And I wondered if there would be fireworks this 4th weekend

This obviously will NOT be considered a credit event, correct?

Correct. It's non-marketable is not protected under the Constitution and carries no rating because, again, it's non-marketable.

All those who argued that the Social Security and Medicare funds were anything other than an accounting fiction and a "polite political promise" just got shown the ass end of Treasury Secretary Geithner.

I would NOT want to be reliant on a government handout at this point. They are going to default like crazy on your ass.

"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."

what I think is really laughable is when the talking heads on tv (i've seen a few of them do this, mostly on msnbc), try to say that "...debts incurred for payment of pensions..." protects Social Security

I mean, come on! They clearly ignore the rest of that sentence as if it's not even there.
_______________________________

But what really*****es me off is how either party (and the MSM) bring up the US Constitution whenever it backs there argument and conveniently forget about it when it doesn't, and would make them look stupid.
Like the ACLU fighting for most of the bill of rights, but never would they ever defend the 2nd amendment.

Sorry, done venting...

I'm really, really glad that I'm going to spend the rest of my vacation (yeah, I've been on leave all week), though Independence Day, doing something I enjoy quite a bit - camping with my family.

No cell phone (no coverage where we're going), no wi-fi (ditto), not even radio.

I'll be home in time to watch the pyrotechnics on Monday night in my home town and then will be back at work for the "fireworks" on Tuesday. My guess is that it's going to be an, ahem, interesting week.

Corn what effect do you think that is going to have on everyone else when the economy collapses from decreased spending. Not saying the spending shouldn't be cut but the damage is not going to be localized. Just sayin'

"I mean, come on! They clearly ignore the rest of that sentence as if it's not even there."

The only way that they could ignore it with any credibility is if:

a) there was a comma after the word "pensions;" and

b) if "pensions" included Social Security Trust Fund payments. I don't think that these are classified as a pension, since normally that word applies to retirement payments made to a person who worked for the entity in question. Note that the civil service pension of a career bureaucrat would be covered under the 14th Amendment IF, IF, IF there was that comma after "pensions" - but it isn't there, so they may also be S.O.L. before long. Well, except those still receiving payments for their service in the Civil War. :>)

IOW, the talking heads have exactly ZERO credibility - on par with those criminal politicians (but I repeat myself) who's dicks they're sucking.

Bring it on!

"The validity of the public debt shall not be questioned."

What the hell does this mean!?!?! I'm not allowed to question whether or not I think the .gov can pay me back? (what if China wishes to raise such questions, what are we gonna do, wave our Constitution in their face and say nah-ah, you can't question us?)

I think "the amount of the public debt shall never be ignored" would have been a better addition to the US Constitution.

Quote:

Well, except those still receiving payments for their service in the Civil War. :>)

Or future incidents of insurrection or rebellion.

Just sayin' ;)

Quote:

Corn what effect do you think that is going to have on everyone else when the economy collapses from decreased spending. Not saying the spending shouldn't be cut but the damage is not going to be localized. Just sayin'

It's money that should never have existed in the first place. It's a thirty year ponzi scheme that produced a huge sugar high.

I don't know what to tell people. You get the government you deserve in a democracy. I really don't feel bad for people who are relying on Social Security.

Quote:

On January 31, 1940, the first monthly retirement check was issued to Ida May Fuller of Ludlow, Vermont, in the amount of $22.54. Miss Fuller, a Legal Secretary, retired in November 1939. She started collecting benefits in January 1940 at age 65 and lived to be 100 years old, dying in 1975.

Ida May Fuller worked for three years under the Social Security program. The accumulated taxes on her salary during those three years was a total of $24.75. Her initial monthly check was $22.54. During her lifetime she collected a total of $22,888.92 in Social Security benefits.

That should set off alarm bells for anyone not in a coma!!!!

What's better? Being paid back in worthless dollars, or not being paid back at all? I'll choose the latter.

If the US did not pay SSI or Medicare, IT's Debt to Inocome Level would look much better. I see the credit rating of the US going UP/getting better due to not paing SSI and Medicare.

"Hey want to buy some US Treasuries?"

"I don't know, I'm afraid I'll not be paid back, I mean just look at all the money the US has to spend on SSI and medicare, The US will go broke spending that kind of money and then I'll get hosed on the US debt I bought"

"Well did you hear the US stopped paying into SSI/Medicare? The US just freed up a lot of money to pay you back with if you decide to buy US debt."

