U.S. hits debt limit, special measures put in place
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Geithner: U.S. hits debt limit, special measures put in place
The federal government hits the $14.3 trillion debt ceiling today, the Obama administration announced, requiring extraordinary measures that can stave off a default for a few more months.
In a letter to Congress, Treasury Secretary Timothy Geithner told Congress he will halt investments in two big government pension plans Monday.
Geithner has said that various accounting maneuvers can delay a government default until Aug. 2.
The announcement comes as President Obama and aideswarned that messing around with the debt limit could threaten economic recovery.
"If investors around the world thought that the full faith and credit of the United States was not being backed up -- if they thought that we might renege on our IOUs -- it could unravel the entire financial system," Obama told CBS News last week.
White House spokesman Jay Carney told reporters today's milestone on passing the debt limit is "a reminder that we need to have a vote to lift the debt ceiling because the consequences of not doing so would be quite serious indeed. Those who suggest otherwise are whistling past the graveyard."
Congressional Republicans say they will support an increase in the debt ceiling only if the Obama administration proposes major budget cuts.
"Everything should be on the table except raising taxes, because raising taxes will hurt our economy and hurt our ability to create jobs in our country," said House Speaker John Boehner, R-Ohio, appearing on CBS' Face The Nation.
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This whole US financial system is clearly like a ponzi scheme now and the musical chair is getting shorter. A default sound like a better option for the US while it still has the technology and resources for a fresh start. On the other hand, the rest of world who follow US capitalism will pretty much be screwed (especially those who have been bank rolling US govt debt) since the US govt will be like any American who walk out of their underwater mortgages.
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Borrow & Borrow to fuel the economy
Basically, building on air.
SG is Pay & Pay to fuel the economy
So which is better?
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how can any country service a 10 trillion debt? in fact US cant even afford to pay off the interest.
i dont understand what the whole world is doing. why is US allowed to keep raising the debt ceiling? there will be no end to it right? US debt will keep going up. then what?
anyone knows how this works?
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This Obama is a real idiot. In order to finance his medicare, he spend 14 trillion. Everybody blames Bush for subprime but this joker will be known as the idiotic president to plunge the world into Great Depression. USA fundamentals are so shaky that the speculators will have a good time spooking the US markets. The whole world is so badly tied to USA. China, Japan, RUssia, Singapore, Malaysia - everybody bought US bonds. Moody and Standards downgrade US debt, then interest rates start to skyrocket, thats when USA starts to default. China will be in trouble, it will drag Australia and S.E.A and Japan with it.
USA overspends. Just look at them - they have 12 mega aircraft carriers. Each one cost $20billion. Do they need 12 mega aircraft carriers? NASA eats up $100billion a year. Wars in Iraq and Afganistan eats up $200billion a year. USA waste aid money to Pakistan - like $10 billion a year when the country is still sponsoring terrorism. USA waste another $8billion a year to Colombia to eradicate drug smuggling when they can solve it in their own homeland by instituting mandatory death sentence for drug smugglers and save lots of money.
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US debt will eventually hurt the rest of the world.
they are delaying the problem, not solving it.
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10^14 used to be called astronomical numbers Now its called economic numbers...
If USA defaults, global economy will plunge... China probably would take the no. 1 economy and superpower... Scary... Lucky I'm chimes xp
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There's no way back for USA. One of these days, they will have to default because no country will have faith in the US$ anymore. No one will buy their bonds anymore. Our own S$ is projected to surpass it in 5 years time. The writing's on the wall.....they spend so much on anything and everything, from electrical power to oil to military weapons. And they do so much imports, their currency is only going to plummet further.
I guess this fulfills the universal law of history....that no empire can last more than a few hundred years.
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And when USA collapses, time to buy stocks and property.
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why are we still holding US bonds? 32.4 billion?
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Originally posted by dragg:
why are we still holding US bonds? 32.4 billion?
Not sure how much we have but US bonds are attractive because of the high interest rate they offer: up to 4% per annum if over 30 years. And no one believes that the US will ever default. Many think it's just not possible because of the severe repercussions over the entire world. People would be jobless and therefore countries still continue to buy US bonds to sustain them.
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Originally posted by Rock^Star:
There's no way back for USA. One of these days, they will have to default because no country will have faith in the US$ anymore. No one will buy their bonds anymore. Our own S$ is projected to surpass it in 5 years time. The writing's on the wall.....they spend so much on anything and everything, from electrical power to oil to military weapons. And they do so much imports, their currency is only going to plummet further.
I guess this fulfills the universal law of history....that no empire can last more than a few hundred years.
Unfortunate inevitability...
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Originally posted by Rock^Star:
Not sure how much we have but US bonds are attractive because of the high interest rate they offer: up to 4% per annum if over 30 years. And no one believes that the US will ever default. Many think it's just not possible because of the severe repercussions over the entire world. People would be jobless and therefore countries still continue to buy US bonds to sustain them.
