Languish.org

So... the deadline approaches. How do you think it will play out?

And if a fix is finally offered - will there be some sort of compromise, will the Republicans back down, or will Obama?

Republicans don't have much posturing to back down from, but I predict they will pass an increase with no strings attached.

Quote from: Admiral Yi on October 07, 2013, 04:48:28 PM
Republicans don't have much posturing to back down from, but I predict they will pass an increase with no strings attached.

That's reassuring :)

I predict the Republicans re-open the government / raise the debt ceiling at the 11th hour.  Despite his vow to "not negotiate" Obama will give them a very tiny figleaf to claim some kind of victory, butit will essentially be with no strings attached.

Some half-ass 'compromise' at the 11th hour that legislatively post-pones the problem until the next Congress.

I'm not that optimistic.  I have a feeling that things will get worse before they get better when it comes to the bitter partisan divide.  This game of chicken is bound to end with a tie some time, and only after that there is a possibility of insanity washing away.  Now is probably the likeliest time for that moment to happen.

Quote from: DGuller on October 07, 2013, 05:16:17 PM
I'm not that optimistic.  I have a feeling that things will get worse before they get better when it comes to the bitter partisan divide.  This game of chicken is bound to end with a tie some time, and only after that there is a possibility of insanity washing away.  Now is probably the likeliest time for that moment to happen.

This sounds like you itching to make a bet with someone like Yi on this matter ?  :D

Quote from: mongers on October 07, 2013, 05:24:34 PM

Quote from: DGuller on October 07, 2013, 05:16:17 PM
I'm not that optimistic.  I have a feeling that things will get worse before they get better when it comes to the bitter partisan divide.  This game of chicken is bound to end with a tie some time, and only after that there is a possibility of insanity washing away.  Now is probably the likeliest time for that moment to happen.

This sounds like you itching to make a bet with someone like Yi on this matter ?  :D

I'll pass.  At the root of this question is insanity, and insanity tends to be unpredictable and not quantifiable.  Not only that, but bets on events like this have to be conducted in foreign currency or gold, and that's too much PITA.

Quote from: DGuller on October 07, 2013, 05:32:38 PM
and insanity tends to be unpredictable

Hardly. If so Languish would be bearable.

Quote from: Darth Wagtaros on October 07, 2013, 05:15:19 PM
Some half-ass 'compromise' at the 11th hour that legislatively post-pones the problem until the next Congress.

This one.


Whatever happens, though, there will not be a default. The only people saying that are wingnuts and goldbugs.

Quote from: MadImmortalMan on October 07, 2013, 05:41:52 PMWhatever happens, though, there will not be a default. The only people saying that are wingnuts and goldbugs.

Are you saying that failing to raise the debt ceiling will not result in a default, even a partial one (whatever that means)? Or are you saying that while the present course could theoretically trigger a default, that will not be allowed to happen in spite of all the political theatrics?

Quote from: Jacob on October 07, 2013, 05:45:17 PM

Quote from: MadImmortalMan on October 07, 2013, 05:41:52 PMWhatever happens, though, there will not be a default. The only people saying that are wingnuts and goldbugs.

Are you saying that failing to raise the debt ceiling will not result in a default, even a partial one (whatever that means)? Or are you saying that while the present course could theoretically trigger a default, that will not be allowed to happen in spite of all the political theatrics?

Yes to both.

Edit: To clarify---Failing to raise the debt ceiling will prevent them getting additional loans. That does not cause default. If there were a situation where a default could potentially be triggered, steps would be taken to prevent it that are more bureaucratic in nature and not necessarily subject to direct intervention by Obama or the Congress. Default is almost always a decision. If it happens, it will be because our government decided to do it. They won't.

Quote from: MadImmortalMan on October 07, 2013, 05:47:20 PMYes to both.

:lol:

So it's basically inconceivable! Current path and failing to raise the debt ceiling will not trigger a default, and if it was going to they'd stop it before it was too late. Fair enough.

So in your view all the default discussion is essentially political posturing rather than an accurate description of possible consequences?

