Saturday, December 29, 2012

Debt Ceiling: Quo Vadis?

Report out 2 days ago at WaPo where Geithner is claiming we will hit the ceiling Monday.

Another report out yesterday afternoon at the Daily Caller that depicts the GOP digging in on the 'ceiling' issue and Obama admin taking a previous demand for a large multi-year ceiling increase off the table for now.
Obama is meeting with the four top congressional leaders mid-afternoon Friday to talk about the fiscal cliff, and if he doesn’t insist on his debt ceiling demand, he will remove one of the main obstacles that he added to a bipartisan deal.
So far, the statement from the Obama official is unconfirmed, and comes only two days after Obama’s Treasury secretary suddenly escalated the debt ceiling fight by declaring the government is going to hit its debt ceiling by the end of February. Treasury Secretary Timothy Geithner announced the day after Christmas that the formal debt limit will be reached Dec. 31, but that temporary “extraordinary measures” can keep federal spending on track for two months.
These "temporary extraordinary measures” that "can keep federal spending on track for two months" are otherwise known as FISCAL DRAG around here.

So on the "ceiling", it seems like Treasury is claiming we will hit it on Monday (latest DTS still shows we are about $95B below ceiling), the GOP is digging in, and the Obama administration claims it has a fiscal siege plan where they can operate in a fiscally constrained mode for at least 2 months if necessary.

Seems it is highly likely that we will be operating at ceiling mode for at least some time at the beginning of the year.

This is a dangerous and unstable mode of operation for a country that is supposed to be operating a monetary economy as no net "money" is being issued yet tax payments and fees are still being demanded by the government... scary!  Where is the bottom if this mode of operation is allowed to continue?

At ceiling, the country is left without the ability to issue the additional $NFA which domestic entities require in order to pay taxes and fund domestic and external savings of $NFA; at this point, the math dictates that certain domestic entities have no choice but to liquidate assets or arrange short term loans (or the sad beg/borrow/steal/prostitute, etc... methods) in order to acquire $NFA required to pay taxes and fund the domestic and external $NFA savings of others.

Now tribute collectors also came to be baptized, and they said to him, "Teacher, what should we be doing?"    Now he said to them, "Impose nothing more than has been prescribed to you."  Luke 3:12-13
"Woe to you, blind guides!... Stupid and blind!.... STUPID AND BLIND! "  Mat 23

Stay tuned!  Looks like the disgraced blind morons in charge today stand ready to again crank up the 10 dogs after 8 bones game in earnest after Monday.

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