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Oops! US Can Avoid Default Until September

From Bloomberg:

U.S. Can Avoid Default Until September: Silvia

By Jillian Berman and Betty Liu – Jul 25, 2011

The U.S. government can avoid a default for at least a month after the Aug. 2 deadline to lift the debt ceiling set by the Treasury Department, said John Silvia, chief economist at Wells Fargo Securities LLC.

“The Federal Reserve and the Treasury can work together to generate enough cash probably for the next two or three months to avoid any kind of automatic default on the Treasury debt,” Silvia, who is based in Charlotte, North Carolina, said in an interview on Bloomberg Television’s “In the Loop” with Betty Liu. “There’s a way of getting around this issue for at least another month or two.”

Greater-than-forecast tax revenue might give the Treasury until Aug. 10 before it runs out of cash, Barclays Capital said in a report last week.

“Tax-receipt inflows from July 14 to date have been considerably stronger than we were expecting,” New York-based Barclays analysts, including Ajay Rajadhyaksha, said.

Inflows over the five-day period from July 14 were about $14 billion higher than Barclays had foreseen, and outlays were about $1 billion less, according to the report

“It’s very unlikely that we’re going to default,” Silvia said. The Treasury already has “cash flow that’s available” to last two weeks after Aug. 2, before resorting to any special measures.

Even if the two parties fail to reach an agreement to raise the debt ceiling in time, officials will still be able to stave off a default for at least a month, Silvia said. Bond investors have realized they will probably still get paid in the event the impasse goes past the deadline.

Regarding entitlement programs like Social Security and Medicare, Silvia said, “there’s probably enough cash to make those payments as well.”

“It really comes down to who’s third or fourth in line and it’s the federal government contractors and some federal government employees that may have some temporary furloughs,” he said

“In general, I think they’d want to temporarily substitute the Fed’s credit in place of the Treasury’s credit,” Feroli said.

Silvia cautioned that there is still a risk that the U.S. will lose its AAA debt rating.

“OK you’ve got a deal, the debt ceiling’s raised — that’s not the issue,” he said. “The issue is what are the details behind that, that alter the long-term trend in terms of federal spending and the deficit, and that’s what the credit agencies are talking about.” …

Isn’t it funny how elastic this deadline is? Which is probably a good thing, considering that Mr. Obama has never been able to meet a deadline.

Still, how many deadlines have we missed now about the debt ceiling? The drop dead limit? The absolute drop dead limit?

This article was posted by Steve on Tuesday, July 26th, 2011. Comments are currently closed.

8 Responses to “Oops! US Can Avoid Default Until September”

  1. proreason says:

    There are probably hundreds of ways to delay the “ceiling”.

    A few would be:
    – delay payments to government suppliers
    – delay (ore better, cancel) wealth transfers to our foreign enemies like the UN, Egypt, Mexico and Saudi Arabis
    – turn the thermostats up 2 degrees
    – suspend the regular pay increases for obamy’s loyal bureacracy
    – don’t fund “the arts” for a few days
    – delay payments to medicare suppliers for a few days
    – don’t refresh the military arsenal for a few days. Suspend training exercises.
    – don’t refresh the inventory of non-military supplies for a few days
    – suspend government travel
    – close the government caferia’s
    – delay the funding of bureaucrates platinum retirement benefits
    – delay the payments of useless funds to schools for a few days
    – furlough every bureaucrat who touches obamycare in any way

    maybe hundreds is too small of a number

    But best of all….don’t pay Congress, their aids and the marxist in chief and his aids until they resolved the crisis they induced themselves.

    • Right of the People says:

      Just like back in ’95 close all nonessential agencies, there is a long list and leave them closed. After awhile we’ll all be saying, “What the hell did we need the EPA, NASA, HUD, HHS and all the others for in the first place.

      I’m all with stopping ALL foreign aid. Why should we give money to countries who don’t like us? I’d say one of two things happen to the funds we send overseas;

      1) It’s used to fund terrorists to attack us
      2) It end’s up in some high ranking official’s bank account.

  2. tranquil.night says:

    Establishment apparatchiks coming out from all across the Northeastern power-broker machine also trying to steal defeat from the brink of victory. Right as the Truth is dawning!!

    They are wrong and just trying to protect Boehner. There is no imminent crisis unless you kick this to a commission where the people’s will has no voice in the negotiations and the Establishment media continues to get to set the table. They have violated the public’s trust irreconcilably for such blantant corruption to peddle a lie to help the State advance its agenda through scaring and bullying the political will out of people.

  3. tranquil.night says:

    “A host of conservative organizations are coming out against Boehner’s plan because, among other things, it only cuts $6 to $7 billion and punts major reform to a commission of 12 that will only need 7 votes to raise taxes.”


    “You have not enough Conservatives in Congress” is a subversive cop-out.

    This is my official vote of no confidence in Team Boehner/McConnell/Cantor. Forget what they may have sought to do, all they’ve achieved is a huge wedge in our party and they’ve used their own media cronies to try and do it the whole fight. We have broken the will of the Left-wing base by not giving up. They have looked for the exit the whole time we’ve dragged them along through this.

    How about the Establishment stop whining and tell the American People that this whole theatre was constructed by false premises and fearmongering promulgated by an arbitrary deadline from Obama, Geithner, and the Democrat Media Complex.