Quote from: Jacob on October 07, 2013, 05:49:27 PM

So in your view all the default discussion is essentially political posturing rather than an accurate description of possible consequences?

Yep.

As a Kentucky Colonel, I plan to take advantage of the anarchy and enslave Cal.

Quote from: Jacob on October 07, 2013, 05:49:27 PM

So in your view all the default discussion is essentially political posturing rather than an accurate description of possible consequences?

Sounds like most issues when you put it that way.
In other words, the U.S. has a placebo government.

Quote from: MadImmortalMan on October 07, 2013, 05:51:48 PM

Quote from: Jacob on October 07, 2013, 05:49:27 PM

So in your view all the default discussion is essentially political posturing rather than an accurate description of possible consequences?

Yep.

From what I've been reading that view seems to be gaining currency amongst GOP legislators. This, combined with what you're saying and Rasputin's posts, makes me inclined to think that the debt ceiling will not be raised before it's reached.

I expect that whatever the consequences of not raising the debt ceiling will be, we'll find out first hand.

Look at it this way--The bureaucracy isn't going to default without being instructed to do so. For them to get that instruction, some politician must be in power who does the instructing. What US politician is in favor of doing that and has enough popular support to get in a position powerful enough to make it happen? I can think of none. Not even the crazies.

Quote from: MadImmortalMan on October 07, 2013, 05:59:54 PM
Look at it this way--The bureaucracy isn't going to default without being instructed to do so. For them to get that instruction, some politician must be in power who does the instructing. What US politician is in favor of doing that and has enough popular support to get in a position powerful enough to make it happen? I can think of none. Not even the crazies.

So what happens when treasury doesn't have enough cash on hand? As I understand it, on Oct 17th the US Treasury will have $30B on hand, and daily obligations of $60B.

I guess you're saying it won't be a default, it will just be a "we'll pay you later, we're good for it - honest" where it really matters?

I think what Mimsy is saying is that other parties besides bond holders will get stiffed.

Quote from: Admiral Yi on October 07, 2013, 06:09:16 PM
I think what Mimsy is saying is that other parties besides bond holders will get stiffed.

Pretty much.

Not everything will be paid. Some of it might be in IOUs like California did. Other things might be shut down for a while. The last time, the Treasury was able to significantly increase the cash on hand by delaying some things and managing the payouts differently.

Some things in the budget won't happen because there isn't money for them. That's a far cry from a default though. The debt obligations will be paid.

We need to hold a deathrace.

Quote from: Ed Anger on October 07, 2013, 06:13:14 PM
We need to hold a deathrace.

(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.collider.com%2Fwp-content%2Fuploads%2FDeath_Race_2000_movie_image-1.jpg&hash=bd9f789b1843f05f0bb534ce8faeaa3c8ba2e38d)

http://www.youtube.com/watch?v=o2x7gHxQYYE

Quote from: 11B4V on October 07, 2013, 06:17:28 PM

Quote from: Ed Anger on October 07, 2013, 06:13:14 PM
We need to hold a deathrace.

(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.collider.com%2Fwp-content%2Fuploads%2FDeath_Race_2000_movie_image-1.jpg&hash=bd9f789b1843f05f0bb534ce8faeaa3c8ba2e38d)

:)

Quote from: MadImmortalMan on October 07, 2013, 06:10:52 PM

Quote from: Admiral Yi on October 07, 2013, 06:09:16 PM
I think what Mimsy is saying is that other parties besides bond holders will get stiffed.

Pretty much.

Not everything will be paid. Some of it might be in IOUs like California did. Other things might be shut down for a while. The last time, the Treasury was able to significantly increase the cash on hand by delaying some things and managing the payouts differently.

Some things in the budget won't happen because there isn't money for them. That's a far cry from a default though. The debt obligations will be paid.

Correct if I'm wrong, and I may be, but isn't failure to meet obligations for anyone considered a default?  It doesn't have to just be bondholders.

Quote from: MadImmortalMan on October 07, 2013, 06:10:52 PM
The last time, the Treasury was able to significantly increase the cash on hand by delaying some things and managing the payouts differently.

