Shocking admission from Tim Geithner: U.S. on the brink of catastrophic collapse

[Mira]

Shocking admission from Tim Geithner:
U.S. on the brink of catastrophic collapse
From SHTF Plan:

... For those 17% of people who think the economy is in recovery and the other 33% who believe it will happen soon, we point you to the latest statement from current Treasury Secretary Timothy Geithner, who outlines the severity of the problem in a January 6, 2011 letter to Congress writes:
I am writing in response to your request for an estimate by the Treasury Department of when the statutory debt limit will be reached, and for a description of the consequences of default by the United States.
Never in our history has Congress failed to increase the debt limit when necessary. Failure to raise the limit would precipitate a default by the United States. Default would effectively impose a significant and long-lasting tax on all Americans and all American businesses and could lead to the loss of millions of American jobs. Even a very short-term or limited default would have catastrophic economic consequences that would last for decades...

The Treasury Secretary of The United States of America just said that if we don't get another $1 trillion or so dollars by March of this year then this country will begin to default on its debt obligations. These remarks are extremely serious and should be understood for what they are.
We are, literally and without mixing words, on the brink of economic catastrophe.
The scary thing is, according to Mr. Geithner and the many supporters of raising our debt ceiling, that borrowing more money is the only solution available.

In a recent commentary we pointed out the opposing view from Karl Denninger of Market Ticker, who said that raising the debt ceiling would essentially lead to the very same consequence as leaving it as is:
Let me be clear: If you extend the debt ceiling and by doing so allow deficits of this sort to continue for another year, say much less two, you will have placed a loaded shotgun in...

http://www.shtfplan.com/headline-news/confirmed-were-literally-on-the-brink-of-catastrophic-collapse_01062011

[MannyGoldstein]

1. Just another contrived 'hostage taking' situation

Last month it was to cut taxes for the wealthiest Americans while raising them for the working poor.

This one is for slashing Social Security.

We are mightily screwn.

[WhiteTara]

4. clear thinking there, Manny.

:hi:

[robinlynne]

10. makes sense to me.

[FiveGoodMen]

2. More of the Shock Doctrine

[melody]

28. Exactly n/t

[notesdev]

3. And whose fault is that?

YOURS Timmy, as the WORST EPIC FAILURE OF A REGULATOR IN HUMAN HISTORY!

(for those w/o the background knowledge, he was head of the NY branch of the Federal Reserve - Wall St.'s regulator - during the entire time the housing bubble was being blown to epic proportion)

If there is a breakdown of law and order Geithner will be the first victim of a resurgence of human cannibalism... and not because anyone is hungry.

[xchrom]

5. +1

[midnight]

6. Just erase our debt, and start over.

[abelenkpe]

27. Jubilee sounds better than starvation, lost jobs, economic disaster, etc.

[AnneD]

7. It is only shocking...

to folks that don't read the SWT here on DU.

[GeorgeGist]

8. Too Rich to Fail ...

again.

[Warpy]

9. It's nice that somebody is telling the truth about that

because extending Stupid's tax cuts for even another two years will be ruinous if they don't do the hardest and most necessary thing: start chopping down the military budget and forcing the Pentagon to start ceding empire starting with at least half the foreign bases. It means closing the welfare office fat cat military contractors have depended on for so many years and ending bogus contracts to fake companies just to funnel contributions to Republican PACs.

The Republican House would rather starve the rest of us, of course, since the rich men pulling their strings want empire to continue and grow. However, they might not have a choice a year or so from now, maybe sooner.

We're about to live in interesting times, indeed.

[Smashcut]

11. And that's why we must CUT SOCIAL SECURITY AND LOWER THE CORPORATE TAX RATE NOW!!!!!111!!!!

AGHGHGHGHGGHGHGHGGHH!!!!!!!!

[gateley]

22. You're right - any minute now...nt

[frazzled]

12. The debt ceiling has been raised 10 times in the past 10 years

It's totally routine. What is this bullshit? It sounds like a right-wing anti-deficit screed -- from some guy obsessed with freeze-dried foods.

