So we hit the debt limit...

[Faeelin]

Hrmm. The market isn't impressed with this deal, I guess, and a double dip recession looks certain.

I guess soon President Perry will rickroll us.

[KRonn]

Heh, they're debating about getting the budget balanced in 5 to 10 years! Then there will be the need to start  paying off a by then 15-20 trillion dollar deficit! Staggering sums of money.   

The US is a staggeringly wealthy nation, to be able to rack up such massive debt!   

Of course, inflation will be causing a sizable chunk of that debt, but you are correct to note that the total debt will come within striking range of the greatest level of total debt the US faced (WW2).  The country paid down that debt, but I don't think there will be the same will to pay down this one.  That is what staggers me.

Agreed that we won't likely have the will to pay down the debt as we did after WW2. And maybe we don't have to be  committed to paying it all down quickly. I figure the US will be, and is quite able to be, carrying some heavy debt for a while, even after, or if, the budget is balanced. But I'm hoping the debt can be brought down and made a lot more manageable. As it is now it's just damn scary.

[Razgovory]

The moment the budget is balanced, it'll be tax cut time again!  That surplus belongs to the people, not the government.

[derspiess]

The moment the budget is balanced, it'll be tax cut time again!  That surplus belongs to the people, not the government.

It will be pretty hard to ignore all the interest we're paying on outstanding debt.

[derspiess]

Hrmm. The market isn't impressed with this deal, I guess, and a double dip recession looks certain.

Hey, oil prices dropped at least.  And the dollar apparently surged today.

[frunk]

At this point I think it's more driven by concern over Italy and Spain than the US situation.

[MadImmortalMan]

Yes. Italy = dead man walking.

[Razgovory]

The moment the budget is balanced, it'll be tax cut time again!  That surplus belongs to the people, not the government.

It will be pretty hard to ignore all the interest we're paying on outstanding debt.

Why?  We had interest on the debt in 2001, we could ignore it then.  We'll ignore it again, just you watch.
l

[sbr]

Willie Sutton said he robbed banks because that is where the money is.  In the federal budget, the money is the "mandatory" spending categories, and entitlements in particular.

Agreed.  rethinking medical provisions for the dying will almost certainly be needed, IMO, along with some less drastic measures.

ZOMG DEATH PANELS!! 

[alfred russel]

Give it up for Berlusconi--for the first time in over 1500 years, he has the world terrified of what the Italian people might unleash on them.

[DGuller]

 

[grumbler]

Give it up for Berlusconi--for the first time in over 1500 years, he has the world terrified of what the Italian people might unleash on them.

[Malthus]

Give it up for Berlusconi--for the first time in over 1500 years, he has the world terrified of what the Italian people might unleash on them.

You mean aside from "Bunga Bunga"? 

[MadImmortalMan]

Oh hell. Here we go again.

Sen. Jon Kyl (R-AZ) threatened to quit the Super Committee Thursday morning Bloomberg reports — hours after the deficit cutting group's first meeting — telling DC conference that he would leave the committee before accepting any cuts to defense spending.

Bloomberg is reporting Kyl said the committee can find the required $1.5 trillion in savings without further cuts to defense spending.

[The Minsky Moment]

Proposition 1: The US federal fiscal position is precarious, and the US risks default if it does not take immediate strong action to take deficits under control.
Proposition 2:  Markets are reasonably efficient in the semi-strong efficient sense of asset prices reflecting publicly available information in an unbiased way.

Fact: Yields on US federal government treasury securities are 0.20% for 2-year bonds, 0.91% for 5-year, and 2.04% for 10 years.  The fact is from the newspaper, reporting yesterdays rates.

Given that fact, at least one of Proposition 1 or 2 must be false.

I would be curious to ask the GOP Presidential candidates which one they think is wrong, but I suspect fewer than half of them would understand the question.

[NOTE: edited to fix slight errors in yields as reported in the OP, main impact was 2-yr is sightly higher, the longer maturities lower)]