    Sorry Dan, I don’t know who got to you, never thought I’d disagree with the CC.

    • tranquil.night says:

      The Leadership is strong-arming Republicans who are trying to present their own legislative failsafe plans for either extending the limit short-term with dollar-for-dollar cuts or preventing default and paying essential services. They’re doing it while the Establishment apparatchiks put the full court press on us to call this slimy Turd Sandwich Victory.


      There is no arguement that the passing the Boehner Plan is substantively or politically advantageous to the Country or the Party long-term, in fact there are very clearly reasoned arguements for why it’s awful because it just signs our name onto the credit rating downgrade we all know is going to come, wherein the regime is just going to spin that against us too.

      The Boehner Plan is about John Boehner. It’s about avoiding blame for the results of a phony crisis that will never come to pass, quelling the voices of dissent within his ranks and yanking them back into line for debates to come. He should go ask his opposition colleague, the Wicked Witch of the West, to deliver him 100 Democrat votes for his “bipartisan” bill if everybody loves it so much.

      Can there be any more stark a contrast between how the Demoturds in Congress haven’t budged on anything, while the leaders of the Stupid Party have nearly torn their caucus apart looking for a way to weasel a deal?

      Now McConnell and Bam are trying to cook up yet another deal. It’s ridiculous. They’re just going to keep throwing things at us until we give in. Why are we intransigent? Is this whole charade not proof positive of everything about which we have been yelling and screaming at people to try and listen to us? Someone tell us we are not vindicated – that Washington is nothing but political theatre that has little to do with Democracy or Republicanism or the Constitution, and everything to do with controlling the debate through cults of personality, identity politics, and mass media that direct people towards Statism and dependency. That this Culture of Corruption is endemic to people and insitutions connected to that power base, who would claim to be on either side of the supposed political spectrum?

      Whoa, I see we’re having a “Hold the Line” Tea Party tomorrow for CCB in Washington. Excellent! I guess there’s no need to jump the gun on our failsafes yet, then. I’d wager the Establishment is wearing thin since they still haven’t broken us.

    • Rusty Shackleford says:

      Listening to Boner on Rush today, I was appalled at his apparent belief that you can pick up a turd by the clean end and ….his fear of doing anything to entitlements because:

      “We waited too long to deal with the problem — and when we got 10,000 Baby Boomers like us retiring every day, more money for Social Security, more money for Medicare, it’s just a fact.


      What about gradual reductions? What about not spending that which was in the trust fund to begin with? You idiots.

      When I heard him say it I thought it was the lamest thing I’d heard him say of late. And, it sounded like nothing more than a pure, hackneyed, overspent lie that is told over and over and over. So much so it has gone from beyond legendary into mythical.

      As Rush so aptly pointed out, what is actually happening in the US outside the beltway of DC, don’t think for one minute they have any touch to that reality. They have their social circles, golf groups, dinner soirees, etc, etc. It’s the yaaaawwwt club on steroids, complete with Biff, Marty and Chip. Ascots, cigarette holders, lawn parties and the like. They have all become caricatures and really only concerned with “optics” and to hell with the American people who pay their salaries. They have made themselves comfortable, like ticks, and suck our blood and money and then when unelected will fall off the hound that gave them life to begin with and create a bunch more just like them.

      To say we have become late Rome is to easy. It’s really sickening. It’s stealing without any shame and not even a casual smirk that they are getting away with anything for two reasons. 1), It’s normal to them and 2)it would be an acknowledgement that they are less than competent.

      I am glad that Boner’s horrific “compromise” which is really just a repeat of the “give them a trillion dollar check now and they’ll promise to eliminate similar costs at a later time. Could anything be more indicative of an addiction? An intervention is badly needed and now. It’s good that the Senate will reject it, though because for once, I agree with them, but for different reasons. They need to keep throwing CCB at them and never let up. Meet stubbornness with same. See who blinks first.

      Phagh! Democrats go to DC to beat up republicans. Republicans go to DC to let them.

  4. proreason says:

    Maybe you guys already know this, but I was taken by surprise when Rand Paul said it on Hannity’s radio show today.

    When they talk about $1 trillion in cuts, what they are actually talking about is $1 trillion in cuts vs a “baseline” that increases $9 trillion in 10 years.

    It’s kind of like when your wife tells you she saved $20 again today by buying the $180 shoes instead of the $200 shoes.

    Rand also talked about a plan that eliminates the debt in 10 years by simply cutting 1% a year from current spending. How is that possible, you ask, when “saving” $1 trillion merely reduces the projected $23 trillion deficit to $22 trilllion in 10 years? Well, silly, the 1% a years in savings is actually S A V I N G S…not the -Washington-speak savings. The definition of “savings” in Washington-speak is “smaller increase in spending than the inflated amount I previously declared”.

    Just when you think you’ve heard it all, it gets worse.

    Much worse.

    • tranquil.night says:

      Amazing. I missed his interview. Thank you for sharing this. Fighting this State’s addiction is like Breaking Bad. You ultimately just can’t trust the addicts even though you know at varying levels there is still goodness to be found.

      “Washington wants a deal. America wants a solution.” – Rep. Jim Jordan

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