US hits credit limit

US hits credit limit, setting up 11-week fight
By PAUL WISEMAN, AP

The government has maxed out its credit card.
The United States reached its $14.3 trillion limit on federal borrowing Monday, leaving Congress 11 weeks to raise the threshold or risk a financial panic or another recession.

Treasury Secretary Timothy Geithner formally notified Congress that the government would halt its investments in two federal pension plans so it won't exceed the borrowing limit. Geithner said the government could get by with bookkeeping maneuvers like that through Aug. 2. After that, the government could default on its debt for the first time, threatening the national credit rating and the dollar. Geithner sent Congress a letter saying he would be unable to make the pension investments in full. He urged Congress to raise the debt limit "in order to protect the full faith and credit of the United States and avoid catastrophic economic consequences for citizens."

Republican leaders in the House have said they won't raise the debt limit unless the Obama administration first agrees to big spending cuts or to steps to lower the debt over the long run. House Speaker John Boehner repeated the pledge in a statement Monday. The statement did not address Geithner's warning about what would happen if the limit were not raised.
"Americans understand we simply can't keep spending money we don't have," Boehner said. "There will be no debt limit increase without serious budget reforms and significant spending cuts."

Republicans have also ruled out any tax increases, including any plans to end tax cuts for high earners enacted in 2001 and 2003.
"We need to have a vote to lift the debt ceiling because the consequences of not doing so would be quite serious," White House spokesman Jay Carney told reporters. "And those who suggest otherwise are whistling past the graveyard."

If it doesn't raise the limit, Congress would have to come up with $738 billion to make up for what it planned to borrow through the end of the fiscal year on Sept. 30. The options are drastic: Cut 40 percent of the budget through September, which might mean defaulting on payments to investors in government bonds; raise taxes immediately; or some combination of the two.
"In the economic area, this is the equivalent of nuclear war," says Edward Knight, who was the Treasury Department's general counsel during a standoff over the debt ceiling in the mid-1990s.


Here are some questions and answers about the federal debt limit:
Q: What is the debt ceiling?
A: Story Continued Here

IMF chief held hostage by the US government

By now, everyone knows that Dominique Strauss-Kahn, the head of the IMF, was hauled off an Air France flight two minutes before it was due to take off, and taken into custody by the NYPD. Why? The US cover story is that he allegedly forced or attempted to force a maid at the Sofitel hotel in Manhattan to perform oral sex on him. The real story behind his detainment has to do with the US economy – the bankruptcy of the United States of America.

On Monday evening, May 16, 2011 the Obama government reached and crashed through the $14.29 trillion debt ceiling. What is the debt ceiling? The debt ceiling is simply a cap on how much money the US federal government can owe. For instance, if the debt ceiling was set at $14.29 trillion, then the US government would be forbidden from incurring a total public debt load of over $14.29 trillion. This $14.29 trillion number includes both public debt (money that is owed to individual investors, foreign governments, pension funds, etc) and intragovernmental holdings (money that is owed to various government programs).

On the weekend (May 14 and 15, 2011) prior to this historic event the US government and the IMF chief were engaged in behind closed doors negotiations for an IMF financial bailout of the US government. IMF chief Dominique Strauss-Kahn, a French citizen and political opponent of French president Nicolas Sarkozy for the French presidency, was in the US for this meeting. The Obama government failed to secure funds from the IMF chief. In retaliation the US government immediately launched a pre-planned smear campaign against the IMF – IMF head Dominique Strauss-Kahn.

As Dominique Strauss-Kahn is a French citizen and a foreign diplomat the US government had to act quickly to snatch him and hold him hostage before he left the United States. Why? Diplomatic immunity. The forced removal of IMF chief Dominique Strauss-Kahn from an Air France plane (Air France is the French flag carrier) violated international law as the IMF chief is a foreign diplomat (a politician from France who was running against Nicolas Sarkozy for the French presidency) and has diplomatic immunity. Diplomatic immunity is a principle of international law by which certain foreign government officials are not subject to the jurisdiction of local courts and other authorities. The Vienna Convention on Diplomatic Relations of 1961 and the Vienna Convention on Consular Relations of 1963 codified most modern diplomatic and consular practices, including diplomatic immunity.