My understanding is that that's what they're doing now, and the Oct 17th deadline is when that will no longer suffice.

QuoteNot everything will be paid. Some of it might be in IOUs like California did. Other things might be shut down for a while. 

Some things in the budget won't happen because there isn't money for them. That's a far cry from a default though. The debt obligations will be paid.

Other than bonds, the other two big ticket items are social security and medicaid, right? It's not going to be too pretty if those aren't paid out either, is it?

Interesting times.

I know that the Supreme Court has ruled that Social Security is not a legal obligation.

Quote from: Admiral Yi on October 07, 2013, 06:30:13 PM
I know that the Supreme Court has ruled that Social Security is not a legal obligation.

If only Minsky was here right now  :(

Quote from: DGuller on October 07, 2013, 06:23:47 PM
Correct if I'm wrong, and I may be, but isn't failure to meet obligations for anyone considered a default?  It doesn't have to just be bondholders.

Default only refers to debt obligations. Unpaid salaries for time already worked and such counts as part of that category I suppose. Stuff we planned to spend money on but haven't yet does not count.

I wouldn't mind seeing a nuts and bolt overview of what will happen if the debt ceiling is breached, without little focus on how the markets might react and more on exactly what chunks of money the US will pay to whom and what will stop functioning due to an absence of funds.

I sincerely doubt the Treasury has a default action plan prepared it is willing to share with the public.

Quote from: Admiral Yi on October 07, 2013, 06:43:05 PM
I sincerely doubt the Treasury has a default action plan prepared it is willing to share with the public.

I do as well. I'd settle for some informed speculation :nerd:

Quote from: Jacob on October 07, 2013, 05:00:09 PM

Quote from: Admiral Yi on October 07, 2013, 04:48:28 PM
Republicans don't have much posturing to back down from, but I predict they will pass an increase with no strings attached.

That's reassuring :)

He also said there would be no government shutdown, so there ya go.

Put your mouth where your mouth is.

Quote from: Jacob on October 07, 2013, 06:40:04 PM
I wouldn't mind seeing a nuts and bolt overview of what will happen if the debt ceiling is breached, without little focus on how the markets might react and more on exactly what chunks of money the US will pay to whom and what will stop functioning due to an absence of funds.

Think that'll be fun?  Wait until everybody else decides they would much rather see a certain fungible commodity traded globally on another currency, like the Euro.

Quote from: Admiral Yi on October 07, 2013, 08:52:05 PM
Put your mouth where your mouth is.

I don't bet against sure things, like the GOP keeping the government closed and not raising the debt ceiling because they don't like black people in the White House or with healthcare.

And when you do bet, you don't pay off.

I have no idea what you're referring to.

Yi has gone through those 20 quatloos he won off me and is now harassing Seedy.  :(

Quote from: CountDeMoney on October 07, 2013, 09:09:51 PM
I have no idea what you're referring to.

You made a bet with me that Bush would produce bin Laden's head right before the 04 election.  You lost.  You welched.

Quote from: MadImmortalMan on October 07, 2013, 05:59:54 PM
Look at it this way--The bureaucracy isn't going to default without being instructed to do so.

That's an extraordinarily benign view of the capabilities of bureaucracy :mellow:

They may not be able to successfully and smoothly launch the signature policy of their President but they'd be able to juggle up to 4 million payments a day without fumbling?

Here's the FT on what's required:

QuoteRaise your hand if you know how the Treasury's payment systems work... Anyone?
Cardiff Garcia    | Oct 06 23:09 | 5 comments | Share
Begin with a snippet from the rates crew at Credit Suisse:

QuoteAs we understand it, there are three main systems – the Department of Defense Disbursing Offices, the Bureau of the Fiscal Service (which deals with Treasury security related payments), and the Financial Management Service (which makes all other payments).

The way that they are set up, they can either be set to "on" or "off" – i.e., a system either makes all of its payments or it doesn't make any at all.

