Geithner warns U.S. to hit debt ceiling by May 16 | Reuters

The United States will hit the legal limit on its ability to borrow no later than May 16, Treasury Secretary Timothy Geithner said on Monday, ramping up pressure on Congress to act to avoid a debt default.

“The longer Congress fails to act, the more we risk that investors here and around the world will lose confidence in our ability to meet our commitments and our obligations,” Geithner said in a letter to congressional leaders.

“Default by the United States is unthinkable.

“Previously, the Treasury had forecast that the $14.3 trillion statutory debt limit would be reached between April 15 and May 31. As of Friday, Treasury borrowing stood just $95 billion from the ceiling.

Some Republican lawmakers have sought to use the need to raise the debt limit as a lever to pressure the Obama administration into agreeing on large-scale budget cuts.

The debt-limit showdown comes as Congress struggles to complete a spending package that would keep the government operating beyond Friday.

Republicans are seeking to use that bill to enact deep spending cuts and lawmakers are focusing on a proposal to trim this year’s budget by $33 billion, a relatively small amount compared with a projected $1.4 trillion deficit.

Geithner said a failure to raise the debt ceiling in a timely way would push interest rates higher and spark “a financial crisis potentially more severe than the crisis from which we are only starting to recover.”

via Geithner warns U.S. to hit debt ceiling by May 16 | Reuters.

So basically, we’re not even close to out of the woods yet; that clearing of sky up ahead just indicates the giant cliff we’re about to walk off. The good news is that all those student loans people have will probably be able to be paid off for the price of a loaf of bread; the bad news is that many people will be unable to afford a loaf of bread. Holding onto a large supply of USD and USD backed commodities right about now would be a very foolish course of action.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: