8/5/2011 - Despite raising the debt ceiling, Moody’s and S&P warn of downgrade

By Madison Ruppert - BLN Contributing Writer
The debt ceiling issue has dominated headlines for weeks, yet even when a compromise is made and Americans are forced to sign on to more bankster debt, the Moody’s rating agency is warning of a ratings cut.

Moody’s is not presenting any solutions or ways to avoid this downgrade, instead Steve Hess, a senior credit officer at Moody’s New York told Bloomberg, “We do think more needs to be done to ensure a reduction in the debt to GDP ratio, for example, going forward.”

That is like being inside of a plane hurtling towards the earth and saying, “Well, I think we should probably start flying away from the ground if we don’t want to die.” It is so painfully obvious that stating such is a bit ridiculous. Obviously something needs to be done and signing on to more debt without making significant cuts is not going to do it.
However, Moody’s, like most of the other corrupt financial institutions of the world, is likely referring to austerity measures that would economically rape the people while keeping thecash flow for defense contractors and banks.
Hess is claiming that Moody’s could make a decision on the United States’ credit rating in the next two years or even “considerably sooner.”
J.P. Morgan & Chase has jumped on the Moody’s bandwagon, claiming that a rating downgrade would increase American borrowing costs by roughly $100 billion per fiscal year.
Another Wall Street ratings/financial research house, Standard & Poor’s, or S&P, has told Washington that any cuts totaling less than $4 trillion will result in a downgrade from America’s current AAA rating.
The insanity lies in the reliance on the same old failed monetary and financial systems. Why does our government continue to insist on issuing a debt-based currency that literally subjugates our entire nation under offshore banking cartels? Why is no one pointing to the fact that we could ameliorate a great deal of our problems by issuing a debt-free currency outside of the private Federal Reserve cartel and their buddies in the World Bank and IMF?
The sad fact is that the current compromise makes no significant changes whatsoever. The agreement was passed in the Senate with a 74-26 margin and results in the debt ceiling being raised until 2013. It also threatens “automatic spending cuts” in order to attain the goal of $2.4 trillion in spending cuts over the next decade.
You read that right, the deal provides for slightly more than one half of the cuts required by S&P in order to keep our rating and does so over a 10 year period. That’s $0.24 trillion per year in spending cuts.
Despite all of these dark portents, some say that the United States will still be the world’s first choice in debt and currency investment.

A senior vice president and overseer of about $50 billion in assets at USAA Investment Management Company, Matthew Freund, claims that even if we are downgraded, “Treasuries are going to be seen as the safe haven.” The fact that the U.S. dollar still represents about 60.7% of the world’s currency reserve helps back up this conjecture. The fall of the value of the dollar seems to be completely ignored in this equation.

In response to these continued statements from ratings houses, futures in the Dow, S&P, and NASDAQ dropped today by 30 points, 4.8 points, and 9 points respectively. Other stocks in the United States fell as well with the S&P down for the sixth day in a row.
Meanwhile, other nations’ credit ratings don’t seem to be as generous as Moody’s and S&P when it comes to waiting on the rating downgrade.
The Chinese rating agency Dagong Global Credit Rating Company lowered the United States for the second time to the rating of A from A+ last November.
The political theatrics surrounding the debt ceiling debate are seemingly behind this move, as Dagong’s Chairman Guan Jianzhong revealed.

In a statement to CNN Jianzhong said that, “The squabbling between the two political parties on raising the U.S. debt ceiling reflected and irreversible trend in the United States’ declining ability to repay its debts. The two parties acted in a very irresponsible way and their actions greatly exposed the negative impact of the U.S. political system on its economic fundamentals. Our downgrade simply reflects reality. Our rating didn’t cause China to lose any money – it was inappropriately high ratings for the U.S. by Western agencies that had led China to make risky investments in U.S. debt.”

Regardless of these clear warnings from across the globe, some seem to be holding on to the idea that the United States is untouchable.

Jeff Cox of CNBC claims that because “bond auctions have been solid if not spectacular as of late” a credit downgrade would not negatively impact interest rates. He offers little support this conjecture other than the global debt crisis threatening every economy which he claims is leading world central banks to keep putting their money into U.S. bonds.

Others, like president and CEO of Waddell & Associates David Waddell, also claim that “a downgrade would bark loudly and bite softly” due to the fact that the debt crisis is a wide spread problem and it is not as if there is a plethora of reliable economies to invest in.

I sincerely hope that Waddell, Cox, and others are correct. However, I think it might be a bit early to claim that it will be smooth sailing regardless of any credit downgrades.

More at EndtheLie.com - http://EndtheLie.com/2011/08/02/despite-raising-the-debt-ceiling-moody%e2%80%99s-and-sp-warn-of-downgrade/#ixzz1TxmQ8Dc1

http://www.blacklistednews.com/Despite_raising_the_debt_ceiling%2C_Moody%E2%80%99s_and_S%26amp%3BP_warn_of_downgrade/15009/0/0/0/Y/M.html

8/5/2011 - The Debt Ceiling Deal From Hell

By Michael Snyder - BLN Contributing Writer
Is the debt ceiling deal supposed to be some sort of a cruel joke?  Is this what the American people have been waiting months and months for?  The "debt ceiling deal from hell" is a complete and total fraud.  Barack Obama will not need to worry about the debt ceiling again until after the 2012 election, and no "real" spending cuts will happen until after the 2012 election.  The way the political game in Washington D.C. is played today, if you don't get something right now, you probably will never end up getting it.  The Republicans have traded a massive debt ceiling increase right now for the possibility of very skimpy budget cuts in the future.  Meanwhile, this deal establishes a new "Super Congress" that threatens to fundamentally alter our political system (and not in a good way).  The funny thing is that everyone is running around proclaiming that the Tea Party won this battle.  That is a complete and total lie.