There is a clear unwillingness to prioritize payments, and doing so would be politically messy, but if push comes to shove and Congress cannot strike a deal in time, the ability to pick and choose who gets paid does exist, if only on a broad basis.

In 2011, the press reported that there was some contingency planning going on, but the details of those plans were unknown.

The idea is that the Treasury would keep on the Fiscal Service and maybe the Department of Defense systems while shutting down the system that pays everything else.

Default would be avoided, while pressure for a resolution to the standoff would quickly build — especially after the nation's grandparents respond to their canceled retirement checks by knife-sharpening the tips of their walkers and thrusting them like lances at the nearest members of Congress.

But I'm not yet convinced that "if push comes to shove and Congress cannot strike a deal in time, the ability to pick and choose who gets paid does exist, if only on a broad basis". Strategists and other observers have given conflicting accounts over whether prioritising interest and principal payments on Treasuries is possible.

Certainly the Treasury department has emphasised the logistical complexity as much as the legal and political dubiousness of prioritizing payments. It has little choice, of course, but at this point I'm finding it difficult to know what to believe.

The web sites of the DoD Disbursing Offices, Fiscal Service, and Financial Management Service (which is part of the Fiscal Service office) are vague and unhelpful.

Mark Patterson, who was chief of staff at the Treasury Department during the 2011 debt ceiling negotiations, told Ezra Klein that the government's payment system "is sprawling. It involves multiple agencies. It involves multiple interacting computer systems. And all of them are designed for only one thing: To pay all bills on time. The technological challenge of trying to adapt that to some other system would be very daunting and I suspect that if we were forced into a mode like that the results would be riddled with all kinds of errors."

Again, vague and pessimistic — and Patterson has less of an incentive to be coy than his former colleagues still at Treasury.

The Treasury Inspector General's report surveying the 2011 showdown noted that the Treasury "makes more than 80 million payments per month" and that its systems "are designed to make each payment in the order it comes due".

According to the report, the Treasury decided that making payments in arrears — "no payments would be made until they could all be made on a day-by-day basis" — was probably the least awful option, less awful than prioritisation.

So, maybe? I'm assuming the Treasury department wouldn't have arrived at this conclusion unless it had considered the operational obstacles and believed them to be, at least, less insurmountable than those of the other options. But still the language is opaque, uncertain and cautious.

Assuming that payment in arrears can work logistically — and remember that there's no way to know how financial markets will react during the arrears period — it might function only for a little while if the delay for a given interest payment doesn't last too long. At least by the rating agencies' definition, the security would likely be placed on temporary selective default and reversed quickly when the payment arrives.

But:

1) Maybe that's wrong and the fallout of even a temporary missed payment would be enough to trigger one of the terrible chain reactions that have been frequently pondered. Would a selective default be enough to provoke margin calls in repo markets (where, according to RBC, the systems aren't set up to sort the defaulted from non-defaulted Treasuries) and on clearinghouses?

2) The success of this idea would seem to depend on the Treasury not being in arrears for very long at any given time.

And on that note, here's Alec Phillips of Goldman Sachs:

Quote
...the practical problem is that on November 1, the payments the Treasury must make are so large that the Treasury would already be nearly a week in arrears after the first day it has depleted its cash. So while this sort of strategy might be employed, the practical effect in early November would probably be indistinguishable from a decision to cease payments entirely.

(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fftalphaville.ft.com%2Ffiles%2F2013%2F10%2FGS-590x298.png&hash=ca7134e7dc092d338a242fe25adc1391762d3860)

I dunno, perhaps it can work. And when I say "work", I strictly mean "keep the Treasury servicing its debt while still breaking the economy's knees with a fiscal crowbar".

Murky stories and indiscrete quotes about payment contingency plans occasionally see daylight, but never anything detailed.

And yes, obviously Jack Lew has to be evasive about the possibility. The game-theoretic considerations of the Million Dollar Coin debate from earlier this year still apply equally to this case. To acknowledge that payment prioritisation is possible would enable the Republicans to force the president to use it. That goes for all the other backup plans, from the trillion dollar coin to issuing high-coupon bonds to invoking the 14th amendment.

