US Fed Reserves - Raise the debt ceiling...or be lame and dead by 2013.

[sephodwyrm]

http://www.bbc.co.uk/news/world-us-canada-13770390

Fed chief Bernanke warns of US debt ceiling threat

The chairman of the US Federal Reserve, Ben Bernanke, has warned that the country's creditworthiness is at risk if its borrowing limit is not raised.
He said the US could lose its coveted AAA credit rating if Congress did not vote in favour of lifting the $14.3 trillion (£8.7 trillion) debt ceiling.

If there is no deal by August, the US may start defaulting on obligations.

Vice-President Joe Biden and congressional leaders have resumed efforts to find a bipartisan solution.

They are trying to reach an agreement that would tie spending cuts with an increase in the debt limit. They are expected to discuss annual spending levels, budget process reforms, taxes and healthcare benefits.

"We're making real progress, we're down to the tough stuff now and everybody's still in the room," Mr Biden said after Tuesday's meeting.

President Barack Obama and the Speaker of the House of Representatives, John Boehner, want an agreement by 4 July.

'Wrong tool'

At a conference on Tuesday organised by a think tank, the Committee for a Responsible Federal Budget, Mr Bernanke said any delay in the US government making payments could cause chaos on global financial markets.

It could also damage the dollar's status as a reserve currency, he warned.

Mr Bernanke said he understood the desire of many politicians to use the deadline to force some necessary and difficult policy adjustments, but said the debt limit was "the wrong tool for that important job".

"Failing to raise the debt limit would require the federal government to delay or renege on payments for obligations already entered into."

"Even a short suspension of payments on principal or interest on the treasury's debt obligations would cause severe disruptions in financial markets and the payments system."

In addition, Mr Bernanke said US government debt risked being downgraded, creating fundamental doubts about the nation's creditworthiness.

Long-term damage to the "special role" of the dollar and of treasury securities in global markets was also possible, he said.

Instead of allowing a default, Democrats and Republicans needed to develop a credible long-range plan to rein in the nation's budget deficit, Mr Bernanke added.

An increase of $2.5 trillion would allow the government to operate until early 2013.

He suggested stabilising the deficit as a proportion of the total economy, and lowering the figure over time. Deficit-reduction goals should be set and enforced with a mechanism triggering automatic cuts.

The only question is:
Why have a debt limit when your Fed treasury chief thinks its useless?

US: God...I'm so friggin knee deep in debt.
BB: So we need to raise the debt ceiling.
US: To get more knee deep in debt?
BB: Yeah, and to pay off existing ones (WTF?). And give us 2 more years of operating time.

Who is the US going to borrow from this time?

[hellheaven1987]

It is to lie the publics and make common people feel comfortable, don't you know such is common political tactic?

[Exarch]

time to sack a few settlements the way they did viking style.
for tips, look at my link

[Sphere]

And in other news, the Pope is Catholic.

If the US doesn't raise the the debt cieling, it won't be able to cover it's debt obligations. Your bonds don't stay AAA for very long if you stop honoring them.

[Enemy of the State]

And in other news, the Pope is Catholic.

If the US doesn't raise the the debt cieling, it won't be able to cover it's debt obligations. Your bonds don't stay AAA for very long if you stop honoring them.

The US will always pay its obligations. It's just a question if wheter they need to result to monetization.

[Matthias]

http://www.bbc.co.uk/news/world-us-canada-13770390



The only question is:
Why have a debt limit when your Fed treasury chief thinks its useless?

US: God...I'm so friggin knee deep in debt.
BB: So we need to raise the debt ceiling.
US: To get more knee deep in debt?
BB: Yeah, and to pay off existing ones (WTF?). And give us 2 more years of operating time.

Who is the US going to borrow from this time?

Mostly its own citizens. The vast majority of America's debt is owed to Americans. Indeed, US foreign debt is proportionally less than many European nations.

And the debt limit is nothing more than a political tool. It is being used as such now.

[sephodwyrm]

And in other news, the Pope is Catholic.

I thought he's German.

The vast majority of America's debt is owed to Americans.

If I were American I'd be pissed. It's like borrowing another 5 grand from me to pay the 4 grands you owe.

[Imperial]

I thought he's German.

I thought he was a Nazi.

[Ahlerich]

I thought he was a Nazi.

the pope is not romanian!

[assburgers]

doge people like you are the reason everybody thinks the US is filled with idiots

oh and enjoy your debt slavery

smash the reserve... your founding fathers would have

[Matthias]

If I were American I'd be pissed. It's like borrowing another 5 grand from me to pay the 4 grands you owe.

Naw, they don't care, since they are all being paid on time and making money on interest. Americans who pay taxes may be pissed that a rather large chunk goes to paying interest on the debt. Then again, they should be pissed that a much larger chunk is blown on useless wars, which are a huge part of the cause of our current debt.

Americans would readily give up our large military before ever giving up Social Security or universal health care (when, not if, we get it).

[Sphere]

Not raising the debt cieling is the most assbackwards approach to deficit reduction.

It's like getting rid of a unwanted baby by pretending you are not pregnant.

[Nietzsche]

Not raising the debt cieling is the most assbackwards approach to deficit reduction.

It's like getting rid of a unwanted baby by pretending you are not pregnant.

This analogy isn't very helpful. Pretending your not pregnant would be analogous to politicians and economists pretending there isn't a debt problem, which, arguably, many are (Krugman for example).

However, you must admit that the idea that you need to borrow more to pay off your debt is counter-intuitive. Obviously, cutting spending is not politically expedient. So that is off the list. Borrowing more becomes the only political option.

[sephodwyrm]

universal health care

Or Universal Studios.

Americans who pay taxes may be pissed that a rather large chunk goes to paying interest on the debt. Then again, they should be pissed that a much larger chunk is blown on useless wars, which are a huge part of the cause of our current debt.

I don't think those wars are useless.
Crude is important for the economy. Just that it should probably be used to help pay off debts as well.

[Matthias]

I don't think those wars are useless.
Crude is important for the economy. Just that it should probably be used to help pay off debts as well.

If only you could prove that these wars have increased the amount of crude available to the US in any significant way, and that that crude is worth several trillion dollars that has been spent on the wars. The US doesn't own the crude oil in these countries and will not profit from them.

No, these were useless wars. The costs definitely outweighed the benefits, except for a select few in the defense industry.

[sephodwyrm]

and that that crude is worth several trillion dollars that has been spent on the wars. The US doesn't own the crude oil in these countries and will not profit from them.

Then they should.
Why are they allowing private companies and consortiums to mine the crude and givin them tax breaks?
It makes absolutely... no sense.

[-Conan the Barbarian-]

Then they should.
Why are they allowing private companies and consortiums to mine the crude and givin them tax breaks?
It makes absolutely... no sense.

You're assuming that the FED policy and U.S. foreign policy is to benefit the American people when really they benefit the plutocrats ie the banking cartels.

[Big War Bird]

The debt ceiling law was put in place as a mechanism to make it politically difficult to engage in deficit spending. Now it is finally working as intended. And the FED chief says its the wrong tool. Go figure.

[sephodwyrm]

Now it is finally working as intended. And the FED chief says its the wrong tool. Go figure.

Yeah. What is the purpose of the debt ceiling if it just keeps getting raised?

[sephodwyrm]

You're assuming that the FED policy and U.S. foreign policy is to benefit the American people when really they benefit the plutocrats ie the banking cartels.

It's a sad assumption, isn't it.
What is the purpose of US state apparatus if not for the benefit of the American people?
Am I being too idealistic here?