From the wikipedia Social Security Trust Fund entry:

Quote:

To escape paying either principal or interest on the "special" bonds held by the trust funds, the government would have to default on these obligations. This cannot be done by executive order. The Congress would have to pass legislation to repudiate these particular government bonds.

An alternative to repudiating these bonds would be for Congress to simply cap Social Security spending at a level below that which would require the bonds to be redeemed.

Assuming wikipedia isn't totally off base with this info, how was this non-payment legal? Seems that either of these options would have drawn some notice?

It's not done by congressional or executive order, it's done by mathematical order

but but but the SS/Medicare trust funds are money good !
but but but i paid into a system!

oh

hahahhahahahaha

fukking morons. it was, and always will be a fiction if you are kind. but really it was one of the Biggest of Big Lies from the Govern - we are here to help you - ment

Any one that actually believes that there is a "system" is a moron. Well strike that, there is a system,. its a ponzi scheme.

Thats is sukkas !

Treasury's lawyers came up with something I'm sure. They've suspended "reinvestments" somehow, whatever that really means, which are emergency measures they are allowed to do by law. I'm sure TurboTimmy has, on paper, issued some sort of IOU^2 (IOU for an IOU) to the trust funds for the interest payments, just like they're doing with the G-funds. Or something.

Note for real marketable debt, an IOU for a coupon payment (much less an IOU for an IOU, essentially an IOU for a payment-in-kind bond) wouldn't cut it and that would be a default.

I think the Social Security "Trust Fund" should invest in Purina.

Maybe they can get a bulk discount because that is what SS recipients are going to be eating!

I understand there was a coupon payment due at month end, but why did the number come down by $13 Billion on the 29th? (from $4,619,217 to $4,606,188 before the drop to $4,600,864 on the 30th)

They're drawing down the funds because they're paying more out than taking in for dedicated taxes.

Am I the only person that finds the left's bleating about "the validity of the public debt .....shall not be questioned" incredibly amusing given their contortions with respect to the Second Amendment?

Rsbloans,

That's the normal ebb and flow of the trust funds. Here's how it works basicall. Every day, billions of dollars flow from taxes, mostly witheld taxes. That lump goes into the general fund at Treasury's account at the Fed. But some of those taxes are income taxes, and others are the payroll taxes, earmarked for SS and Medicare. The money is just spent as needed.

But on the accounting side, they split it up. The payroll tax money will be credited to SS and Medicare in the form of the GAS bonds, the IOUs. Now, when SS and Medicare have to make payments (the former in a big wad at the first of the month, then a trickle later, and Medicare making whopping payments every day), that is deducted from the IOUs. So, taxes in = IOUs issued, and payments out = IOUs redeemed.

So if more payroll taxes come in on a given day than payments go out, the trust funds will increase, and if more payments go out that taxes come in, the trust funds go down.

That difference is actually net, really. In some complicated mess I've never figured out, they are constantly "rolling" some of the IOUs, so on the DTS on a typical day you'll see around $200B rolled (sometimes a lot less, sometimes a lot more). But the net is the difference between taxes in and payments out.

But then, every 6 months on June 30th and Dec 31th, they make a big coupon payment on those IOUs, and that causes a big jump higher.

The thing to appreciate is the only source of funding, the real money that must be paid out for SS and Medicare comes from taxes in and real money borrowed from the bond market. That is the only source of funding. The trust funds are just an accounting fiction. They are not real assets in a sense of the word as they cannot be sold, and can only be "redeemed" by Treasury.

As it is now, SS is running around $40B cash deficits. That is, in a given year the payments out exceed the payroll taxes in by $40B. Previously it was running a cash surplus of around $80B or so. This represents a shift of around $120B to the red. However, because of the coupon payments, the trust fund still increases on paper, even though its running in the red on a cash basis.

Medicare has been in the red since 2006 or 2007 or so.

SS wasn't projected to go in the red until around 2109 or so, but now, thanks to the crash, it's going to stay in the red unless they get the balls to fix it. Which they won't until they're forced to, and forced hard.

Quote:

I think the Social Security "Trust Fund" should invest in Purina.

Maybe they can get a bulk discount because that is what SS recipients are going to be eating!

So if I attempt to "opt out" by dumpster diving when I turn 62 will I be one of those dreaded "free riders"?