Nevertheless it's really striking just how little is widely known about how the Treasury department goes about the normally mundane business of paying its bills — and that this seemingly crucial knowledge didn't become more accessible in the aftermath of either the 2011 or early-2013 debt ceiling showdowns.

And there does exist the possibility that it's not possible — ie that it's not a bluff — or that the Treasury department simply doesn't know how well it would work.

If so, then there is no purely mechanical way to avoid default if the Treasury runs out of cash. The White House would instead have to keep the payment systems running as normal — and either try to legally justify having ignored the debt ceiling, or resort to an innovative but unprecedented idea to get around it.

I mean maybe that's doable, but how much would you put on it?

I'm personally pretty sanguine though. I don't think there'll be a default. I don't think Boehner would do it - they may abolish the medical device tax, which was something many Democrats want abolished anyway. My impression is that the markets are also pretty sanguine. The rising talk among Republicans that this wouldn't lead to a default is a worry and if it builds I think that could worry the markets.

QuoteI wouldn't mind seeing a nuts and bolt overview of what will happen if the debt ceiling is breached, without little focus on how the markets might react and more on exactly what chunks of money the US will pay to whom and what will stop functioning due to an absence of funds.

http://bipartisanpolicy.org/library/staff-paper/debt-limit
Is a pretty good overview.
Also this, note the Deutsche Bank chart at the bottom:
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/10/07/if-we-hit-the-debt-ceiling-can-obama-choose-which-bills-to-pay-2/

Also this is fun:
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fftalphaville.ft.com%2Ffiles%2F2013%2F10%2FCiti-periph-vol-vs-US-Oct-4-2013-590x494.png&hash=4c8401000a4048cd4ae3f267d0196f45cf32c7df)
:lol:

Edit: And also what would the consequences be for the US government's debt, even if they managed not to default, but in effect said if a political crisis is so extreme the executive can choose which legally mandated liabilities to pay. Even if all this jiggery pokery worked I don't think it'd be positive.

Quote from: Admiral Yi on October 07, 2013, 09:15:50 PM

Quote from: CountDeMoney on October 07, 2013, 09:09:51 PM
I have no idea what you're referring to.

You made a bet with me that Bush would produce bin Laden's head right before the 04 election.  You lost.  You welched.

LOL, yeah I did. 

But hey, jacking up the Homeland Security threat level after the Edwards running mate announcement and again immediately after the Democratic National Convention made fear mongering a nice replacement in any case.

Shelf:  You understand that last graph is not measuring yields, right?

Quote from: Admiral Yi on October 07, 2013, 09:21:38 PM
Shelf:  You understand that last graph is not measuring yields, right?

Yeah. I've not been talking about yields of just 3% as historic lows :P

It's volatility. A US bond is both low-yielding and ever-changing, while the Euro-periphery is becalmed but costly. Given that they've been dealing with Berlusconi getting convicted and the right splitting in Italy that's an extraordinary comparison.

Quote from: Admiral Yi on October 07, 2013, 09:15:50 PM

Quote from: CountDeMoney on October 07, 2013, 09:09:51 PM
I have no idea what you're referring to.

You made a bet with me that Bush would produce bin Laden's head right before the 04 election.  You lost.  You welched.

Troubling, if true.  A wager is a sacred bond. :(

He would've pissed it all away on hookers and blow anyway.

And opium.

And ballroom lessons.

Didn't know I was crowding you.  HAR

Quote from: Jacob on October 07, 2013, 06:35:56 PM

Quote from: Admiral Yi on October 07, 2013, 06:30:13 PM
I know that the Supreme Court has ruled that Social Security is not a legal obligation.

If only Minsky was here right now  :(

Where is he? :unsure:

Also on prioritisation, imagine the political consequences if the US government was choosing to pay Chinese debt holders over, say veterans' benefits...

I voted other, but does "wackiness" encompass "bloody civil war"?

