Geithner Slips Into Emergency Debt Limit Mode

[sasha031]

The US will reach its borrowing limit in less than two weeks, under normal circumstances. Since nobody expects Congress to come to their senses and pass a bill to allow the country to pay what it has promised, the Treasury Department has decided to start maneuvering to avoid default. Treasury Secretary Tim Geithner believes he can hold out until around August 2nd. Here’s a sample of what he’s doing.

In the first emergency step, Treasury on Friday will stop issuing state and local government series securities, commonly known as SLGS. That could make it harder for states and cities to issue debt, because they will have to seek issuers in the private market.

If the debt limit hasn’t been raised by May 16, the government will begin delaying payments into two government pension funds and redeeming Treasury securities in those funds. It also will suspend its daily investment of Treasury securities into another government employees’ retirement plan.

In addition, Treasury officials are prepared to suspend their daily reinvestment of Treasury securities held as investments in the Exchange Stabilization Fund, a fund held by the government to guard against exchange-rate fluctuations.
http://news.firedoglake.com/2011/05/03/geithner-slips-into-emergency-debt-limit-mode/

[CoffeeCat]

1. Oh great...

I love it when these liars create pseudo emergencies for the public to lap up like Pavlovian
dogs.

Remember when Hank Paulson pulled this, "We must do what I say NOW or the world will burn, civilization
will collapse and you will all starve and die!" schtick?

The very same people who have destroyed our economy and the middle class--are now standing around with their
hair on fire (although it's a fake fire, all done with mirrors and wires) demanding that specific things
happen or the world as we know it is gone.

I especially love the tight deadline for the impending armageddon. Two weeks!!

It all ends in two weeks! Not three weeks!! Not eight days!!! Specifically and on point, in two weeks!!!

I'm feeling a strange mix of: :popcorn: :eyes: :mad: :rofl: :puke:

[Pale Blue Dot]

6. Do you understand why raising the debt ceiling is important?

Do you realize what will happen if we don't?

I suggest you do some research. In this case, there is absolutely nothing fake about the deadline.

[CoffeeCat]

7. I do understand that this is a big deal...

...and I will admit that I don't understand the ramifications of this as well as you probably do. My understanding
is that the government essentially runs out of money--and can't pay back our debt, etc--and that we need to raise
the ceiling on how much our government can borrow/owe to other countries.

I would be interested in learning more from you, if you like to share more info.

My point of contention---is that these bastards spend trillions war, tax cuts for the rich, bank bailouts
and corporate welfare. They knew the implications of their crazy spending as they spent every dollar.

The real emergency was upon them--when they started these horrendous wars that are bankrupting our nation. I am
most bothered that they made decisions that led to this point---and never bothered to draw attention to their
reckless decisions when they were funding needless war.

Why is it a crisis when they're out of money---not while in the process of spending like crazy weasels?

In effect, the four-alarm fire they are screaming about now--is an emotional device used to allow us to borrow more, when
maybe we wouldn't be in this position AT ALL if they hadn't spent us into a corner with war and welfare for corporations.

I'm also not happy that many of these hucksters want to eliminate Medicare, Medicaid and Social Security. They get off on
starving old people and de-funding programs that help poor 90-year olds stay warm in the winter. Raising the debt ceiling
won't benefit "We The People."

They will use this money to fund and re-fund their neocon/corporatist bullshit nonsense--while programs that aid children, the poor,
senior citizens and the middle class---will be eliminated.

That is what bothers me.

[Pale Blue Dot]

8. Sorry for my snark - obviously I'm touchy on this. :-)

Your response makes total sense to me.

Essentially, should we default on our debt by not raising the debt ceiling, our creditors will have no reason to trust us or our currency anymore. Our supply of money would dry up. Hyperinflation might be the worst of our problems at that point.

This is as good of an explanation as any: http://thinkprogress.org/2011/01/06/graham-debt-ceiling/

[Autumn]

2. Can I just say?

FUCK GEITHNER !!!

[Romulox]

3. But how will be build more roads in Afghanistan if we don't borrow more money?

:shrug:

U.S. Pays $176 Million to Build Road in Afghanistan ($3 million a mile)

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x1023505

[DCKit]

4. "Treasury on Friday will stop issuing state and local government series securities..."

And THAT will be the beginning and end of it - when the reality of the situation takes hold at the state and local level.

[Igel]

10. That's part of the game.

In local politics, the first cuts deemed necessary are to schools, police, and fire departments. Of course, the county/city continues with 95% of its revenue and decides where to make the pain public. In the end, if they don't get increased revenue from the threats they usually back down, mostly or all the way, and make other cuts.

If the cuts are extreme then they wind up either completely cutting some programs or reduce across the board.

Same with the public debt. Geithner's saying the equivalent of, "We'll have a big budget cut and could reduce spending on an emergency basis in all sorts of places. But the first place we'll make or at least loudly and publicly threaten to make cuts are the public debt, whether state and local or federal. Better to threaten to throw the US into default on its obligations, Constitutionally required to be honored, than impinge on some spending that is politically or administratively, by which I mean *really*, important."

Unless, of course, all the spending from mid May to the end of the f/y is entirely borrowed money. That strikes me as unlikely, given all the quarterly and monthly tax payments.

[Pale Blue Dot]

5. Edit: Wrong place.

[PufPuf23]

9. Now we know why Geithner was hired - he knows how to game the system to buy time.

The problem is that these actions are counter-productive to domestic economic recovery.

IMO there should be a loosening of the debt ceiling to pay for jobs programs for infrastructure and research.

Bigger government during the true recovery would be necessary to administer and permit and provide oversight to the projects.

The government contracts would be an optimized between large, small, and micro-businesses.

The economic multiplier effect at providing paying jobs for the un- or under- employed provides a 3X-7X multiplier to GDP.

This type of program is what is required to re-start local domestic economies and awards American innovation, entrepreneurship, and labor.

Pouring dollars into the top leads to hoarding to buy distressed assets and invest non-domestically.

The Globalists are not good Ecologists and the economy is ecologic in model and natural law.