So what about the $917 billion in "immediate" spending cuts that the Republicans are getting as part of this deal?

Well, they aren't really spending cuts at all.  Rather, they are spending caps.  Basically what is happening is that future spending increases are being cancelled and our politicians are selling that to us as "spending cuts".

What is even sadder is that the $917 billion is spread over ten years and the vast majority of the "cuts" are in the latter years.

For example, even if you consider these to be "spending cuts" (which they are not), the deal calls for only about $25 billion in "cuts" in 2012 and only about $47 billion in "cuts" in 2013.

25 billion dollars is far less than one percent of the federal budget, so needless to say these "cuts" are not very impressive at all.

Okay, so how about the second stage of the deal which will produce "spending cuts" of between 1.2 and 1.5 trillion dollars?

Well, yes, these would actually be spending cuts and they would be spread over 10 years.

Near the end of the year, the new "Super Congress" (more on that in a minute) will submit a proposal to Congress which could cut spending over the next 10 years by a total of up to 1.5 trillion dollars.

If the recommendations of the "Super Congress" are not implemented, than "automatic" spending cuts of $1.2 trillion will go into effect over the next 10 years.

However, there are some very important things to remember about these "spending cuts".

First of all, none of these "automatic" spending cuts would even go into effect until 2013.  The face of American politics will be dramatically different by then, and there is absolutely nothing that makes these cuts binding on Congress.

As Gregg Easterbrook recently noted, Congress can cancel spending cuts at any time and for any reason....

By projecting the only tangible savings — which aren’t even specified, but are merely caps — into the future, the plan allows Congress to cancel them. In 2012 or any future year, Congress will say, “We can’t have caps this year because of the [INSERT ANY WORD CHOSEN AT RANDOM] crisis. We are postponing action till next year.” Rinse and repeat.

As I have written about so many times before, the U.S. national debt is completely and totally out of control.  This was supposed to be the moment when at least some members of Congress were finally going to get serious about our exploding debt.  Unfortunately, our politicians have sold us down the river once again.

Even if the best case scenario happens (which it never does) and Congress sticks to this deal for the full ten years (which is about as likely as hell freezing over), the "savings" that this deal would produce are quite pathetic as Peter Schiff recently explained....

The Congressional Budget Office currently projects that $9.5 trillion in new debt will have to be issued over the next 10 years. Even if all of the reductions proposed in the deal were to come to pass, which is highly unlikely, that would still leave $7.1 trillion in new debt accumulation by 2021. Our problems have not been solved by a long shot.

Keep in mind that Congress can change this deal whenever it wants.

So nobody should get excited about these "spending cuts".  After all, when was the last time that "future spending cuts" actually materialized in Washington?

The reality is that neither political party seems to want to do much to cut government spending.

So the band will play on and the can will get kicked even farther down the road.

When Obama was inaugurated, the U.S. national debt was $10,626,877,048,913.08.

Today, it is $14,342,358,440,969.10.

But what this "debt ceiling deal" will do is it will give the congressional leadership of both parties much more power.

The new "Super Congress" that this deal establishes will be granted "extraordinary new powers" that regular members of Congress do not possess.

For example, The Huffington Post says that any new legislation produced by the "Super Congress" will not be able to be filibustered or amended....

Under the reported framework, legislation the new congressional committee writes would be fast-tracked through Congress and could not be filibustered or amended.

So who will be a part of the "Super Congress"?

The members will be chosen by the leadership of both parties.

So anyone that is not part of the "establishment" is not likely to be included.

The following is what U.S. Representative Ron Paul had to say about this new "Super Congress"....

"Nothing more than a way to disenfranchise the majority of Congress by denying them the chance for meaningful participation in the crucial areas of entitlement and tax reform. It cedes power to draft legislation to a special commission, hand-picked by the House and Senate leadership."

It is this new "Super Congress" that will decide what will be in the package of "spending cuts" that will be voted on by the end of the year.

Regular members of Congress will be frozen out of the process.

On December 23rd, Congress will be required to vote up or down on the spending cuts proposed by the "Super Congress".  Regular members of Congress will not be allowed to amend the legislation in any way, and no filibusters will be permitted.

Does that sound very "American" to you?

The more that one examines this "debt ceiling deal", the worse it looks.

Meanwhile, many Democrats are running around and acting as if their lunch money was just stolen.

For example, the following is what Politico is reporting that U.S. Representative Mike Doyle said about this deal....

“We have negotiated with terrorists,” an angry Doyle said, according to sources in the room. “This small group of terrorists have made it impossible to spend any money.”

Democratic congressman Emanuel Cleaver was even more dramatic when he proclaimed that this deal "looks like a Satan sandwich".

Well, this deal is a total nightmare, but not for the reasons that Cleaver is suggesting.

This deal opens the door for more rampant deficit spending, and nearly all of the "spending cuts" are put off until after the 2012 election.

