Debt ceiling

[clester]

The consequences of not increasing the debt ceiling could hurt the G and F funds as well as all of us getting paid by our federal government. Bond prices could fall if a lot if folks think they won't get paid for their investments.

Could this be a reason bond funds have sold off?

Scary.

It probably won't happen but....

 

[Frixxxx]

Could this be a reason bond funds have sold off?

Scary.

It probably won't happen but....

Bonds have been bubbling for the last 10+ months. Sell off was a correction. With all the "good" numbers this week, I'm thinking I may have to go "G" on Friday for stabilization..

Your original point on raising the cieling is perplexing and I intend to see which revenue stream will be hit and how.

 

[Steadygain]

If my comment is 'out of touch' -- sorry

'Debt Ceiling' is a term that stuck out as I was paying attention to the details of what was called the collapse of the 'Global Economy'.

It's actually kind of cool in retrospect -- because they had a 'ceiling' or limits on a lot of the lending up to that point. Well lo and behold the US either lifted the ceilings (please note plural) or elimated them altogether and this was hugely associated with 'Foreign Giving' - 'Donations' - but the word 'lending' would stretch what was happening.

Most of our 'focus' was on how much was going to AIG, the Banks, Fannie and Freddie and all....

Anyway when I saw the thread 'Debt Ceiling' started recalling it all.

BONDS - are solid G and F are 'not' in danger.

 

[Frixxxx]

If my comment is 'out of touch' -- sorry

'Debt Ceiling' is a term that stuck out as I was paying attention to the details of what was called the collapse of the 'Global Economy'.

It's actually kind of cool in retrospect -- because they had a 'ceiling' or limits on a lot of the lending up to that point. Well lo and behold the US either lifted the ceilings (please note plural) or elimated them altogether and this was hugely associated with 'Foreign Giving' - 'Donations' - but the word 'lending' would stretch what was happening.

Most of our 'focus' was on how much was going to AIG, the Banks, Fannie and Freddie and all....

Anyway when I saw the thread 'Debt Ceiling' started recalling it all.

BONDS - are solid G and F are 'not' in danger.

Steady,

Here ya go:

Debt is spending more than we have. Setting the ceiling is to STOP spending at higher levels than we are taking in (revenue). Other 'entities' buy this debt and get paid interest on it.

If you increase the debt, you have to increase the ceiling, BY LAW. Debt has to be legal for it to occur in the government.

If this ceiling is not lifted, then something has to give....We need to stop spending more than we're taking in. But if we keep spending and don't raise the ceiling, then those who hold are debt will not reap the interest they are owed which is known as DEFAULT.

Hence, government securities CAN lose their value because there is nothing to secure them. Bonds will feel the same pinch because there is no benefit from owning the paper if it isn't doing anything for the holder.

They will inevitably raise the ceiling....The have since the inception of the government voting in a debt ceiling... But you can't blanket that sort of statement about the funds.

 

[Boghie]

Concur with Frixxxxx on the correction of the 'F Fund'...

Now, off to the more important point - the Debt Ceiling.

The most salient point is that the Treasury can 'borrow' from our 'G Fund' holdings. They have 'borrowed' from it three times in the fairly recent past to cover their spendaholic ways during a debt ceiling argument.

That will probably have minimal affect on the 'F Fund'. Unknown on C and S. Might migrate to the 'I Fund' as a way of not allowing the Feds to borrow from me. We need an intervention.

 

[Boghie]

Frixxxx,

All dummies currently invested in Federal bonds will lose nothing.
The problem is that the Treasury WILL NOT be able to issue bonds for more debt.
And, we are in the envious position of paying older debt with new debt - kinda like we're broke.

So, they will have to stop spending and force cutbacks during the debt ceiling argument. Me thinks the general public really will not care this time around.

We live in interesting times.

 

[clester]

If I understand it correctly,
If the debt ceiling is not raised all our paychecks, pensions, social security payments could be at risk. It means the Government can't borrow. They can't pay the interest either on the bonds that have been bought including the G fund treasuries.

They will run out of money.

I fell pretty certain they will raise it but the new Republican congress will resist up til the end.

 

[nnuut]

Seems to me if they set the Debt Ceiling high enough to pay the bills it would be OK? The Idea is not to allow more debt without proper approval, PAYGO. CUT SPENDING NOW!!:nuts:

 

[James48843]

Seems to me if they set the Debt Ceiling high enough to pay the bills it would be OK? The Idea is not to allow more debt without proper approval, PAYGO. CUT SPENDING NOW!!:nuts:

What spending do you want to cut, in order to balance the budget?