Thanks for that post, Sheilbh. I'd read elsewhere that prioritization was not just a matter of deciding but that lays it out better than what I'd come across previously.

I voted "breach and a few weeks to fix" by the way. I don't think the GOP is taking it seriously enough - too many Rasputins and MiMs in their hinterland means there isn't enough pressure for a back down.

Then the shit does hit the fan, and it's a big enough mess that they realize it was a mistake, but it takes a bit to pick the broken egg back up.

I hope I'm wrong, though :)

Quote from: Jacob on October 08, 2013, 12:56:48 AM
Thanks for that post, Sheilbh. I'd read elsewhere that prioritization was not just a matter of deciding but that lays it out better than what I'd come across previously.

One other problem that isn't mentioned there is the legality. This would be the executive choosing which bills to pay. I don't believe that Congress has set the seniority levels of the spending bills they've passed - whether on the military, social security or whatever else.

At any other time this would be seen as an enormous power grab by the executive. This would surely be of dubious legality and need testing in the Supreme Court, or if legal an awful precedent to set.

I saw mentioned elsewhere that Treasury might be able to limp along until the 31st servicing T-Bills, assuming the internal systems allow that sort of selective payouts.

In any case, when Social Security payments stop being processed that will be a major pain point. Same with military pay. I expect a resolution shortly after those thresholds are passed.

Quote"Unlike a federal shutdown which has no impact on the payment of Social Security benefits, failure to raise the debt ceiling puts Social Security benefits at risk."

Quote from: lustindarkness on October 08, 2013, 11:35:51 AM

Quote"Unlike a federal shutdown which has no impact on the payment of Social Security benefits, failure to raise the debt ceiling puts Social Security benefits at risk."

Yup. That's going to be a turning point, I believe.

Guller: $30 even money cap is raised in time.

Quote from: Admiral Yi on October 08, 2013, 12:03:53 PM
Guller: $30 even money cap is raised in time.

If I win, my $30 may be worth nothing.  I really can't begin to put the odds on it, except that I think they're significant.

Quote from: DGuller on October 08, 2013, 12:13:17 PM
If I win, my $30 may be worth nothing.  I really can't begin to put the odds on it, except that I think they're significant.

OK, your $30 against my 3 cans of Spam.

 :lol:

Actually, we could fix the bet in euros.  :hmm:

Quote from: Admiral Yi on October 08, 2013, 12:17:03 PM
Actually, we could fix the bet in euros.  :hmm:

Still no good to him if he wins.  Everything is going to go to hell.  Your offer of spam may be overly generous.

edit: which of course is why you are going to win the bet.  Or at least why I would not want to bet against you.

Quote from: Admiral Yi on October 08, 2013, 12:17:03 PM
Actually, we could fix the bet in euros.  :hmm:

You could offer him a blow job against his $30.

Quote from: dps on October 08, 2013, 12:23:11 PM

Quote from: Admiral Yi on October 08, 2013, 12:17:03 PM
Actually, we could fix the bet in euros.  :hmm:

You could offer him a blow job against his $30.

:huh: Where do you get your blowjobs?

Quote from: DGuller on October 08, 2013, 12:25:05 PM

Quote from: dps on October 08, 2013, 12:23:11 PM

Quote from: Admiral Yi on October 08, 2013, 12:17:03 PM
Actually, we could fix the bet in euros.  :hmm:

You could offer him a blow job against his $30.

:huh: Where do you get your blowjobs?

Not from Yi.

Quote from: dps on October 08, 2013, 12:27:21 PM
Not from Yi.

:hmm: Good point.

I'll enslave DG after enslaving Cal. I'll need some track suits made.

Quote from: Ed Anger on October 08, 2013, 03:49:52 PM
I'll enslave DG after enslaving Cal. I'll need some track suits made.

:mad: Just because you eat all the time doesn't mean you know how to cook, so to speak.

I don't get it.

Here's an article that covers a bit of what I was asking for yesterday:

QuoteThere's been a fair bit of confusion about the timeline for the debt-ceiling crisis. The date Oct. 17 gets tossed around a fair bit as a hard deadline. But that's probably not the date when we'll see lots of financial disruptions if Congress fails to lift the debt ceiling.