US dont need to default to cause problems.
at the rate they raise the debt ceiling its only a matter of time everything crumbles. their debt will only get bigger with time. 12 then 21 then 100 trillion?
can the number increase and increase? dont understand wtf the world is doing.
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é•¿ç—›ä¸�如çŸç—›.... the next president will have to clean the ceiling fan... full of shit.
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They will keep printing money to devalue their currency till it reaches an equilibrium point. They have to resort to such measure because of unfair currency manipulations by some countries (so they say).
If there is US$100 million in circulation in US, RMB 500 million in circulation in China, say exchange rate is US$1 = RMB 5.
If US prints another US$ 100 million and China still maintain her exchange rate at US$1 = RMB 5, then China would have to print another RMB 500 million to maintain the exchange.
Why you think inflation is so high in China?
China is importing inflation from US.
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"They will keep printing money to devalue their currency till it reaches an equilibrium point. They have to resort to such measure because of unfair currency manipulations by some countries (so they say)."
More accurately... The US government has to pay the capital value with interests on the bills they print... to the FEDS. Fed fatsoes...
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Originally posted by Aneslayer:
"They will keep printing money to devalue their currency till it reaches an equilibrium point. They have to resort to such measure because of unfair currency manipulations by some countries (so they say)."
More accurately... The US government has to pay the capital value with interests on the bills they print... to the FEDS. Fed fatsoes...
equilibrium point? wat wld tat be?
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Originally posted by lce:
equilibrium point? wat wld tat be?
That is quoted from beta's post above... Beta? -
more like space travel where u can nvr able to contemplate the edge till its too late
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Originally posted by βÎτά:
They will keep printing money to devalue their currency till it reaches an equilibrium point. They have to resort to such measure because of unfair currency manipulations by some countries (so they say).
If there is US$100 million in circulation in US, RMB 500 million in circulation in China, say exchange rate is US$1 = RMB 5.
If US prints another US$ 100 million and China still maintain her exchange rate at US$1 = RMB 5, then China would have to print another RMB 500 million to maintain the exchange.
Why you think inflation is so high in China?
China is importing inflation from US.
Does it really work that way? lol....There's been a surge of consumption demand by China in recent years and heavy foreign investment which contributes to their own inflation. And it's not so much of US printing money to devalue their currency, they have no choice. Their economy, investments, technology and labour takes so much USD to sustain, not to mention maintenance of military all over the world.
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US is really the number 1 troublemaker of the world.
one war after another. one crisis after another.
they should wake up and stop trying to play big brother when they know very well they dont have the ability. they should stop pretending to be the leading country of the world. they must do something about their economy and their debt.
see what they have done to the financial world again today.
great democracy???
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This millenium will bear witness to the rise of the weak and fall of the powerful.
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its long overdue S & P dowgrade US's rating. a country with 14 trillion debt can actually have AAA rating?
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Originally posted by Rock^Star:
Does it really work that way? lol....There's been a surge of consumption demand by China in recent years and heavy foreign investment which contributes to their own inflation. And it's not so much of US printing money to devalue their currency, they have no choice. Their economy, investments, technology and labour takes so much USD to sustain, not to mention maintenance of military all over the world.
Economics 101
Basic econonomic theory teaches us that if the supply of a good increases, and nothing else changes, the price of that good will decrease. If the supply of a country's currency increases, we should see that it takes more of that currency to purchase a different currency than it did before. Suppose there was a big jump in the supply of the Canadian dollar. We would expect to see the Canadian dollar become less valuable relative to other currencies. So the Canadian-to-U.S. Exchange rate should decrease, from 67 cents down to, say, 50 cents. Each Canadian dollar would give us less American dollars than it did before. Similarly, the U.S.-to-Canadian exchange rate would increase from $1.49 to $2.00, so each U.S. dollar would give us more Canadian dollars than it did before, as a Canadian dollar is less valuable than it used to be.
http://economics.about.com/cs/money/l/aa022703c.htm
Now say hypothetically US Central Bank maintains the old exchange rates, won't that be importing inflation into USA?
5. Conclusion
In recent years China has faced an increasing trilemma—attempting to pursue an independent monetary policy and limiting exchange rate flexibility, while at the same time facing large and growing international capital flows. We argue that China’s current account surpluses and foreign direct investment inflows, and occasionally large non-FDI capital inflows, combined with the objective of limiting exchange rate appreciation, have the potential to compromise China’s monetary policy goal of limiting inflation.
Times are bad
http://www.frbsf.org/publications/economics/papers/2008/wp08-32bk.pdf -
Maybe in my lifetime I can see USA being declared as a bankrupt state. Hooray !!! ^^