Exactly what, and how much, would you cut?

 

[Silverbird]

Why is Congress messing around with the health care bill now, when the entire budget is running on totally inefficient autopilot that is due to crash in March?
Congress has 3 months before both the debt ceiling and Continuing Irresolution end. Review of the FY 2011 budget should take place as soon as possible to negotiate in any cuts or changes. Or if Congress wants to really say Agencies only get their 2008 budgets, someone put that in a budget bill and introduce it.

Other cuts have been proposed by the three bi-partison groups - how about introducing some bills soonest with some of those? I doubt all the recommended cuts in one bill will go anywhere but someone has to get started.

If there is gridlock or even worse no budget bills are reviewed before the debt ceiling comes into play, Congress only has itself to blame. If the debt ceiling is hit, and we can't pay for anything - including Afganistan and Iraq and Social Security, maybe Congress will finally understand why the Federal Government actually costs money. Especially since they won't get paid either and the lights and internet may even get shut off. And since Continuing Irresolution will be over about that time too, the Executive branch will be out of service until a new Continuing Irresolution is passed (by candlelight I guess).

 

[Silverbird]

Debt ceiling: What you need to know

http://money.cnn.com/2011/01/03/news/economy/debt_ceiling_faqs/index.htm

 

[Steadygain]

Steady,

Here ya go:

Debt is spending more than we have. Setting the ceiling is to STOP spending at higher levels than we are taking in (revenue). Other 'entities' buy this debt and get paid interest on it.

If you increase the debt, you have to increase the ceiling, BY LAW. Debt has to be legal for it to occur in the government.

If this ceiling is not lifted, then something has to give....We need to stop spending more than we're taking in. But if we keep spending and don't raise the ceiling, then those who hold are debt will not reap the interest they are owed which is known as DEFAULT.

Hence, government securities CAN lose their value because there is nothing to secure them. Bonds will feel the same pinch because there is no benefit from owning the paper if it isn't doing anything for the holder.

They will inevitably raise the ceiling....The have since the inception of the government voting in a debt ceiling... But you can't blanket that sort of statement about the funds.

Thanks man !!

Why is Congress messing around with the health care bill now, when the entire budget is running on totally inefficient autopilot that is due to crash in March?

WHY? Seriously ??

Because Congress has been - and all the more continues to be - way more focused on Battles and Conflicts the 'Parties' can lodge against each other --- than dealing with anything 'practical'.

As long as 'one' can make it look like the other's fault -- that is all that matters to them (across the board).

Congress has 3 months before both the debt ceiling and Continuing Irresolution end.

They will come up with some BS and keep us on the edge of our seats until the last minute. It's a dumb game Silverbird -- but somehow they look more like 'heros' of the American People at crunch point.

Review of the FY 2011 budget should take place as soon as possible to negotiate in any cuts or changes. Or if Congress wants to really say Agencies only get their 2008 budgets, someone put that in a budget bill and introduce it.

You're right !! - sorry but I gave up with the last administration and this one is even worse.

Other cuts have been proposed by the three bi-partison groups - how about introducing some bills soonest with some of those? I doubt all the recommended cuts in one bill will go anywhere but someone has to get started.

'IF' there were people like you in place - then I might believe.

If there is gridlock

Gridlock more defines 'Congress' than anything else. It is most certainly the core of all they do.

or even worse no budget bills are reviewed before the debt ceiling comes into play, Congress only has itself to blame.

That too broad - sugar plum -- one party will blame the other -- and one party will claim they did everything possible....

If the debt ceiling is hit, and we can't pay for anything - including Afganistan and Iraq and Social Security, maybe Congress will finally understand why the Federal Government actually costs money.

I see what you're saying .... I really do. How do 'we' pay for anything now and all the more where did we come up with the $10 Trillion (plus) spent trying to correct the WMD that hit the global economy.

Especially since they won't get paid either and the lights and internet may even get shut off. And since Continuing Irresolution will be over about that time too, the Executive branch will be out of service until a new Continuing Irresolution is passed (by candlelight I guess).

Silverbird -- I love it when you make these kind of expressions - I really do and I agree wholeheartedly.

Last week -- I was in Rockville, Fairfax, Pontiac. These 3 hold all the power and know everything.