Basically, the Republicans got taken out behind the woodshed and beaten to a pulp on this one.  Any Republican that is trying to proclaim that the debt ceiling deal is a "great victory" is a complete moron.

But in the end, it really does not matter which political party gets a "victory" out of all this.  What matters is that our federal government is still steamrolling toward a date with financial oblivion.

If this is the best that our politicians can come up with, we are absolutely doomed.

http://www.blacklistednews.com/The_Debt_Ceiling_Deal_From_Hell/15013/0/0/0/Y/M.html

8/4/2011 - Debt ceiling will have to be raised again on September 29

Well after the months of theaters from the actors in Washington DC ending in the obvious and predicted conclusion, we will see the second act of that farce within 60 days. Get your popcorn early. 

Debt for fiscal year starting October 1 2010 till August 2 2011 : 921.48 billion or 3.02 billion/day 
Debt for calendar year 2011 : 534.4 billion. 2.49 billion/day 
Current debt : 14.532 trillion 
Current debt ceiling : 14.694 trillion 

At the current average rate of 2.75 billion in new debt/day (or about 8.87$ in new debt per day for every citizen in America...and that is just federal) it will take about 58 days before reaching the debt ceiling yet again, aka September 29. 

All the data from the US government here for current debt and debt ceiling and here for daily debt. 

Also, US debt has grown by a nice 240 billion overnight and the US debt to GDP ratio has hit a post-ww2 high of 97.2%. 

And that is just the debt ceiling issue. The US government have to pass the 2011 GOVERNMENT FUNDING BUDGET before October 1 (different from a budget) or else the federal government will shutdown and hundreds of thousands of federal employees will get furloughed.

8/2/2011 - The Imminent $2.5 Trillion Debt Ceiling Hike Will Unleash A Gold Price Surge To $1,950 And Higher

Zero Hedge
Aug 2, 2011

Two weeks ago we presented a chart that shows the uncanny correlation between the debt ceiling and the price of gold. Now that we know the final amount of the next debt ceiling hike, somewhere in the $2.5 trillion ballpark, it allows us to extrapolate where gold will end up as a result of the debt ceiling hike which will likely be voted into law at 7pm PDT.

A simple correlation rule of thumb allows us to predict that gold will be at $1,950 by the end of the year if it simply retains it close correlation to the debt ceiling. Should Bernanke announce that he will additionally need to monetize some or all of this incremental debt amount, we anticipate that gold will be well over $2,000 by the end of the year, courtesy of yet another round of accelerated dollar debasement, which also means that real gains in US stocks will be negated courtesy of the devaluation of the currency in which they are priced. The same, however, does not apply for gold, which with every passing day is priced in nothing but itself.

The Bloomberg chart of the day first presented on July 20.

And our revised version including the projected gold price.

8/2/2011 - Forget Compromise: The Debt Ceiling Is Unconstitutional

Forget Compromise: The Debt Ceiling Is Unconstitutional

By Ellen Brown - Truthout 
The debt ceiling crisis can be averted by enforcing the 14th Amendment, which mandates the government to pay its debts already incurred, including pensions. That means Social Security, which IS an "entitlement," in the original sense of the word. We're entitled to it because we've paid for it with taxes. 

The game of Russian roulette being played with the US federal debt has been called a "grotesque political carnival" and political blackmail.

The uproar stems from a statute that is unique to the United States and never did make much sense. First passed in 1917 and revised multiple times since, it imposes a dollar limit on the federal debt. What doesn't make sense is that the same Congress that voted on the statute votes on the budget, which periodically exceeds the limit, is requiring the statute to be revised. The debt ceiling has been raised 74 times since 1962, ten of them since 2001. The most recent increase, to $14.294 trillion by H.J.Res. 45, was signed into law on February 12, 2010.

Taxes aren't collected until after the annual budget is passed, so Congress can't know in advance whether or how much additional borrowing will be required. Inevitably, there will be some years that the budget pushes the debt over the limit, requiring new legislation. And inevitably, now that this tactic has been discovered, there will be a costly battle over the increase, wasting Congressional time, destabilizing markets and rattling faith in the American financial and political systems. There will be continual blackmail, arm twisting and concessions. The situation is untenable and cries out for a definitive resolution.    

Fortunately, there is one. A bevy of legal scholars are recommending that the issue be eliminated altogether by playing the constitutional trump card. The 14th Amendment provides at Section 4:

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.

Where statute and the Constitution collide, the Constitution prevails. Whether the government should pay the bills it has already incurred is not a matter of negotiation. It is a constitutional mandate. And those are the bills we are talking about here, as President Obama stressed in his remarks on the issue last Friday. He said:

Raising the debt ceiling simply gives our country the ability to pay the bills that Congress has already racked up. I want to emphasize that. The debt ceiling does not determine how much more money we can spend, it simply authorizes us to pay the bills we already have racked up. It gives the United States of America the ability to keep its word.

Ignoring the debt ceiling on constitutional grounds would not, as Michelle Bachmann declares, make President Obama a "dictator." It would simply mean he is complying with his constitutional mandate to pay the government's bills on time and in full.

Social Security Is Not Welfare. It Is a Debt Due and Owing.

The president could have a clean resolution of the issue, but he is not jumping at the opportunity. Rather, he appears to be ready to throw Granny under the bus by slashing Social Security, Medicare and Medicaid, all in the name of "compromise."

