Default averted? Announcement to be made at noon

[TheSlamma]

Hurry this up.. Sold my house to an FHA buyer and closing is on the 25th, wanna be outta this place!

 

[sandorski]

Drama delayed a few Months?

 

[First]

Just wow.

The US can (and does during such times as these) legally pay off old debt coming due by rolling it over into debt.

Fern

<slaps forehead>

For one, I'm not even sure what bond covenants are in place for various T-bills, which may or may not disallow refinancing of debt. Bond covenants restricting or disallowing the ability to issue new debt are quite common:

Possible bond covenants might include restrictions on the issuer's ability to take on additional debt, requirements that the issuer provide audited financial statements to bond holders and limitations on the issuer's ability to make new capital investments. When an issuer violates a bond covenant, it is considered to be in technical default. A common penalty for violating a bond covenant is the downgrading of a bond's rating, which could make it less attractive to investors and increase the issuer's borrowing costs.

Two, and more importantly, in what reality do you think interest rates are going to stay low if the gov't starts a massive debt rollover to take advantage of currently low rates? The gov't rolling over debt is effectively counter-stimulative here, it has the exact opposite effect on long-term rates as, for example, the Fed buying back its $85B worth of bonds every month. Note in case you didn't know; the Fed's QE program has drastically lowered long-term interest rates.

Bottom line; the rollover risk of the gov't massively refinancing their bonds is unprecedented and exceedingly stupid. There is no evidence or history that this can be done with the speed necessary and on the scale required to avoid defaulting. There is but $30B cash on hand after October 17th, with big entitlement payments due in 2 weeks.

 

[dabuddha]

Drama delayed a few Months?

pretty much :/ Fucking cockroach politicians (all of them, repubtards and demotards alike). What they need to do is start finding them $10,000 for each day shit like this happened. At the very minimum.

 

[Darwin333]

Considering China has said the 17th is the day, it's the day. Everyone can keep servicing all the debt they want, if the people who own the debt are unhappy, we will be unhappy, in a nutshell.

Technically its "if the people who buy our future debt are unhappy, we will be unhappy. The people who already own our debt can't do a whole lot without shooting themselves in the foot at the same time. I guess you could combine them into "if the people who buy our future debt are unhappy, we and the people that currently own our debt will be unhappy.

 

[Darwin333]

<slaps forehead>

Two, and more importantly, in what reality do you think interest rates are going to stay low if the gov't starts a massive debt rollover to take advantage of currently low rates? The gov't rolling over debt is effectively counter-stimulative here, it has the exact opposite effect on long-term rates as, for example, the Fed buying back its $85B worth of bonds every month. Note in case you didn't know; the Fed's QE program has drastically lowered long-term interest rates.

Bottom line; the rollover risk of the gov't massively refinancing their bonds is unprecedented and exceedingly stupid. There is no evidence or history that this can be done with the speed necessary and on the scale required to avoid defaulting. There is but $30B cash on hand after October 17th, with big entitlement payments due in 2 weeks.

Umm, this reality? We have actually just recently started extending the average duration of our bonds but up until recently our debt, all of it, rolled over on average ever 4 1/2 years or so. That is the reason that we paid less total money in interest payments this year than we did last year despite taking on an additional trillion in debt. Why is our debt, again on average, of such short maturity you ask? To do exactly what you said, to take advantage of lower interest rates. It doesn't come without risks though, if rates were to jump we would in a VERY short period of time see our interest payments skyrocket. Its actually been a while since I ran the numbers on what we would be paying in 5 or 6 years should interest rates simply return to historic norms but it would be a massive increase that would wipe out any and all budget cuts that have even been proposed.

Hell the US Treasury issued over 8 trillion dollars of new securities in FY 2013. We have less than $1.5T in long term T-bonds with the vast majority of the rest on the very low end of the time scale. Another fun fact, 30 year T-bonds have roughly a 5% "interest rate" while on average we pay under 2% interest on the entirety of our debt.

 

[laspariahs]

Technically its "if the people who buy our future debt are unhappy, we will be unhappy. The people who already own our debt can't do a whole lot without shooting themselves in the foot at the same time. I guess you could combine them into "if the people who buy our future debt are unhappy, we and the people that currently own our debt will be unhappy.

No it's both, if the people who hold our current debt sell, they flood the market with cheap bonds, making it impossible to sell new ones unless we hike the interest rates to high heaven.

If they think theres a chance they wouldn't get their money out of us, they have every reason to sell, and recoup as much money as possible. This is what happened to Greece.

 

[Darwin333]

The US is not legally capable of paying off prior bonds/debts without a debt ceiling increase.

Yes it is. However, I am very interested in knowing why you believe this. Rolling over existing debt does not increase our debt one bit. Sure the Treasury has to do a tad bit of game playing but if you owe a dollar, pay off that dollar and borrow another dollar at the same time the amount of money you owe remains completely unchanged.

Perhaps you could argue that, completely depending on cash flow at that time, that for a few minutes we exceeded the debt limit but by the end of the day when the Treasury makes its report everything will be kosher.

 

[poofyhairguy]

If they think theres a chance they wouldn't get their money out of us, they have every reason to sell, and recoup as much money as possible. This is what happened to Greece.

Greece can't print the world's reserve currency to pay their debts.

 

[laspariahs]

Greece can't print the world's reserve currency to pay their debts.

And what would that do to the world's reserve currency, to just print up some more money out of thin air?

Greece actually can't print any money since they are attached to the EU, only the European Central Bank can do so.

 

[sm625]

This still hinges on the house. If Boehner fucks this up by not allowing it to come up for a vote, he (and the rest of the house leadership) should be arrested and charged with treason.
I'm dead serious.

