Tim Geithner says debt limit will be reached on December 31

[tsai3904]

Today, Secretary Geithner sent the following letter to Congress regarding the debt limit.

***

December 26, 2012

The Honorable Harry Reid
Majority Leader
United States Senate
Washington, DC 20510

Dear Mr. Leader:

I am writing to inform you that the statutory debt limit will be reached on December 31, 2012, and to notify you that the Treasury Department will shortly begin taking certain extraordinary measures authorized by law to temporarily postpone the date that the United States would otherwise default on its legal obligations.

These extraordinary measures, which are explained in detail in an appendix​ (http://www.treasury.gov/connect/blog/Documents/Appendix%20--%20Extraordinary%20Measures%2012-26-2012.pdf) to this letter, can create approximately $200 billion in headroom under the debt limit. Under normal circumstances, that amount of headroom would last approximately two months. However, given the significant uncertainty that now exists with regard to unresolved tax and spending policies for 2013, it is not possible to predict the effective duration of these measures. At this time, the extent to which the upcoming tax filing season will be delayed as a result of these unresolved policy questions is also uncertain. If left unresolved, the expiring tax provisions and automatic spending cuts, as well as the attendant delays in filing of tax returns, would have the effect of adding some additional time to the duration of the extraordinary measures. Treasury will provide more guidance regarding the expected duration of these measures when the policy outlook becomes clearer.

Sincerely,

Timothy F. Geithner

http://www.treasury.gov/connect/blog/Pages/Secretary-Geithner-Sends-Debt-Limit-Letter-to-Congress-12-26.aspx

[itshappening]

Why is he writing to Sen. Reid and not Boehner? doesn't the House originate spending?

And defaulting on obligations wouldn't happen. Treasury is bringing in 200 billion/month in tax revenue, perhaps they should use that to pay obligations and find cuts elsewhere.

But no, the government doesn't want to cut anything, it just wants to keep spending and borrowing.

[tsai3904]

Why is he writing to Sen. Reid and not Boehner? doesn't the House originate spending?

Identical letters were sent to Boehner, Pelosi and McConnell.

[tsai3904]

In the appendix, Geithner discusses ways to create headroom. In one section, he discusses gold:


Although the U.S. Government owns other assets, such as gold, there are prudential or legal limitations on its ability to sell these assets. Selling the Nation’s gold to meet payment obligations would undercut confidence in the United States both here and abroad, and would be extremely destabilizing to the world financial system.

[BAllen]

In the appendix, Geithner discusses ways to create headroom. In one section, he discusses gold:

You have to read between the lines. What he really means is that there is no more gold left. The vault is empty:
http://1.bp.blogspot.com/-chTisO3qFs0/TpmuZbYXoEI/AAAAAAAABuQ/Ph6UK2ahJyU/s1600/EmptyVault.jpg

[Acala]

Oh man. They haven't even resolved the LAST debt ceiling mess. And here it is again. These clowns are pathetic.

[Acala]

You have to read between the lines. What he really means is that there is no more gold left. The vault is empty:
http://1.bp.blogspot.com/-chTisO3qFs0/TpmuZbYXoEI/AAAAAAAABuQ/Ph6UK2ahJyU/s1600/EmptyVault.jpg

We prefer the term "rehypothecated", sir.

[itshappening]

Spend, Spend, Spend!

keep on truckin'

He'll never sell the gold because Fort Knox has already been looted. No one is allowed near it to see what's in there nevermind appraise the the gold.

[John F Kennedy III]

Better sell that gold we got in that there Fort Knox!

[kathy88]

These fuckers talk about trillions of dollars like it's nothing.

[seraphson]

These fuckers talk about trillions of dollars like it's nothing.

Because it is nothing. The numbers they talk about are built on non-existence and are literally nothing. The moral hazard of "easy [fiat] money".

[twomp]

These fuckers talk about trillions of dollars like it's nothing.

Serious! They act like money is printed out of thin air or something...

[lx43]

The founding fathers made a grave error giving scumbag politicians the power to issue debt. If you ask me, the entire debt should be repudiated (ie never repaid and just voided) since the money its been spent on isn't constitutional.

[NoOneButPaul]

^One day I think that argument will be seriously made...

Ultimately I get this awful feeling that while i'm getting wasted next Monday night TPTB will be pulling some ALL-TIME Shenanigans right before the Midnight hour...

[sparebulb]

In the appendix, Geithner discusses ways to create headroom. In one section, he discusses gold:

Although the U.S. Government owns other assets, such as gold, there are prudential or legal limitations on its ability to sell these assets. Selling the Nation’s gold to meet payment obligations would undercut confidence in the United States both here and abroad, and would be extremely destabilizing to the world financial system.

Oh, so gold is money. Why don't you tell your good friend The Bernank that, Timmy.

[lx43]

^One day I think that argument will be seriously made...

Ultimately I get this awful feeling that while i'm getting wasted next Monday night TPTB will be pulling some ALL-TIME Shenanigans right before the Midnight hour...

Oh I have complete faith that they'll do the wrong thing as usual by raising the debt ceiling.

[oyarde]

I think they will raise it, why would I think different ??

[BAllen]

The reason they're not concerned with the debt is that most of it is the amount of money in the system.
Money is created by the banks when loans are made, since they don't have it on hand. Since money is created from debt, if all the debt was paid up, there would be no money. That's their reasoning.

[seraphson]

The reason they're not concerned with the debt is that most of it is the amount of money in the system.
Money is created by the banks when loans are made, since they don't have it on hand. Since money is created from debt, if all the debt was paid up, there would be no money. That's their reasoning.

That's why I laugh when you have all these people running around screaming "fiscal cliff, fiscal cliff!" and pundits speaking of "paying down the debt". Too bad very few people realize that "paying down the debt" is an action that would simply unwind and destroy the current monetary system. "Paying down the debt" is just another bullshit euphemism that tries to hark back to the days of perfect American Dads telling their little Johnnys to save their money because that shows responsibility.

[Henry Rogue]

I don't disagree with your sentiment, but there was a time when saving was worth while. Unfortunately that is no longer the case.

[Acala]

That's why I laugh when you have all these people running around screaming "fiscal cliff, fiscal cliff!" and pundits speaking of "paying down the debt". Too bad very few people realize that "paying down the debt" is an action that would simply unwind and destroy the current monetary system. "Paying down the debt" is just another bullshit euphemism that tries to hark back to the days of perfect American Dads telling their little Johnnys to save their money because that shows responsibility.

Yup. Feigned concern in DC over the debt has two functions: 1. mollifying the millions of Americans who still retain some trepidation about constantly spending more than you earn; and 2. duping the dwindling supply of suckers who are still buying American debt. The ultimate goal is to keep the scam going as long as possible, knowing full well that it will end someday, and that when it ends, it will be an earth-shaking catastrophe. But the insiders will have been choppered off to their compounds before the food runs out.

[supermario21]

Fighting over the debt ceiling seems to be the only thing that can shift the conversation among the political class to the real problem, spending. Rand should get his couple allies in the Senate and rally with the House rebels and make a serious issue of this.

[awake]

Debt limit? There isn't one...This thing they call a "Debt limit" is simply a political festival, sort of like Halloween, where by every politician can dress up as fiscally responsible ask for higher taxes.

[cheapseats]

More FINANCIAL TERRORISM, like Fiscal "Cliff".

Like "total meltdown of the financial sector" without no-strings-attached, here-ya-go TARP billions.

Memo to Resistance: FEAR WERKS.

[twomp]

We should call this what it really is. It's a War on Savings.