The 14th Amendment says debts already incurred shall not be questioned, "including debts incurred for payment of pensions." That includes Social Security, which is an "entitlement" in the true sense of the word: we're entitled to it because we've already paid for it. In fact, the Social Security Act was originally sold to Congress and the nation in 1935 not as a government benefit, but as a retirement savings program. Earlier this year, the Urban Institute published a study evaluating the program in this way, concluding that the average worker who retires today will withdraw from Social Security just about the same amount he put in over the years, with a modest 2 percent real interest rate (after inflation).

A deal is a deal. We paid for it; we are owed it and the US government is good for it. To change the terms of the deal ex post facto is both a breach of contract and a violation of the Constitution.

Where to Get the Money: Ron Paul's Creative Plan

A sovereign nation can always find the money to pay debts owed in its own currency. The US could, if it wished, pay its bills using debt-free US Notes or Greenbacks, just as President Lincoln did to avoid a crippling debt during the Civil War. Alternatively, it could eliminate the deficit with Ron Paul's plan, which amounts to the same thing. As Stephen Gandel explains Paul's solution in Time Magazine:

In the last year or two the Fed has been buying up US Treasury bonds in an effort to lower interest rates and boost the economy. The most recent round of that buying has been dubbed QE2 and has come under a good deal of criticism, though most economists agree that it was a generally helpful policy. The result is that the Fed now holds nearly $1.7 trillion in US debt. But that is really phony debt. The Treasury pays the interest on the debt on behalf of the US government to the Fed, which in turn returns 90 percent of the payments it gets back to the Treasury. Nonetheless, that $1.7 trillion in US bonds that the Fed owns, despite the shell game of payments, is still counted in the debt ceiling number, which caps that amount of total federal debt at $14.3 trillion.

Paul's plan: Get the Fed and the Treasury to rip up that debt. It's fake debt anyway. And the Fed is legally allowed to return the debt to the Treasury to be destroyed. A trillion and a half dollars is currently about what spending is expected to exceed tax revenue in 2011.

The biggest drawback to the plan, says Gandel, is just that it "looks bad." It looks as if the government is paying off its debts by printing money. But that is what government-issued money is: a note acknowledging a debt due and owed from the public, good for an equivalent value from the public, traded in the marketplace. A US Note, or Greenback, and a Federal Reserve Note, or dollar bill, are both forms of promissory notes. The government can as easily issue a dollar bill as a dollar note or a dollar bond, as Thomas Edison pointed out in the 1920s. 

The objection to that solution is that it would be inflationary, but as economist Richard Koo graphically demonstrates, the Fed's quantitative easing has had virtually no inflationary effect on the money supply to date:

Click here to view larger.

Misdirected Fed policy has instead caused $1.6 trillion in "excess reserves" to sit on bank balance sheets, as explained in an earlier article. Conveniently, excess reserves can be used as collateral for futures and derivatives contracts and that is what some banks appear to be doing with the money: backing trades in the financial markets. This sort of speculation, involving money making money without increasing productivity, can and does drive up prices.

If the money had been delivered directly to the government to be spent on the national budget, it might have gotten into the real economy where it could do some good. The government's budget is spent not on speculation, but on goods and services. Increased government "demand" stimulates an increase in "supply," causing supply and demand to increase together, avoiding price inflation while stimulating economic activity. 

Time to Close the Debt Ceiling Loophole

The debt crisis was created, not by a social safety net bought and paid for by the taxpayers, but by a banking system taken over by Wall Street gamblers. The gamblers lost their bets and were bailed out at the expense of the taxpayers; and if anyone should be held to account, it is these gamblers.

The debt ceiling crisis is a manufactured one, engineered to extort concessions that will lock the middle class in debt peonage for decades to come. Congress is empowered by the Constitution to issue the money it needs to pay its debts. Abraham Lincoln did it; Barack Obama could do it. He probably won't, but he does need to follow his constitutional mandate to pay the government's bills as and when due. The statute imposing a ceiling on the national debt is trumped by the 14th Amendment, making it redundant and unnecessary. The statute should be repealed.

http://www.blacklistednews.com/Forget_Compromise%3A_The_Debt_Ceiling_Is_Unconstitutional/14981/0/0/0/Y/M.html

8/1/2011 - The Current Debt Ceiling Debate Is A Complete Fraud

Source: BLN

By Lee Rogers


The entire debt ceiling debate that is being covered religiously by the corporate controlled media is nothing more than a fraud surrounded by false ideologies on both sides of the phony political spectrum.  This problem is very simple to solve and it defies logic that not one single person in the corporate controlled media or in government appears willing to discuss a legitimate solution.  Instead, the politicans and the corporate controlled media propagandists prefer to offer fake solutions that keep the current debt based monetary system in place.  The argument is primarily focused around Democrats demanding so-called revenue increases with spending cuts where as the Republicans are demanding no tax increases combined with slightly more aggressive spending cuts.  Although it is true that government spending is wildly out of control and should be drastically cut, neither of these proposals come anywhere close to offering real reform.  They are merely proposals designed to keep the current system in place when the system itself is the real problem.