 

[nnuut]

What spending do you want to cut, in order to balance the budget?

Exactly what, and how much, would you cut?

Your Pay! Waste, government programs that we don't need, downsize stop the crazy spending on crap. I'm not going to go into detail, why don't you tell me how much waste Washington generates? You work for the Government, just look around you, I worked for DOD and Buddy there is so much it still makes me sick and I've been retired for 1 year and 2 days, look around you, tell me some waste stories. We that worked for the Government know very well what is out there to cut. Don't get me started.:nuts:

 

[Boghie]

Re(1): 'Debt ceiling: Battle heats up', CNNMoney.com, Jeanne Sahadi

Will reaching the debt ceiling cause a government shutdown? Not necessarily.
A government shutdown occurs if lawmakers fail to appropriate money for federal agencies and programs.

By contrast, if the debt ceiling is breached, Uncle Sam would still have revenue coming in that could be used to fund the government, Penner noted.

Of course, if it can't borrow, the government will need to raise taxes or cut spending to continue to meet its obligations in full.​

James, on where to cut spending...

How about inflation adjusting each department spending to FY2008.

FY2008 Expenditures: $2,978,664
FY2008 Expenditures (2010 Dollars): $3,027,085
FY2011 Projected Revenue: $2,425,725
Resulting in a Projected Deficit of: $601,360​

The Obama Projected Deficit is: $1,416,195

So, James, in one fell swoop I have wiped out $814 Billion in this years deficit.

Thats a nice start, eh...

 

[Silverbird]

GOP Takes Aim at Lawmaker's Budgets
http://money.cnn.com/2011/01/05/news//boehner_cut_congress_budget/index.htm
[Well, looks like the GOP is proposing 5% cuts to the legislative budgets first. Very Smart!
Ok, the water here can be pretty bloody awful (we've gotten brown water before), but if you don't like it create an office pay in pool for the Deer Park bottled like the rest of us.]

The problem with that 2008 budget is that is has the Afghan and Iraq wars off-budget. I am not against the idea, however, if consideration of this problem is taken into account - in other words, 2008 budget + discrete amount of money for Afganistan and Iraq = 2010 budget.

I agree with you Boghie, but if we reach the debt ceiling before any spending cuts are legislated, we are stuck. Cuts need to be done now. Looks like it may be starting.

 

[Boghie]

Concur on the timing SilverBird...

It would be both childish and embarrassing to avoid the reality of a growing debt ceiling. I don’t want an equivalent of a stupid attack like that which occurred over the extension of the Bush tax code. But, some hardball should be played.

By the way, SilverBird, I NEVER use budget numbers. I use the ‘Monthly Treasury Statement’. Those are actual numbers and have ALWAYS included war expenditures. So, to take expenditures back to FY2008 using the MTS includes war expenditures. And that means something. I think we can cut my own employer – the DOD.

Finally, I don’t want to hear about Congressional salary cuts. I want tens or hundreds of billions to be cut. You can find those cuts here:

Money values are the difference between FY2007 and FY2010 in 2010 dollars...

DEPARTMENT OF AGRICULTURE: $40,989
DEPARTMENT OF DEFENSE-MILITARY: $111,571
DEPARTMENT OF EDUCATION: $23,320
DEPARTMENT OF ENERGY: $9,698
DEPARTMENT OF HEALTH AND HUMAN SERVICES: $149,968
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT: $12,411
DEPARTMENT OF LABOR: $123,075

There is no need for this bloat. And, it wasn’t paid for.

Give me 1/4th of this bloat as a spending cut and we can talk in good faith.

Till then, good luck getting my backing.

GOP Takes Aim at Lawmaker's Budgets
http://money.cnn.com/2011/01/05/news//boehner_cut_congress_budget/index.htm
[Well, looks like the GOP is proposing 5% cuts to the legislative budgets first. Very Smart!
Ok, the water here can be pretty bloody awful (we've gotten brown water before), but if you don't like it create an office pay in pool for the Deer Park bottled like the rest of us.]

The problem with that 2008 budget is that is has the Afghan and Iraq wars off-budget. I am not against the idea, however, if consideration of this problem is taken into account - in other words, 2008 budget + discrete amount of money for Afganistan and Iraq = 2010 budget.

I agree with you Boghie, but if we reach the debt ceiling before any spending cuts are legislated, we are stuck. Cuts need to be done now. Looks like it may be starting.