Chris Martenson over at Financial Sense is reporting on some disturbing economic facts.
The US is currently in technical default.
The debt limit was raised shortly after the 2004 presidential elections to $8.184 trillion
(
ATSNN link) and there has been talk of the US reaching it by
mid-February/early-March (
ATSNN link), however not only has the debt ceiling been
reached it has been
breached as early as January 24. The government's own website reports the debt as of January 26 to be at $8,190.5 billion.
According to common banking practice, this places this debtor in technical default by a margin of over $5.5 Billion.
U.S. in Technical Default
I suppose we could write this off as merely an unsurprising development from a government that no longer bothers to even appear to be adhering to
rules, laws and procedures, let alone actually doing so.
But the silence is all the more troubling because there is an unprecedented level of government borrowing on the books for 1Q06 with next 2 weeks (Feb
1st to Feb 9th) an especially busy period of time. An ambitious ~$70-$80b in Treasury paper will hit the market.
The federal government does not have the legal authority to borrow above the statutory debt limit, which raises the prospect of emergency
congressional action to avoid a full-fledged default.
Since the debt ceiling has been raised 50 times over the past 40 years, hoping for some rational debate on the matter would be an extravagant
indulgence. Time spent wishing pigs could fly would offer a far better potential return.
Another odd facet of this story is
the deafening silence from the financial press (and I use that term loosely) regarding this matter. Leaving
aside the issue of a technical default, one wonders why questions aren’t being asked about the rate of debt accumulation and whether it’s
sustainable.
The last debt-ceiling adjustment was $800 billion and was passed in November 2004. Now, on January 24th 2006, it is entirely gone. $800 billion in
only 16 months for an average of $50B a month.
So tomorrow night when President Bush performs his
State of the Union theatre act for the compliant press and target audience, try to remember
that he is talking about a bankrupt country. LITTERALLY!
.
economy in the world need a deficit? Deficits are for times of emergency, not everyday practice. 