Currently, there are many sovereign countries that find themselves in an enormous amount of debt.  The reason for this is because of the myriad of central banking systems that operate in conjunction with these nations.  These systems operate off of the concept that all money is debt.  In the case of the United States whenever the government needs to deficit spend they borrow it from the Federal Reserve at interest.  The Federal Reserve provides the United States Treasury Federal Reserve Notes that they create out of nothing in exchange for bonds or debt.  As these Federal Reserve Notes circulate in the economy and get stored in banks, these banks can loan out many times the amount of money that they have on hand.  For many years banks could loan out ten times the amount of cash on hand.  In other words, these banks could simply create additional Federal Reserve Notes out of nothing and force the borrower to pay interest on it based off of the amount of reserves at their disposal.  In this system, all money is debt and the people are taxed so that the government can pay back interest on the debt that originated from the funds that the Federal Reserve simply created out of nothing.  It is nothing more than a scam designed to ensure that the people are enslaved to a system of debt that the government can never pay back.

As a result, the debate surrounding the debt ceiling, spending cuts and the like is nothing more than smoke and mirrors.  There is no real debate going on as it is just staged theatre between two factions of a one party system.  There is zero difference between both the Republican and Democrat parties as for decades they have continued supporting this phony monetary system that has bankrupted the nation and made the American people debt slaves.  As a sovereign entity the United States Treasury could simply issue its own currency free from the burden of debt or interest payments and use that to pay off its debts.  Abraham Lincoln did this by financing the Civil War through the issuance of Greenbacks.  To reiterate, a sovereign entity does not need to borrow from the Federal Reserve or any other lending institution when it can issue its own currency.  The fact that not one politican or one media pundit has brought up this fact shows that nobody is interested in truly resolving this crisis and are only interested in continuing the status quo.

The only way this debt problem will ever be truly resolved is if the debt based monetary system that is facilitated through the Federal Reserve is phased out and replaced with a non-debt based monetary system.  Additionally, gold and silver coins should be brought back into active circulation with the U.S. Mint stamping out silver coins with a $50 face value and gold coins with a $2,000 face value.  The reason why they do not circulate now is because the face value of the coins is far less than the actual melt value of the coins.  If a piece of paper can be worth $100 just by the fact that it says $100 on it, there is no reason why the U.S. Mint can't do the same thing with the coins.  If these two ideas were implemented, the debt crisis would soon no longer exist, there would be no reason for excessive taxation and the U.S. government would be able to finance a myriad of programs for the benefit of the American people.

It is hard to say how this manufactured crisis is going to end but with nobody offering any real solutions, it is quite possible this is just another way for the establishment to further weaken the U.S. economy and make the prospect of global government all the more possible.  Either way, it should be very interesting to watch this disgusting circus unfold over the next few days as the politicans and talking heads continue to argue over their fake solutions.


http://www.blacklistednews.com/The_Current_Debt_Ceiling_Debate_Is_A_Complete_Fraud/14967/0/38/38/Y/M.html

7/31/2011 - ABC Reports Tentative Debt Ceiling Deal Reached Between GOP And Obama

This could very well be another red herring like the NYT article from two weeks ago that proved to be a dud, but for what it's worthaccording to ABC's Jonathan Karl, the White House and the GOP have just reached a tentative deal as follows...

• Debt ceiling increase of up to $2.8 trillion 
• Spending cuts of roughly $1 trillion
• Special committee to recommend cuts of $1.8 trillion (or whatever it takes to add up to the total of the debt ceiling increase) 
• Committee must make recommendations before Thanksgiving recess 
• If Congress does not approve those cuts by late December, automatic across-the-board cuts go into effect, including cuts to Defense and Medicare.

In other words, virtually the same as the Boehner deal in the actual cuts, which will likely be back-end loaded (we expect about $10-20 billion in 2012 cuts), but the Democrats get what they want in that it will not require a second debt ceiling hike before Obama's re-elecetion as $2.8 trillion should last well into 2013. As for "future cuts", well, that's easily what Congress is so very good at. Indefinite future cuts that is.

Some more recent details from the National Journal:

Here are the outlines of a debt-ceiling deal that congressional leaders and the Obama White House are firming up in preparation for a possible announcement as early as Sunday afternoon. 

In many respects, the deal will, if approved by all parties, resemble the contours of a short-lived pact negotiated last weekend by House Speaker John Boehner, R-Ohio, and Senate Majority LeaderHarry Reid, D-Nev. Obama rejected that deal, forcing Congress to wrestle with other inferior legislative options throughout the week.

Among the newest wrinkles, according to informed sources, is an agreement to extend the current $14.3 trillion debt ceiling very briefly to give the legislative process time to work without resorting to emergency, hurry-up measures.

President Obama has said he would only sign a short-term extension (days, not weeks) if it were linked to an extension of borrowing authority that lasts beyond the 2012 election. 

According to sources, the Senate would use the military construction appropriations bill, one currently available for action, as the vehicle for the short-term extension. This element of the arrangement, like everything else, is subject to modification. But those close to the negotiations expect Congress to slow things down without jeopardizing the nation's full faith and credit. A debt extension of days would achieve that goal.

http://www.zerohedge.com/news/abc-reports-tentative-debt-ceiling-deal-reached-between-gop-and-obama

7/31/2011 - NIA Exposes Debt Ceiling Truth

NIA Exposes Debt Ceiling Truth

NIA hasn't written about the whole debt ceiling issue over the past few weeks because in our minds it is completely irrelevant. Our elected representatives in Washington along with the mainstream media have been wasting thousands of hours of time and hundreds of millions of dollars debating a topic that has no meaning at all. The President, Senate, and House of Representatives are putting on a show to make it look like they care about cutting spending and balancing the budget. Except for a select few elected representatives like Ron Paul who care about protecting the U.S. Constitution and preserving what little purchasing power the U.S. dollar still has left, every other politician in Washington is putting on a complete charade in order to trick their constituents into believing there is a difference between the proposals from the Republicans and Democrats.

