The Return to the Debt Limit Apocolypse Thread

[The Minsky Moment]

"Extraordinary measures" are estimated to run out some time in February.

Feb. 15 is looking to be a key date.  Most of the longer dated treasuries are issued quaterly, and Feb. 15 is the next issue date for a quarterly issuance.  Interest payments are accordingly very high on those dates.  If the government is out of excess cash by that day, it will not take in anywhere near enough in daily receipts to cover the interest payments due, even if it reneges in all other payments. 

One hint of how things may go will be seeing what happens with the treasury auctions that week: the 3-year, the 10-year and the 30year auctions are on the 12th, 13th, and 14th respectively.  A significant amount of debt will be coming due on the 15th and will need to be rolled over. 

[mongers]

Didn't we do this, like already ?

[Valmy]

Didn't we do this, like already ?

Twice actually.

They won't make the tough decisions so this can is going to be kicked a few more times.

[Jacob]

How ugly is this going to get?

What are the different scenarios? How likely are they, respectively?

[derspiess]

What if we had a bond auction and nobody showed up?

[Admiral Yi]

What if we had a bond auction and nobody showed up?

We would be completely fucked.

[MadImmortalMan]

There will be uncertainty. Therefore, stocks will go down.

[The Minsky Moment]

What are the different scenarios? How likely are they, respectively?

Most likely - some harebrained last minute compromise that puts this off for another 6 months or so.

Less likely scenarios include:
+ long-term resolution of the Executive's authority to issue debt to implement appropriations
+ nobody swerves and there is a big loud crash and lots of blood
+ nobody swerves and Obama takes one of several possible but controversial measures to borrow or otherwise evade the limit.

[mongers]

Obama comes out swinging ?

America is "not a deadbeat nation", US President Barack Obama has said, as he warned Republicans unconditionally to approve a rise in the US debt ceiling.

At a White House news conference, he said it would be "absurd" to use the borrowing limit as a negotiating chip.

But Republican House Speaker John Boehner said spending cuts should accompany a federal debt ceiling rise.

The US is expected to hit its $16.4tn (£10.2tn) borrowing limit by February unless lawmakers act.

Monday's press conference came a week before the inauguration ceremony in Washington DC that will begin Mr Obama's second term.
'Ransom'

With an agreement to prevent the so-called fiscal cliff of sharp spending cuts and tax increases barely two weeks old, Mr Obama faces another budget showdown with congressional Republicans.

The Democratic president warned lawmakers: "They will not collect a ransom in exchange for not crashing the economy.
.....

rest of item here:
http://www.bbc.co.uk/news/world-us-canada-21017052

[MadImmortalMan]

Congress could just issue the bonds themselves like the old days.

[Barrister]

What are the different scenarios? How likely are they, respectively?

Most likely - some harebrained last minute compromise that puts this off for another 6 months or so.

Less likely scenarios include:
+ long-term resolution of the Executive's authority to issue debt to implement appropriations
+ nobody swerves and there is a big loud crash and lots of blood
+ nobody swerves and Obama takes one of several possible but controversial measures to borrow or otherwise evade the limit.

I am partial to the $1,000,000,000,000 coin myself.

[derspiess]

Most likely - some harebrained last minute compromise that puts this off for another 6 months or so.

6 months?  We should be so lucky.  At this rate, the fiscal crises are starting to occur so frequently that they're becoming one continuous megacrisis. 

[Warspite]

Instead of minting one trillion-dollar coin, why not mint a trillion dollar coins? #jobcreation

[frunk]

It's not like there needs to be these continuous crises.  They are entirely manufactured by Congress.

[The Minsky Moment]

Instead of minting one trillion-dollar coin, why not mint a trillion dollar coins? #jobcreation

That's a lot of platinum.