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Friday, January 21, 2011

Nothing Spells Recovery Quite Like Bankruptcy

If you think 7 million more homes coming onto the foreclosure market is a great thing... or the artificially induced stock market rally and jobless recovery have been a wonder to behold...there's more!

States are trying to declare bankruptcy and get out from underneath their crushing debt burdens. A sure sign of fiscal health and recovery. I love it when states' screw the bondholders and the employees. Whatever you do, don't touch those Wall Street bankers. No haircuts or prosecutions for the ruling class.

So the great debate has been joined. Treasury Secretary and sometimes tax payer Tim Geithner now saying that if the debt ceiling is not raised, life as we know it will cease. I supposed to be scared?

US Debt Clock has us at 14.07 trillion in debt. I have been using 5 billion per day in interest as an average (isn't that gawd awful?)  Therefore in 40 days we will hit the 14.3 debt ceiling. The magic day is Mar. 1. Here is a brilliant and of course simple definition of this debt ceiling mess.

If a debtor says to his creditor "I will not be able to make my interest payments unless you loan me some more money", it means the debtor is effectively bankrupt. What amazes me is that the Treasury still has no problem finding buyers for its junk. (and at very low interest rates) Not that amazing when you consider the FED is buying it's own debt.

1 comment:

Slackydoo said...

Does that come with super size fries?