While our incompetent and corrupt mainstream media has been proclaiming there are major differences between the two bills proposed by House Speaker John Boehner and Senate Majority Leader Harry Reid, NIA believes John Boehner might as well be a Democrat and Harry Reid could easily pass himself off as a Republican. There are absolutely no meaningful fundamental differences between Boehner's plan that was approved by the House of Representatives yesterday evening, before being killed by the Senate two short hours later, and Reid's bill, which was just rejected by the House today in a pre-emptive vote before the Senate even had a chance to vote on it.

Both bills are estimated to reduce the U.S. budget deficit by approximately $900 billion over the next 10 years. Of the $900 billion only about $750 billion are actual discretionary spending cuts with the rest being an expected reduction in interest payments on the national debt as a result of either bill passing. When you have an unstable fiat currency that is rapidly losing its purchasing power and could collapse at any time, it is impossible to accurately project what our budget deficits will be 5 or 6 years from now, let alone 9 or 10 years from today. As far as the next two fiscal years are concerned, both proposed bills from Boehner and Reid are estimated to only cut spending by a total of about $70 billion in fiscal years 2012 and 2013 combined.

The budget that former President Bush submitted to Congress in early-2007, projected the deficit to decline in each of the following four fiscal years. Not only did the deficit not decline the next four years in a row, but it nearly tripled in 2008 and from there more than tripled in 2009. Shockingly, Bush's budget actually projected a $61 billion surplus in fiscal year 2012, but instead we will have a budget deficit of $1.1 trillion based on President Obama's latest budget, which takes into account unrealistic GDP growth next year of 4.86%.

U.S. GDP growth for the first quarter of 2011 was just revised down yesterday by 81% from 1.91% to 0.36%. The advance estimate of second quarter GDP growth came in at 1.28%, well below the consensus estimate of 1.8%. NIA is going to really go out on a limb and predict that second quarter GDP growth will soon be revised downward as well. If this is the highest GDP growth the U.S. could muster after the Federal Reserve's $600 billion in QE2 money printing, this should prove once and for all that monetary inflation does not create real economic growth and employment.

The U.S. Treasury as of Thursday night had $51.6 billion in cash, with its cash position declining by $15.2 billion during the previous 24 hours. It expects to bring in $172.4 billion from August 3rd through August 31st in tax receipts, but is scheduled to pay out $306.7 billion during this time period for an estimated deficit of $134.3 billion. The U.S. is scheduled to make its next interest payment on the national debt on August 15th and it will equal approximately $30 billion. Over the last 9 months the U.S. has spent a total of $385.9 billion on interest payments on the national debt, which means it is on track to spend a record $514.5 billion this year on interest payments alone. Just a tiny 30 basis point increase in the interest rate on the national debt would totally wipe out the deficit reductions proposed by both Boehner and Reid.

The U.S. Treasury has been able to pay its bills in recent weeks by using many different accounting gimmicks. However, come Tuesday, there will be no more accounting tricks left to play and the U.S. won't be able to meet all of its obligations. Without a raise in the debt ceiling, the U.S. government will have to prioritize who it pays using the tax receipts coming in, which will probably include the $30 billion interest payment on the national debt (to avoid a default), $49.2 billion in Social Security payments, $50 billion in Medicare/Medicaid payments, $31.7 billion in defense payments, and $12.8 billion in unemployment benefits. With $23 billion of the $49.2 billion in Social Security payments due to be paid on August 3rd and $59 billion in t-bills due on August 4th, the U.S. Treasury's remaining cash balance could dissipate very quickly.

The 10-year bond yield reached a new 2011 low yesterday of 2.785%, its lowest level since November 30th of last year. It is approaching its record low of 2.08% from December of 2008 during the middle of the financial crisis. With threats of a U.S. debt default making headlines across the world, investors are once again rushing into U.S. bonds as a safe haven. It is almost as if the whole world has gone insane. The world is fearful of the U.S. government defaulting on its debt and not being able to pay off maturing bonds, so as a safe haven let's just all rush into the very asset that will soon be worthless due to either an honest default or default by inflation. The U.S. dollar bubble is the largest and longest running bubble in world history and U.S. bonds are currently mispriced big time.

U.S. dollar-denominated bonds should be the last asset in the world to benefit from fears of a U.S. debt default. One positive sign that NIA members are having success at spreading our message to the world is that gold reached a new all time high yesterday, rising $15 to $1,631 per ounce, with silver rising $0.31 to $40.10 per ounce. Thanks to the efforts of NIA members who worked tirelessly to spread the word about NIA's economic documentaries including 'Meltup', 'The Dollar Bubble', and 'Hyperinflation Nation', a larger percentage of the global population than ever before is educated about the global currency crisis that is ahead.

