by Jerry Robinson | FTMDaily Editor-in-Chief
HOUSTON, May 16
Happy Debt Ceiling Day!
It is official. After months of dire warnings regarding the impending breach of the U.S. debt ceiling, the moment has finally arrived: The current U.S. debt ceiling of $14.294 trillion has been hit. In essence, this is the legal debt limit imposed by the Congress. That means that, as of May 16, 2011, the U.S. Federal government has lost its ability to borrow money from the public through the issuance of debt securities, like Treasury bonds.
Washington has lifted the debt ceiling 10 times over the past 10 years. The chart below shows how the debt ceiling has increased since 1980.
In an effort to prevent a default, the Treasury department is expected to announce later today that it will immediately stop issuing and reinvesting government securities in certain government pension plans. However, these emergency measures will only extend the timeline of government default to August 2.
In typical fashion, Republicans and Democrats are using the debt ceiling debate to get the upper hand politically in today’s headlines. While “Rome” burns, the lipstick is carefully being applied to the pig.
As I have been saying since 2006, we are now officially in the final stages of the American empire. The only thing that is unbelievable about today’s political climate is that any American citizen actually buys into anything said in Washington. Today, the lawmakers and the mainstream media have succeeded in pinning the blame on corporate America, on the rich, big oil, the top 1%, etc… They also will blame the poor, the unemployed, the homeowner, the business owner. You name it, they blame it.
Young people are blaming the elderly and their “entitlements.” The elderly are blaming the young and their “laziness.”
However, the real problem today is the political system in Washington. Although, you must admit, it all does make for a really good show. So pull up a chair and watch those “cost-cutting” Republicans take on those “socialist spendthrift” Democrats. Starring: Barack Obama, Nancy Pelosi, John Boehner, Paul Ryan, and the list just goes on. It is such a star-studded show. They plunder and they manipulate you, and then ask you for more “campaign” dollars to start it all over again.
This game is just about as real as modern-day wrestling. But at least it requires a little more thought.
Nonetheless, somewhere during the show, perhaps during the intermission, you may want to begin preparing a financial lifeboat for you and your family. Why? Because if history is any indicator, this movie has a bad ending.
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In The News Today…
1. CHINA RISING: China, the biggest buyer of U.S. securities, trimmed its holdings for a fifth straight month.
2. MARKET WATCH: A bounce back in materials and financial companies erased early losses in the stock market Monday. Commodities like corn and cotton rose more than 3 percent in midday trading, in part because of a slide in the dollar that sent the prices of raw materials higher.
3. SOCIAL INSECURITY: Social Security will run a permanent yearly deficit when looking at the program’s tax revenues compared to what it must pay out in benefits, the program’s trustees said Friday in a report. This report also states that the outlook for Social Security and Medicare, the two major federal social safety-net programs, have worsened over the last year.
4. AH…MADINEJAD: Iranian President Mahmoud Ahmadinejad said he has temporarily assumed the duties of OPEC as the oil cartel prepares for a biannual meeting in Vienna.
5. IMF UPDATE: The former head of the IMF, Dominique Strauss-Kahn, is being held on sexual assault charges and has been denied bail.
In an effort to restore some self-respect, Citibank recently announced a 10-1 reverse split. They also implemented a new 1 cent dividend. The chart still looks dismal. Interesting commentary here.
Cartoon of the Day…
Jerry Robinson – FTMDaily.com
Jerry Robinson is an economist, published author, columnist, international conference speaker, and the editor of the financial website, FTMDaily.com. In addition, Robinson hosts a weekly radio program entitled Follow the Money Weekly, an hour long radio show dedicated to deciphering the week’s economic news.