The House cannot be charged for a crime by passing or not passing a law. You sad sorry dumbed down piece of trash. Goddam lil nazi brownshirt wannabe.

 

[sandorski]

The House cannot be charged for a crime by passing or not passing a law. You sad sorry dumbed down piece of trash. Goddam lil nazi brownshirt wannabe.

How is he a Nazi for being angry at those who were intending to melt the Global Economy for their own Political Gain?

 

[CrackRabbit]

The House cannot be charged for a crime by passing or not passing a law. You sad sorry dumbed down piece of trash. Goddam lil nazi brownshirt wannabe.

How is he a Nazi for being angry at those who were intending to melt the Global Economy for their own Political Gain?

Damn Skippy that I was a bit peeved yesterday.

SM, how is it not treasonous to attempt to destroy the US government and force a violation of the 14th amendment?
That is the endgame of what these yahoos really want.
I am glad that Speaker Boehner had enough sense to stop the games and put the Senate crafted bill up for vote, though I am unsure he will show the same restraint come January for round two of this fight.

 

[TerryMathews]

Damn Skippy that I was a bit peeved yesterday.

SM, how is it not treasonous to attempt to destroy the US government and force a violation of the 14th amendment?
That is the endgame of what these yahoos really want.
I am glad that Speaker Boehner had enough sense to stop the games and put the Senate crafted bill up for vote, though I am unsure he will show the same restraint come January for round two of this fight.

What War were they levying, or to which enemy were they granting Aid and Comfort?

Idiot.

 

[sandorski]

What War were they levying, or to which enemy were they granting Aid and Comfort?

Idiot.

How about All who want the US to fail?

 

[TerryMathews]

How about All who want the US to fail?

Where in Article 3 Section 3 does it say that?

You're way out of your league here.

 

[sandorski]

Where in Article 3 Section 3 does it say that?

You're way out of your league here.

So causing the nation to fail as long as there's no direct link to a foreign "enemy" is fine?

 

[TerryMathews]

So causing the nation to fail as long as there's no direct link to a foreign "enemy" is fine?

Have you, ya know, actually READ the Constitution? Specifically Article 3 Section 3?

To answer your question, it might not be fine but it CAN'T be treason.

 

[sandorski]

Have you, ya know, actually READ the Constitution? Specifically Article 3 Section 3?

To answer your question, it might not be fine but it CAN'T be treason.

Ok, it can't be "Treason". However, surely you must admit that causing a failure of the nation is about as close to it as could be.

 

[werepossum]

Umm, this reality? We have actually just recently started extending the average duration of our bonds but up until recently our debt, all of it, rolled over on average ever 4 1/2 years or so. That is the reason that we paid less total money in interest payments this year than we did last year despite taking on an additional trillion in debt. Why is our debt, again on average, of such short maturity you ask? To do exactly what you said, to take advantage of lower interest rates. It doesn't come without risks though, if rates were to jump we would in a VERY short period of time see our interest payments skyrocket. Its actually been a while since I ran the numbers on what we would be paying in 5 or 6 years should interest rates simply return to historic norms but it would be a massive increase that would wipe out any and all budget cuts that have even been proposed.

Hell the US Treasury issued over 8 trillion dollars of new securities in FY 2013. We have less than $1.5T in long term T-bonds with the vast majority of the rest on the very low end of the time scale. Another fun fact, 30 year T-bonds have roughly a 5% "interest rate" while on average we pay under 2% interest on the entirety of our debt.

Yeah, I don't know what he is smoking but it's some powerful stuff.

Greece can't print the world's reserve currency to pay their debts.

Technically neither can we. After printing money nearly destroyed the government we created the Federal Reserve and vested the right to print money in them. They can loan it to the government, but unless the government has the headroom to legally borrow it that doesn't work either.

Ok, it can't be "Treason". However, surely you must admit that causing a failure of the nation is about as close to it as could be.

The Republican view is that by borrowing so much money we are guaranteeing the failure of the country. Whether or not you truly believe that a nation can borrow more money every year without eventually collapsing, at least be honest enough to admit that the Tea Party is attempting to prevent the failure of the nation, not cause it.

 

[TerryMathews]

The Republican view is that by borrowing so much money we are guaranteeing the failure of the country. Whether or not you truly believe that a nation can borrow more money every year without eventually collapsing, at least be honest enough to admit that the Tea Party is attempting to prevent the failure of the nation, not cause it.

He couldn't admit he didn't know what Treason was and you expect him to admit that? Lol

 

[sandorski]

The Republican view is that by borrowing so much money we are guaranteeing the failure of the country. Whether or not you truly believe that a nation can borrow more money every year without eventually collapsing, at least be honest enough to admit that the Tea Party is attempting to prevent the failure of the nation, not cause it.

That's what they want you to think. Historical precedence does not support this at all though, especially at this point. Threatening action that hastens such an event is not the way to deal with it.

 

[sandorski]

He couldn't admit he didn't know what Treason was and you expect him to admit that? Lol

Lol indeed. I did admit it.

 

[lupi]

I did enjoy hearing one side saying the entirety of fault is due to the other side. Ignoring that said side of fault did pass legislation to fund the mitigation of the majority of shutdown related effects, does anyone recall the party breakdown on the wonderful obamacare bill that is, has been, and will continue to be a source of problem blocking the accomplishment of anything.

 

[Darwin333]

So causing the nation to fail as long as there's no direct link to a foreign "enemy" is fine?

Oh come on, using that kind of very loose translation then one could easily argue that racking up the completely unsustainable debt that we have been is treason as well.

Of course both arguments are absolutely moot since the constitution very clearly defines where spending bills must originate.