The US government is as of Monday May 16, 2011 bankrupt. The IMF was the US government’s last hope. Countries contribute to an IMF controlled pool which could be borrowed from, on a temporary basis, by countries with payment imbalances. As of June 2009, the International Monetary Fund held 3,217 tonnes (103.4 million oz.) of gold. In the past the IMF offered loans with varying levels of conditionality – mainly to poorer countries. The IMF wasn’t formed to loan money to rich countries like the United States. On the weekend prior to Monday, May 16, 2011 (when the Obama government reached and crashed through the $14.29 trillion debt ceiling limit) the Obama government attempted but failed to negotiate an IMF loan. Why did IMF chief, Dominique Strauss-Kahn decline the US government’s loan request? A good banker wouldn’t loan any amount of money to any person, company or country who couldn’t repay it – especially when bankruptcy is inevitable. So to distract the American public from the historic event of May 16, 2011 – when the US government crashed through the debt ceiling limit of $14.29 trillion – the US government, with the support of Libyan war of aggression ally French president Nicolas Sarkozy, illegally seized IMF chief and French diplomat Dominique Strauss-Kahn on US soil and is holding him hostage until the IMF pays the US government a ransom for his release.

Read more here: http://presscore.ca/2011/?p=2642

That is very interesting indeed, Sanicle. Thank you for sharing that article.


Pile of debt would stretch beyond stratosphere
By Emily Stephenson, Reuters

President Ronald Reagan once famously said that a stack of $1,000 bills equivalent to the U.S. government's debt would be about 67 miles high. That was 1981. Since then, the national debt has climbed to $14.3 trillion. In $1,000 bills, it would now be more than 900 miles tall. In $1 bills, the pile would reach to the moon and back twice.

The United States hit its legal borrowing limit on Monday, and the Treasury Department has said the U.S. Congress must raise the debt ceiling by August 2 to avoid a default. The White House is trying to hammer out a deal with lawmakers to cut federal spending in exchange for a debt-limit increase.

Most people have trouble conceptualizing $14.3 trillion.
Stan Collender, a budget expert at Qorvis Communications, said the biggest sum most Americans have ever handled -- in real or play money -- is the $15,140 in the original, standard Monopoly board game. The United States borrows about 185 times that amount each minute.

Here are some other metrics for understanding the size of the national debt and United States borrowing:

* U.S. Treasury Secretary Timothy Geithner has said the United States borrows about $125 billion per month. With that amount, the United States could buy each of its more than 300 million residents an Apple Inc iPad.

* In a 31-day month, that means the United States borrows about $4 billion per day.
A stack of dimes equivalent to that amount would wrap all the way around the Earth with change to spare.

* In one hour, the United States borrows about $168 million, more than it paid to buy Alaska in 1867, converted to today's dollars.
In two hours, the United States borrows more than it paid France for present-day Arkansas, Missouri, Iowa and the rest of the land obtained by the 1803 Louisiana Purchase.

* The U.S. government borrows more than $40,000 per second. That's more than the cost of a year's tuition, room and board at many universities.
"That usually gets their attention," Doug Holtz-Eakin, who was chief White House economist under President George W. Bush, said in an email. "I have two kids, so every 10 seconds, the feds borrow more than I paid lifetime."

* The Congressional Budget Office projects the total budget deficit in fiscal 2011 at about $1.4 trillion.

"The net worth of Bill Gates, roughly around $56 billion, could only cover the deficit for 15 days," said Jason Peuquet, a policy analyst with the Committee for a Responsible Federal Budget. "The net worth of Warren Buffet, roughly around $50 billion, could only cover the deficit for 13 days."

http://xfinity.comcast.net/articles/finance/20110519/BUSINESS-US-USA-DEBT-SIZE/

“Former IMF chief was undesirable in US” - economist


http://rt.com/news/imf-undesirable-strauss-kahn-us/