This year, US public debt could reach end game

[The Northerner]

Federal Reserve Chairman Bernanke issues the warning. Asian nations, China and India first, are no longer willing to purchase securities issued by the US Treasury, which this year has about US$ two trillion short-term debt to refinance. Beijing is buying gold instead.

Milan (AsiaNews) – For at least four years, AsiaNews has sounded the alarm bells against the risks due to the huge size reached by speculative finance<1>. In 2008, we said that the attempt to save US banks could push the US debt beyond the point of solvency (see Maurizio d’Orlando, “US debt approaches insolvency . . .,” in AsiaNews 19 December 2008)<2>. Back them it could appear a bit overblown, but now even US Federal Reserve Chairman Ben S Bernanke is warning the US Congress about the danger. In a statement before the House Financial Services Committee,<3> he said that the US public debt might no longer be sustainable very soon. Financial jargon aside, the subtitle of an article by The Washington Times—Stage is set in U.S. for a Greek tragedy—says it all. Interviewed for the article, Bernanke says the United States is likely to face a debt crisis like the one in Greece sooner than later, “not something that is 10 years away”.

In 2008, the size of the debt was such that it was quite clear that it was not sustainable. Now we have a timeframe to measure the likelihood of insolvency for the US public debt, and it is this year. The reason for that is described in an article whose title needs no explanation: “The bankruptcy of the United States is now certain”.

The abyss of debt

By the end of 2010, the US Treasury will have to refinance US$ 2 trillion in short-term debt, plus additional deficit spending for this year, estimated to be around US$ 1.5 trillion (US$ 1.6 trillion today two months after the original article was published). Together, the US Treasury will need to borrow US$ 3.5 trillion (US$ 3.6 according to this writer) in just one year.

Read more: http://www.asianews.it/view4print.php?l=en&art=17781

[LiberalLoner]

1. Oh, great. :(

[liberal N proud]

2. Maybe we will stop fighting so damn many wars.

[LiberalLoner]

3. exactly.

[Wapsie B]

4. That's right. China paid for Cheney's war in Iraq.

Way to go Dicky!

[lonestarnot]

5. And who put the boat on the sandbar?

[lazarus]

6. The US can't go broke

We can just print more money. Yes, there are downsides to that, but still. Governments in control of their currency can't go broke.

And China only owns about 5% of our debt, which they are not interested in seeing us default on.

And notice that article quotes an article in the Mooney Times.

I'm not buying any of this.

[cdsilv]

7. Nah - we'll keep fighting the wars in Iraq and Afghanistan to protect China's oil supply....n/t

[Birthmark]

8. Let's think this through...

...country "X" holds an amount of US Treasury notes worth, say $500 billion. If the US goes bankrupt (or even just inflates its way out of debt), that $500 billion is toilet paper, right? So wouldn't it be in country "X's" best interest to at least keep up the pretense that the US has no problem? I mean, $500 billion is a lot of money in most countries.