During the financial crisis of late-2008/early-2009, gold and silver prices declined along with all other assets. Today, NIA estimates that half of the world's investors seeking a safe haven are buying dollar-denominated assets like U.S. Treasuries and the other half are seeking safety in precious metals. By mid-2012, investors will most likely no longer look at U.S. bonds and other dollar-denominated assets as a safe haven. During future times of uncertainty, NIA believes that precious metals will receive nearly 100% of safe haven buying, just like the U.S. dollar received 100% of safe haven buying in late-2008/early-2009.

Once the debt ceiling is inevitably raised, the U.S. Treasury will have a lot of catching up to do in order to get its house in order, and we will likely see the largest amount of debt ever sold by the U.S. government in a single month. With QE2 having finished at the end of June, the U.S. will be relying on foreigners in these upcoming record Treasury auctions. In our opinion, we are likely going to see interest rates rise at an unprecedented rate that will shock the world.

Don't believe the mainstream media's laughable claim that there is a shortage of U.S. Treasuries. It was just reported yesterday that Cambodia, one of the most rapidly growing emerging market economies with GDP growth this year of 6.5%, is moving away from the U.S. dollar, which currently accounts for 90% of their currency in circulation, in favor of its own currency the riel. NIA believes it is only a matter of time until China ends its currency peg with the U.S. dollar. The world is flooded with trillions of dollars in U.S. Treasuries that will soon have no buyers except the Federal Reserve. There is no chance of yields falling below record lows from December of 2008.

The mainstream media has been reporting all week that if the U.S. defaults on its debt as a result of a failure to raise the debt ceiling, it will be the first time that our nation has defaulted on its debt obligations. Most NIA members know that the real U.S. debt default already occurred in 1971 when President Nixon closed the gold window and stopped allowing foreign governments to convert their U.S. dollar holdings into gold. Since then, the U.S. currency system has been completely fiat and the national debt has increased by 3,400%.

For the past 40 years, the U.S. government has been running on fumes left over from when countries were able to convert their paper U.S. dollars into gold. The price of gold has increased by 3,900% during this time period, meaning the U.S. dollar has lost 97.5% of its purchasing power. Meanwhile, the median household income has only increased by 384%. In terms of gold, the median U.S. household is earning 87.9% less income today than they did in 1971. The U.S. debt default of 1971 was many times more significant than the pending debt default, because back then our foreign creditors expected to receive real money and not a piece of paper with no real value that we print. The average American family has experienced a dramatic decline in its standard of living since 1971. The U.S. dollar and its reserve currency status is currently serving as the last thread that is keeping our "house of cards" economy propped up.

The U.S. debt ceiling is very similar to a publicly traded company's authorized shares. When a public company consistently loses money like the U.S. government does, they print new shares just like the Federal Reserve prints dollars and when its total outstanding shares reach the shares authorized, the company's Board of Directors simply raises the shares authorized, which allows it to continue issuing shares and diluting shareholders. Since 1962, the U.S. has raised its debt ceiling 74 times. Any public company that needed to raise its authorized shares 74 times would likely have seen its stock price decline by 99.99% from above $10 to below 1 penny.

NIA is strongly against an increase in the debt ceiling because there are ways for our country to stay afloat and continue operating without getting deeper into debt. The U.S. is currently supposed to have 8,133.5 tonnes of gold reserves at Fort Knox. We don't know for sure if these gold reserves still exist because the last audit of our gold reserves took place in 1954 and we had the little minor issue of our real debt default in 1971. Assuming that all of our gold is still there, this gold is worth $426.5 billion at the present time, enough to cover our U.S. government's deficit spending for almost four whole months. The U.S. government also owns valuable land, buildings, monuments, and other types of Real Estate, that could also be worth hundreds of billions of dollars. Although we don't support selling all of our gold and Real Estate, if the U.S. government isn't going to implement real spending cuts that will lead to a balanced budget, we rather sell our assets than see the dollar-denominated savings and incomes of all Americans lose its purchasing power.

If we continue raising the debt ceiling and getting deeper into debt in order to pay back the debts we already have, we are defaulting on our debts through inflation. With gold at a record high of $1,631 per ounce, the market is clearly telling us that a default through inflation is coming. As the Chinese, Japanese, and our other creditors are paid back in U.S. dollars that are rapidly losing their purchasing power, they will be reluctant to increase their purchases of U.S. Treasuries in the future, which we desperately need them to do in order to fund our spending increases. With the Federal Reserve likely to become the Treasury buyer of last resort, the world will lose their confidence in the U.S. dollar and hyperinflation could potentially break out as soon as 2013.

NIA believes it is very likely that U.S. GDP will begin declining again in late-2011, which will officially put the U.S. in double-dip recession territory. In our opinion, the U.S. is still in the early stages of a hyperinflationary depression and the so-called economic recovery reported by the government and mainstream media has been completely phony and only due to misleading and manipulated economic statistics that don't factor in the real rate of U.S. price inflation. We expect Federal Reserve Chairman Ben Bernanke to do everything in his power to avoid a double-dip recession at all costs.

By the end of 2011, we are confident that not only will we see QE3 under a new name, but the Fed will act to force banks to lend their $1.6 trillion in excess reserves. It is a joke that we are debating spending cuts of $70 billion over the next two years, when only very dramatic across the board spending cuts of 50% or more of the total budget will give the U.S. any hope of balancing the budget and avoiding hyperinflation. Best case scenario, if the U.S. government cuts spending by 50% or more in all areas of the budget including entitlement programs and is able to prevent hyperinflation, NIA still believes we will see the U.S. dollar lose 90% of its purchasing power this decade with the price of gold rising to above $16,000 per ounce.

http://inflation.us

7/29/2011 - Giant Banks Lobby to Raise the Debt Ceiling and Slash Public Benefits ... So They Can Keep Sucking at the Public Teet

Source: Washington's Blog

Economist Dean Banker notes:

Wall Street will suffer more than anyone from a default and it will not let it happen. The public should know this, certainly Wall Street does.

