{"id":1102660,"date":"2019-02-27T19:17:22","date_gmt":"2019-02-27T19:17:22","guid":{"rendered":"https:\/\/dailyreckoning.com\/?p=106832"},"modified":"2019-02-27T19:17:22","modified_gmt":"2019-02-27T19:17:22","slug":"another-government-debt-crisis","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1102660","title":{"rendered":"Another Government Debt Crisis?"},"content":{"rendered":"

This post Another Government Debt Crisis?<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

The president has redrawn his March 1 line in the sand.<\/p>\n

\u201cSubstantial progress\u201d in trade talks with China is the reason he cited.<\/p>\n

But another March 1 deadline menaces the United States\u2026 like a creeping shadow, dark, broad and doomy.<\/p>\n

And Mr. Trump cannot push it back.<\/p>\n

Details shortly.<\/p>\n

First to the shadows hanging over the world\u2026<\/p>\n

Nuclear rivals India and Pakistan are playing with matches in perhaps the world\u2019s largest powder keg \u2014 Kashmir.<\/p>\n

A terrorist bomb killed 42 Indian paramilitary personnel in Kashmir earlier this month.<\/p>\n

Yesterday, India airstruck what it claims to be a training facility of the group responsible.<\/p>\n

At least one Indian warbird was downed\u2026 and one pilot captured.<\/p>\n

Early today, Pakistan unleashed a retaliatory airstrike against Indian targets in Kashmir.<\/p>\n

And so the Hatfields and McCoys are once again at each other\u2019s throats \u2014 only these feuding clans wield nuclear muskets.<\/p>\n

Skittish markets sold off this morning before making good some of their losses.<\/p>\n

The Dow Jones closed 72 points lower. The S&P lost a mere point, while the Nasdaq clawed a five-point gain.<\/p>\n

But to return to our looming March 1 deadline\u2026<\/p>\n

Last February\u2019s \u201cbipartisan\u201d spending bill suspended the debt ceiling \u2014 then at $20.5 trillion \u2014 until March 1, 2019.<\/p>\n

March 1, 2019, falls this Friday.<\/p>\n

Friday\u2019s deadline would pass harmlessly if the debt had remained at $20.5 trillion.<\/p>\n

But it has not.<\/p>\n

Today\u2019s federal debt exceeds $22 trillion.<\/p>\n

And after Friday, the United States government cannot legally borrow additional funds \u2014 unless Congress raises the debt ceiling to present levels.<\/p>\n

Of course\u2026 the government runs under perpetual deficit.<\/p>\n

And it cannot meet existing commitments without ongoing resort to the credit markets.<\/p>\n

The Treasury can take to accounting gimmicks or \u201cextraordinary measures\u201d to keep the government in funds.<\/p>\n

But only for a time.<\/p>\n

The Congressional Budget Office (CBO) estimates the cupboards would be empty by September \u2014 unless the debt ceiling is raised beforehand.<\/p>\n

If it is not, the United States government will default on its obligations\u2026 and its creditors will go scratching.<\/p>\n

Before the U.S. Senate Finance Committee yesterday, Jerome Powell attested \u201cit would be a very big deal,\u201d adding:<\/p>\n

\n

It\u2019s beyond even consideration. The idea that the U.S. would not honor all of its obligations and pay them when due is something that can\u2019t even be considered.<\/em><\/p>\n<\/blockquote>\n

But we would advise Mr. Powell to sleep well.<\/p>\n

Of course Congress will raise the debt ceiling.<\/p>\n

We will eat these words if wrong \u2014 without salt, without butter, without chaser.<\/p>\n

Would an addict cut himself off from his dealer?<\/p>\n

Would a hopeless drunkard willingly throw himself upon the wagon?<\/p>\n

Would a crook lock himself up… and toss the key?<\/p>\n

The prior two debt ceiling \u201ccrises\u201d fell in 2011 and 2013.<\/p>\n

Republicans sobbed their crocodile tears about Obama and the spendthrift Democrats.<\/p>\n

The debt ceiling must not be raised without spending cuts to match, they raged.<\/p>\n

But now one of their own occupies the White House \u2014 or at least a fellow with an \u201cR\u201d after his name.<\/p>\n

And they themselves have spent like ship-bound sailors turned loose ashore.<\/p>\n

The federal government has assumed over $2 trillion alone since Mr. Trump swore the oath.<\/p>\n

How could they possibly take their stand now?<\/p>\n

What about the Democrats?<\/p>\n

Might they try to use the debt ceiling for political advantage, to dig a thumb in Trump\u2019s eye?<\/p>\n

Not without being laughed off the floor.<\/p>\n

Have you seen some of their spending proposals?<\/p>\n

And House Democrats have recently introduced legislation to abolish the debt ceiling entirely.<\/p>\n

The new credit card would come without a limit.<\/p>\n

And so today we suffer an acute pang of what the Germans call fremdsch\u00e4men <\/em>\u2014 embarrassment for those incapable of feeling embarrassment.<\/p>\n

Each raising of the debt ceiling represents another sad congressional admission:<\/p>\n

We cannot control ourselves. We are incapable of living within our means. We are wastrels.<\/p>\n

But rather than lower their heads… they extend their hands.<\/p>\n

Fremdsch\u00e4men\u2026<\/em><\/p>\n

But perhaps we should be kinder.<\/p>\n

The entire system rests upon greater and greater infusions of debt.<\/p>\n

It would seem somehow inappropriate to stop now. What else can they do?<\/p>\n

As our co-founder Bill Bonner has said:<\/p>\n

People think what they must think when they must think it.<\/p>\n

Meantime, debt is expanding 6% per year \u2014 far greater than growth.<\/p>\n

As it stands today, the nation\u2019s debt-to-GDP ratio rises above a perilous 106%.<\/p>\n

Evidence \u2014 though inconclusive \u2014 suggests the red zone begins at 90%.<\/p>\n

And growth is trending in the wrong direction.<\/p>\n

Our crystal ball turns up no reason why it will return to historical levels anytime soon.<\/p>\n

But slow-motion disasters are rarely halted before they reach their ultimate conclusion.<\/p>\n

Meantime, the can will go kicking down the road\u2026 until the day it stops.<\/p>\n

Regards,<\/p>\n

Brian Maher
\nManaging editor, The Daily Reckoning<\/em><\/p>\n

The post Another Government Debt Crisis?<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

This post Another Government Debt Crisis?<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

The latest debt ceiling deadline arrives this Friday… Embarrassment for those incapable of feeling embarrassment…<\/p>\n

The post Another Government Debt Crisis?<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n","protected":false},"author":16,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[484,366,1751,1752,463],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1102660"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1102660"}],"version-history":[{"count":1,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1102660\/revisions"}],"predecessor-version":[{"id":1102661,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1102660\/revisions\/1102661"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1102660"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1102660"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1102660"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}