A big epic fail for posting this drivel.

[jberryhill]

14. +1

[Imperialism Inc.]

26. +10,000

This kind of stuff is why I don't frequent DU as much as I used to. The ignorance here is so thick you can hardly wade through it anymore.

Folks, here is a simple fact. It is impossible for the US to default unless it consciously chooses to. That's right, IMPOSSIBLE. We are in control of our own currency and we can print as much of it as we like. That doesn't mean that there can't be a situation where we decide to default. It would need to be much more drastic that right now but it could happen but, we would have to choose to let it happen.

What Geithner is talking about is a conscious choice by the Republicans to not raise the debt ceiling and choosing to cause a technical default.

Right now the interest rates on our treasury bonds are very low historically. When they get up to 4-5% people start freaking out but that was the average back in the Bush administration and 4% was the rate we were paying even during the Clinton balanced budget. Most of the last 2 years the rates have been much lower than that. Heck the real rate even went negative a couple times. Thats right, people were paying the US government for the right to buy their bonds. So the market is no where near stopping their buying of US bonds. And, even if they were, the Fed can just buy them itself. Heck, when the Fed does that they refund the interest payments to the treasury so it is even interest free debt. So, I repeat, the ONLY way we can default on the debt is by conscious decision.

Edit to add: And , BTW, we are one of the only developed countries in charge of their own currency that even has a debt ceiling. In fact I think we are the one and only but I forget if there might be one or two others.

[melody]

29. Thank you, thank you, thank you

At last, a truly rational, well-reasoned post.

[girl gone mad]

13. Probably should have thought things through before turning over Treasury to the banking cartels..

and maybe it wasn't such a good idea to extend all of the Bush tax cuts.

It's difficult to believe the hype about defaulting on our debt at the same time the Fed is busy printing trillions of dollars to buy up toxic MBS, etc. Maybe someone can take the time to explain to Mr. Geithner how our monetary system works.

[doc03]

15. Not to worry economic expert Glenn Beck says it won't n/t

[Warren Stupidity]

16. Not raising the ceiling would indeed cause a worldwide crisis.

On the other hand, raising the ceiling is what is done every few years, and is simply no big deal.

[Coyote_Bandit]

17. You can't fix the problem of

having too much outstanding debt by adding still more debt. Only a dim bulb that doesn't understand the basics of credit counseling would think otherwise.

But then no one is really focused on fixing the economy. They just want to patch it up so that consumer spending can once again carry the nation's economy. Go shopping, it's your patriotic duty. Nobody in government wants to tax corporate profits, or put policies in place that bring back offshored labor positions, or create an economy that once again is based on real productivity. We're fucked.

[bemildred]

18. Tax the rich!! Tax the heck out of them! It's the only answer!!! Do it now!! nt

[bossy22]

20. first you need to define rich

and no...its not families making $250,000...they may be well to do but they are not rich

[bemildred]

21. No I don't, you can just sling things around, no problemo. nt

[lonestarnot]

30. They are quivering under their boatloads of money. Poor things.

[pnwmom]

19. Only if we do something incredibly stupid. And we've been at this brink

many times before. It's hardly shocking.

[dixiegrrrrl]

23. Remember what President Obama said about raising the debt ceiling?

March 20, 2006: This was the last stand-alone debt limit vote on which then-Senator Obama voted.
He was one of 48 members to vote against the increase, which passed with 52 votes.

He said:

“The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the U.S. Government can't pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies. … Increasing America's debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”

It will be interesting to see what he says now.

[pscot]

25. +1

[BridgeTheGap]

24. We must live within our means...

How often do we hear that one? And yet, rare is the business that doesn't borrow money for start-up, operations, etc. If republicans are so pro-business, why don't they get this? Is it because they rely upon the ignorant and ill-informed as their base, and therefore must pander to them?

And, yes, I think it's important for individuals and families to live within our means. But business is whole different ball of wax.