No wonder the fatcats running the giant banks which received tens of trillions in bailouts, loans and guarantees from the American public are screaming loudly that the debt ceiling must be raised.
Robert Reich points out:

Why has Standard & Poor's decided now's the time to crack down on the federal budget -- when it gave free passes to Wall Street's risky securities and George W. Bush's giant tax cuts for the wealthy, thereby contributing to the very crisis its now demanding be addressed?

Could it have anything to do with the fact that the Street pays Standard & Poor's bills?

Remember, the big 3 government-sponsored rating agencies routinely took bribes as their normal business model, committed massive fraud which greatly contributed to the financial crisis, covered up improper ratings after the fact, and otherwise sold their soul (in their own words). And see this and this.
Some complain about the poor sucking on the government teet.
But the fact that Wall Street controls the rating agencies, and the rating agencies are nowcreating an artificial emergency sounds like the powers-that-be - the giant banks which run this country - are trying to protect their government teet of perpetual bailouts from the public coffers.
And of course, they are the ones calling for slashing of spending which helps the public. Even though - as conservative writer Michael Rivero points out:

Social Security is not "unfunded" nor is it an "entitlement." That is YOUR money in that trust fund. You worked for it, and it was taken out of all your paychecks your entire working life.

The Social Security Trust fund invested your money by loaning it to the US Government, which is the largest single holder of US Government debt. But the US Government is already in default in fact, as the actual tax revenues have not even come close to the projections on which the budgets were drawn up.

So the US Government has looked at all the entities they owe money to and decided that stiffing the American people is the least likely to cause them harm. They will pay the bankers and they will pay foreign nations and they will continue to bail out Wall Street for the mortgage-backed securities fraud by embezzling your retirement money you gave them in trust. The US Government is robbing you to save the private central bank! [i.e. the big banks. See thisand this.]

The debt crisis might be real ... I've been warning about it for years (and see this and this).

The potential downgrade to America's credit is real ... I've been warning about thatfor years, as well.

But the way that the rating agencies and Wall Street are approaching the debt ceiling debate is a scam. See this, this and this.

http://www.blacklistednews.com/Giant_Banks_Lobby_to_Raise_the_Debt_Ceiling_and_Slash_Public_Benefits_..._So_They_Can_Keep_Sucking_at_the_Public_Teet/14925/0/38/38/Y/M.html

7/26/2011 - 'Super Congress': Debt Ceiling Negotiators Aim To Create New Legislative Body

Source: Huffington Post

WASHINGTON -- Debt ceiling negotiators think they've hit on a solution to address the debt ceiling impasse and the public's unwillingness to let go of benefits such as Medicare and Social Security that have been earned over a lifetime of work: Create a new Congress.


This "Super Congress," composed of members of both chambers and both parties, isn't mentioned anywhere in the Constitution, but would be granted extraordinary new powers. Under a plan put forth by Senate Minority Leader Mitch McConnell (R-Ky.) and his counterpart Majority Leader Harry Reid (D-Nev.), legislation to lift the debt ceiling would be accompanied by the creation of a 12-member panel made up of 12 lawmakers -- six from each chamber and six from each party.


Legislation approved by the Super Congress -- which some on Capitol Hill are calling the "super committee" -- would then be fast-tracked through both chambers, where it couldn't be amended by simple, regular lawmakers, who'd have the ability only to cast an up or down vote. With the weight of both leaderships behind it, a product originated by the Super Congress would have a strong chance of moving through the little Congress and quickly becoming law. A Super Congress would be less accountable than the system that exists today, and would find it easier to strip the public of popular benefits. Negotiators are currently considering cutting the mortgage deduction and tax credits for retirement savings, for instance, extremely popular policies that would be difficult to slice up using the traditional legislative process.


House Speaker John Boehner (R-Ohio) has made a Super Congress a central part of his last-minute proposal, multiple news reports and people familiar with his plan say. A picture of Boehner's proposal began to come into focus Saturday evening: The debt ceiling would be raised for a short-term period and coupled with an equal dollar figure of cuts, somewhere in the vicinity of a trillion dollars over ten years. A second increase in the debt ceiling would be tied to the creation of a Super Congress that would be required to find a minimum amount of spending cuts. Because the elevated panel would need at least one Democratic vote, its plan would presumably include at least some revenue, though if it's anything like the deals on the table today, it would likely be heavily slanted toward spending cuts. Or, as Obama said of the deal he was offering Republicans before Boehner walked out, "If it was unbalanced, it was unbalanced in the direction of not enough revenue."


Read Full Article Here...

7/22/2011 - Bankrupting America: History Of The U.S. Debt Ceiling

Source: Daily Bail

 

This is outstanding.  Short and to the point.

Produced by Bankrupting America...

Debt Ceiling archives...

http://www.blacklistednews.com/Bankrupting_America%3A_History_Of_The_U.S._Debt_Ceiling_/14824/0/0/0/Y/M.html