Running Out Of Runway

Posted at 10:13 AM (CST) by & filed under

Greg Hunter’s

Dear CIGAs,

It looks like even the mainstream media (MSM) can see a calamity if we are right on top of one.  Finally, the dire debt ceiling negotiations between Congress and the White House were covered wall-to-wall on all the major media outlets yesterday.   No comment better describes the frightful situation America faces over its debt problem than what Treasury Secretary Tim Geithner said yesterday on FOX, “. . . we’re running out of runway.  I never thought they would take it this close to the edge and let politics get in the way of demonstrating we will pay our bills on time.”  To extend that metaphor, even if the debt ceiling is reached just before the August 2nd deadline, doesn’t mean the government can get enough altitude to clear the trees.  It will take some time to implement the new bill, and time is very short.

Meetings in the nation’s capital yesterday did not produce a bill that can garner approval of the House, Senate and President.  At the open of the Asian markets overseas, gold was up $20 an ounce in the first hour of trading.  It hit another record high (with many more to come.)  Who knows if the yellow metal will hold onto the gains, but that amounts to a giant vote of no confidence from overseas consumers of our dollar and debt.  Remember, there are $12 trillion in liquid assets (treasury bonds and dollars) held outside the country.  A panic over the stalled debt talks in the United States could cause massive selling of those assets.  Interest rates would spike and the value of the dollar would plunge.  It would cause immediate pain for U.S. consumers and could disrupt markets worldwide.  The stakes in Washington D.C. couldn’t be higher.  What has been called a “cloud of default” could start hurling thunder bolts and producing torrential rain in the global economy.

To say the Democrats and Republicans are not on the same page is an understatement—they’re not on the same planet.  The argument between raising taxes and cutting spending has morphed.  It now includes a “must do” deal to take negotiations on raising the debt ceiling out of 2012 elections.  When the idea of a short-term debt increase was posed to White House Chief of Staff Bill Daley on “Meet the Press” yesterday, it was soundly shot down.  Host David Gregory asked, if “The President would veto a plan if it does not extend the debt ceiling into 2013?”  Daley quickly said, “Yes.”