US to hit debt ceiling by middle of October

Graham_Devon

I write this as I wanted to pose a question really.

Should the US just ditch it's debt ceiling? While that would cause political warfare on both sides of the house, the actual ceiling appears to be a completely pointless exercise, costing lots of money each year taking up time and resources for politicians to argue over it.

It appears the US are hitting theri debt ceiling quicker each year now too.

So, does the debt ceiling have any point considering it's just continually raised?

Jack Lew also said that after that date the government will only have about half the cash it needs to keep the country running, warning that any shortfall that left it unable to pay its bills would be “catastrophic” for the entire US econony.

"Treasury now estimates that extraordinary measures will be exhausted no later than October 17. We estimate that, at that point, Treasury would have only approximately $30bn to meet our country's commitments," he said in a letter to the House Speaker, John Boehne.

"This amount would be far short of net expenditures on certain days, which can be as high as $60bn."

The US increased its debt celing late last year, effectively extending its credit limit and deferring the problem of how much it can afford to spend until a later date. However, as Mr Lew’s forecast makes clear, the country is perilously close to a new crunch point.

It's one of those policies which everyone knows they won't enact, so what's the point in it? Is it simply a political bargaining stick?

http://www.telegraph.co.uk/finance/economics/10334018/America-to-hit-debt-ceiling-by-October-17-Treasury-Secretary-Jack-Lew-warns.html

Loughton_Monkey

Graham_Devon wrote: »

....Should the US just ditch it's debt ceiling? While that would cause political warfare on both sides of the house, the actual ceiling appears to be a completely pointless exercise, costing lots of money each year taking up time and resources for politicians to argue over it.

Surely it makes sense? I don't think they have similar to our annual budget, where all the numbers are discussed and debated and the government of the day is called to task.

If Obama is mismanaging the economy, he should be scrutinised and made to squirm. This is just the American way of doing it.

Had we such a rule in this country, then Brown's massive spending spree may have been highlighted and stopped before it got so big, that it's a problem to unwind.

MacMickster

It seems that the key requirement is to convince worldwide markets that you are serious about controlling debt when, in fact, you have no intention of actually doing anything about it.

On a household level, once you have realised that you have got yourself into a situation with debt that you aren't ever going to be able to control and repay, do you declare yourself bankrupt imediately, or go on a spending spree until your creditors realise your predicament?

Now if you actually owe far more than your creditors can afford to lose, so they can't declare you bankrupt without bankrupting themselves, then there is little incentive to do more than pay lipservice to your debt problems.

ruggedtoast

The benefits of being the world's reserve currency I suppose.

Loughton_Monkey

MacMickster wrote: »

.....On a household level, once you have realised that you have got yourself into a situation with debt that you aren't ever going to be able to control and repay, do you declare yourself bankrupt imediately, or go on a spending spree until your creditors realise your predicament?

Now if you actually owe far more than your creditors can afford to lose, so they can't declare you bankrupt without bankrupting themselves, then there is little incentive to do more than pay lipservice to your debt problems.

Unfortunately, households rarely have access to a printing press that can churn out loads of crisp new tenners.

Scanning them into my Fujitsu, and printing them on my Samsung somehow doesn't fully convince Tesco's.

grizzly1911

Loughton_Monkey wrote: »

Unfortunately, households rarely have access to a printing press that can churn out loads of crisp new tenners.

Scanning them into my Fujitsu, and printing them on my Samsung somehow doesn't fully convince Tesco's.

Wonder why Thatch was so keen to emphasise the "women know about housekeeping" angle?

Loughton_Monkey

grizzly1911 wrote: »

Wonder why Thatch was so keen to emphasise the "women know about housekeeping" angle?

And I bet she would have cleaned behind the fridge......

Percy1983

The bank did this with me in my youth, if I maxed the credit card the limit just went up.

I will agree if its just going to be raised each time then why bother.

lvader

They hit the debt ceiling months ago, they are now running on the last $50bn cash which is due to run out mid October. Just in case someone thought they could still raid the piggy bank, they have done that already!

Thrugelmir

Graham_Devon wrote: »

It's one of those policies which everyone knows they won't enact, so what's the point in it? Is it simply a political bargaining stick?

Loughton's post sums up the position succiently.

The USA will eventually run out road though.

MacMickster

Loughton_Monkey wrote: »

Unfortunately, households rarely have access to a printing press that can churn out loads of crisp new tenners.

Scanning them into my Fujitsu, and printing them on my Samsung somehow doesn't fully convince Tesco's.

Its your cheap equipment thats the problem. Scrap the Fujitsu and Samsung and get yourself a De La Rue.

I'm sure that Tesco's will be more than happy to accept the prints from them.