The problem of the US debt ceiling

Generali

Radiantsoul wrote: »

Democracy in action I suppose.
It just seems like an unnecessary check and balance that is likely to weaken the USA.

As I say, it's an historical oddity.

The system in the US is set up for spending to be funded on an item-by-item basis.

That theory is still driving the debt side of things with a a rolling budget being used to drive spending. The crux of the problem is a constitutional one and there is no appetite to fight to change it.

There have been problems raising the ceiling before, eg under Reagan. This was Reagan's approach to dealing with a reluctant Congress according to his diary:

I sounded off and told them I'd veto every damn thing they sent down unless they gave us a clean debt ceiling bill

JanCee

Reiwxib wrote: »

The proliferation of world debt has also resulted in an enormous explosion in derivatives products, such as credit default swaps, that has created the potential for exacerbating any financial crisis. It was just such derivatives products, especially those issued by AIG, which brought the world to its financial knees in 2008. Back then, silver sharply declined in price, due to an increasingly obvious (in retrospect) manipulation by large New York banks that were heavily short silver. It will be hard for that manipulation to occur again. Any new financial crisis is likely to be met with soaring silver prices.


My sense is that the European debt crisis and the clash over the US debt ceiling and deficit have had the unintended consequence of instilling doubt in the minds of many where that doubt never existed. Confidence is a tricky thing; hard to earn, easy to lose. Perhaps people should have been more concerned about debt and financial matters earlier, but more are currently as a result of recent headlines. This undermines the confidence needed to continue to buy and hold paper debt obligations. Maybe this confidence is not lost overnight, but it does erode gradually and enhances the chance a panic will come at some point. In a genuine financial panic, it is hard for me to conceive how people won’t flock to hard assets, particularly precious metals.

All taken from...........
http://investmentwatchblog.com/a-nervous-new-world-by-theodore-butler/

You should at least give the originator the credit when you use their words.

wotsthat

Reiwxib wrote: »

The proliferation of world debt has also resulted in an enormous explosion in derivatives products, such as credit default swaps, that has created the potential for exacerbating any financial crisis. It was just such derivatives products, especially those issued by AIG, which brought the world to its financial knees in 2008. Back then, silver sharply declined in price, due to an increasingly obvious (in retrospect) manipulation by large New York banks that were heavily short silver. It will be hard for that manipulation to occur again. Any new financial crisis is likely to be met with soaring silver prices.


My sense is that the European debt crisis and the clash over the US debt ceiling and deficit have had the unintended consequence of instilling doubt in the minds of many where that doubt never existed. Confidence is a tricky thing; hard to earn, easy to lose. Perhaps people should have been more concerned about debt and financial matters earlier, but more are currently as a result of recent headlines. This undermines the confidence needed to continue to buy and hold paper debt obligations. Maybe this confidence is not lost overnight, but it does erode gradually and enhances the chance a panic will come at some point. In a genuine financial panic, it is hard for me to conceive how people won’t flock to hard assets, particularly precious metals.

You should try this - it's a random paragraph generator and should help you to form more coherent posts than your babbling cut and paste jobs.

http://watchout4snakes.com/CreativityTools/RandomParagraph/RandomParagraph.aspx

I think Geneer uses it....

How will self-awareness laugh above each murdered sword? Self-awareness suffers this meme on top of the chapter. A bandwagon values a shouting garbage. On top of the decreased group pants an integrate hero. Can self-awareness name lack?

Generali

Reiwxib wrote: »

Im a new poster so I cant do links yet.

This is what Ted then goes on to say...............


There is less silver bullion inventory in the world than there is gold bullion inventory; around one billion ounces of silver versus three billion ounces of gold. Common sense would suggest that an item more rare than another similar item would reflect that relative rarity in price. While silver has vastly outperformed gold over any reasonable time period over the past ten years, the rarity of silver is vastly underappreciated. I would guess that maybe one out of every million of the world’s inhabitants knows of this fact. Even among those exposed to the rarity of silver compared to gold, few accept it. Inevitably, as more come to learn and appreciate this startling fact, more will choose to invest in silver.

While much more silver is mined and produced each year than gold, when one considers the fact that silver is an important industrial commodity compared to gold, a different picture emerges. After subtracting the industrial and other fabrication usage of silver and gold, the amount of each “left over” and available for investment the attraction of silver becomes clear. Who cares if more silver is produced if most of it is spoken for by industrial and other fabrication consumption. Very few people consider silver in this perspective. As time progresses, more will.

The most important factor to consider in deciding between silver and gold is the price of each. Because gold is so much more expensive than silver, the dollar valuations of each are distorted. At current prices and the amount of gold and silver bullion inventories in the world, there is more than 120 times more gold in the world than silver in dollar terms. What this means, among other things, is that it takes a lot more money to move the gold market than it does to move the price of silver. That’s probably the biggest reason for why silver has been outperforming gold. There is nothing on the horizon to suggest that will change anytime soon.

As more people are subjected to the daily reports of a financial world in distress and of political animosity, their thoughts will naturally gravitate to assets with no liability to that stress and animosity. As more people come to learn of the rarity and value of silver compared to gold, their choice will be to buy and hold silver. The trick, as always, is to beat the crowd.

:spam::iloveyou::easter_os

Graham_Devon

Just read today that the current US debt is 20% of the entire worlds GDP.

Soon to be a larger figure no doubt, to make things ok for a while. When is the point of no return?

Ark_Welder

Graham_Devon wrote: »

Just read today that the current US debt is 20% of the entire worlds GDP.

The USA's GDP is around 23% of the entire world's GDP.

purch

Im a new poster so I cant do links yet.

So that makes it OK to steal others words, and pass them off as your own ??

You didn't need a link, just an acknowledement.

This is what Ted then goes on to say...............

Ted who :eek:

Mr_Mumble

Nice analysis from JPMorgan Private Bank via Forbes. Here's a single graph to give an idea of what is being proposed and what it'd do to America's debt outlook:


All these assumptions are based on healthy growth rates and no recessions over the next ten years. Its hard to see any political will to get debt-to-GDP down to sustainable levels.

Ark_Welder

purch wrote: »

Ted who :eek:

Father?

Ark_Welder

Stephanie Flanders, 27 July: How to think about the US debt battle

With 6 days to go before A-Day (A for Armageddon), Yesterday's auction of $35Bn 5-year notes was ... 2.6 times oversubscribed.

http://www.treasurydirect.gov/instit/annceresult/press/preanre/2011/R_20110727_2.pdf