple are for shearing.

Did anyone catch the irony of Pres. Obama's press conference yesterday where he simultaneously pointed out that the U.S. does not want to be in a position to have to decide whether to pay interest on the debt or grannies medicare claim since it is the "greatest nation on earth". The unthinkable question of course would be how a nation of the uninformed led by buffoons can call itself the greatest nation on earth if it does not understand such an obvious reality....yes, choose we must or destroy the medium of exchange. The uninformed not only do not understand why they are rioting in Greece, they probably think it's a new tv "reality" show.

"“Prioritization” also fails to account for how payments on principal would be made if investors were to lose confidence in U.S. creditworthiness."

Geithner's argument in his letter to Demint is troubling because it illustrates just how FOS this fellow is. If Geithner were to make the argument that Gen is to the bond market, that is, that there will always be enough money to pay interest on exisitng treasuries, and this is the first priority and we will alwys honor this priority, the bond market would care less if the USG stiffed Walmart or whoever.

But if one were to believe Geithner's point of view, then certainly the bond market must cease to buy US treasuries if there is a roll back on SS benefits, that is, a failure to deliver or a default. Or if Medicare tightens up on qualification criteria for paying for procedures.

His argument is absolute nonsense and self serving. It is really a shoot yourself in the foot approach to have this jackrabbit make an absolutely implausible argument. Is this the best they got?

In argument against Tim Geithner's argument above, the Fed could put all the matureing debt rollovers on it's balance sheet if market participants failed to appear. A roll is not an increase in debt but a continuation of existing debt. The Fed has already taken a significant chunk as buyer of last resort anyway consuming a huge chunk of debt on it's balance sheet. Geithner denies that this tool is available in preventing an actual default. It is not a factor of market participants failing to appear but rather at what interest rate? The only reason the Fed has been meddling is to keep interest rates from exploding on the amount of debt currently issued.

The fact is that credit rating is irrelevant since the Fed could buy everything and set the interest rate. Apparently Geithner does not know how **** works in the real world. Geithner you are fired for being a dumb ass.

the problem i have with 'the budget' is that i dont believe the number.....i think we spend a vastly larger amount of money every day/month/year than the official budget.....how do we know what the budget amount is...well the gov tells us what the amount is and either thru deception or gross stupidity, i dont think they know what the true number is........are all the close door bailouts of the uniuons and states and banks nad secret military spending included in the 'public budget'......?

is the $16billion we 'lost' in iraq shown in a budget somewhwre...?

Geithner's position is essentially this: There are ten people in the water, but the lifeboat can only hold eight. So everyone drowns until we get a bigger life boat. What a maroon!

Bagbalm has nailed the real key to balancing the budget:

Quote:

This is the same basic tactic as cities and states that demand more tax by threatening to cut the services which impact the public quickly - first responders instead of regulatory bureaucrats and redundant mid-level executives.
We'll kick the table over if we are losing the game!

The problem is this superfluity of government employees, many of whom collect a very big paycheck and apparently have nothing to do but watch porn.

Part of Greece's problem (and the difficulty in getting it resolved) appears to be that just about everybody is a government employee. It's about that bad here.

I believe the term for the default threat is "brinksmanship". That is, Obama is willing to engage in a game of chicken with Congress. At this point, all we can do is be entertained by guessing which side blinks first. Unfortunately, unless you've protected yourself from a crashing dollar, you're on the bus - heading right at the semi....

Quote:

Geithner's position is essentially this: There are ten people in the water, but the lifeboat can only hold eight. So everyone drowns until we get a bigger life boat. What a maroon!

Actually not everybody drowns, bankers come first. Geithner's position is more like national credit rating = national security. Everyone else comes in second.

Informed comments?:

http://www.marketwatch.com/story/qe2-wor....

QE2 worked, St. Louis Fed’s Bullard says

Central banker cites real rates, inflation expectations and the dollar

WASHINGTON (MarketWatch) — The Federal Reserve’s innovative and controversial plan to pursue monetary policy through a second round of asset purchases, known as QE2, “worked in reality” by helping avoid a bout of mild deflation akin to Japan, a regional Fed president said Thursday.

“QE2 has shown that the Fed can conduct an effective monetary stabilization policy even when policy rates are near zero,” said James Bullard, president of the Federal Reserve Bank of St. Louis, on Thursday.

Whenever I make the mistake of watching the local evening news and they cover this story they repeat the lie: Congress must raise the debt ceiling or default on the debt.

This is straight out of the Hank Paulson "Tanks in the Streets and Martial Law" playbook, is a scurrilous lie, and should be rejected out of hand as such. Period.

Save the children! Old people are gonna die!

Seems like there are schizophrenic messages being sent about the debt. On one hand, they discuss how if we don't cut the debt there will be downgrades/catastrophe and on the other hand if the debt ceiling isn't raised and more debt is not issued, there will be downgrades/catastrophe.

I guess downgrades/catastrophe will happen no matter what is done.

I see they are floating the trial ballon stories about the debt ceiling being unconstitutional. Here we go.

http://www.bloomberg.com/news/2011-06-30....

See this about Geithner possibly leaving. Wonder if he'll go somewhere without an extradition treaty.

Geithner talking of leaving the Treasury.

http://www.bloomberg.com/news/2011-06-30....