The real crises are likely to occur a little later in October or early November. But even that's not certain.

So here's a rough timeline for the whole debt-ceiling fiasco:

May 19: The United States hits the debt ceiling. That's right, the U.S. government actually bumped up against its $16.699 trillion borrowing limit five months ago. Ever since, the Treasury Department has taken a slew of "extraordinary measures" — such as tapping exchange-rate funds — to raise an extra $303 billion without borrowing and to ensure the government has enough cash to meet its obligations, from paying bondholders to sending Social Security checks.

Oct. 17. Extraordinary measures end. Oct. 17 isn't necessarily the doomsday date, as Republicans like Bob Corker and Susan Collins have pointed out. It's just the date that the Treasury Department estimates that all those "extraordinary measures" will run out.

At that point, according to Treasury Secretary Jack Lew, the government will have only around $30 billion cash on hand to meet the country's commitments, plus whatever tax money comes in.

This won't necessarily lead to default right away. But it does put the Treasury Department in a perilous situation. "This amount would be far short of net expenditures on certain days, which can be as high as $60 billion," Lew wrote in his letter to Congress.

Oct. 22 – Nov. 1: At some point here, the government likely won't be able to pay all its bills.

(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.washingtonpost.com%2Fblogs%2Fwonkblog%2Ffiles%2F2013%2F10%2Fxdate1-800x582.jpg&hash=084316d8a94c6cbabf3cf5bbab47609bbb80dbe5)

The Bipartisan Policy Center estimates that at some point between Oct. 18 and Nov. 1, the government won't have enough cash on hand and won't reap enough tax money to cover all of its daily payments. So the government's checks will start bouncing.

How catastrophic will that be? It depends what payments the federal government actually misses. A lot here depends on when the government runs out of cash and whether the Treasury Department decides to try and prioritize payments at all. But here are the big-ticket items that come due between Oct. 18 and Nov. 1:

(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.washingtonpost.com%2Fblogs%2Fwonkblog%2Ffiles%2F2013%2F10%2Fpayments1-800x589.jpg&hash=06bdeb1fbda540c749ed6cd18e493e32e2c74ce9)

If the government misses that $2 billion in Medicaid payments to providers on Oct. 30, that might cause some mild disruption. If, however, the Treasury Department doesn't have enough money to make interest payments on the debt — such as the $6 billion due on Oct. 30 or the $29 billion due on Nov. 15 — then we could have a full-blown financial crisis. That's a default.

Many financial analysts think the end of October or the beginning of November is when the Treasury Department runs the biggest risk of missing a payment, since so many bills come due. So that's a decent bet for doomsday.

However! There's all sorts of market turmoil that could occur up even before doomsday strikes. For example: The Treasury Department has to roll over about $302 billion worth of securities between Oct. 17 and Oct. 31. If the debt ceiling isn't raised before then, there's a risk that buyers of government debt will either sit out Treasury auctions or demand higher interest rates, which would increase the cost of U.S. borrowing.

Furthermore, the Bipartisan Policy Center says that its estimate for the "X-date" — i.e., the day the government starts missing payments — is only an approximation. Doomsday could come unexpectedly early.

"No one can predict with absolute certainty the date and time when Treasury will have exhausted all its extraordinary measures and run out of cash on hand," write Shai Akabas, Brian Collins and Steve Bell. "Therefore, policymakers should not assume that they have until October 22 to make decisions concerning the federal debt ceiling. "

So it's impossible to pinpoint the exact day that Armageddon will start if the debt ceiling isn't lifted. Doom probably won't materialize right on Oct. 17. It will probably start in late October or early November. But there's always room for error.

Source: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/10/08/a-very-simple-timeline-for-the-debt-ceiling-crisis/?t\

Quote from: Admiral Yi on October 08, 2013, 04:05:05 PM
I don't get it.

Because his people wear track suits, they don't know how to make them.

Asoka.

I'll just water him repeatedly.