MidnightWatcher – Prophecy in Motion

“Budget and debt problems are once again racking America. Barack Obama has failed to persuade the Republican majority in Congress to raise the national debt ceiling. That much is nothing new, and similar attempts will be unlikely to succeed in the future. Since July 10, the White House has been holding daily consultations on raising the ceiling. The current ceiling of $14.3 trillion must be raised by several hundred billion, or the Department of the Treasury will run out of money by August 2.

Looming crisis

The Americans raise their debt ceiling on a regular basis. Since 1993, they have come close to defaulting 16 times. In 1995, the government even shut down for a week. In the past, the world perceived these exercises as a matter of course, whereas now the unwritten rule of the U.S. budget is increasingly becoming a sore subject.

The times have changed, and the national debt and deficit have become too astronomical to be treated as an American eccentricity, especially considering the U.S.-bred financial crisis of 2008 and the backdrop of failing finances in Greece, Ireland, and Portugal (likely to be followed by Spain and Italy) and the patently pre-crisis condition of the Euro.

The U.S. Department of the Treasury has not yet announced who will be the hardest hit if worst comes to worst – the secretaries of departments, other officials, congressmen, senators, the Pentagon, intelligence, teachers, transportation workers, the IRS, NASA, museums, or janitors. That much, at least, is of little concern to Europe.

The problem is not salary cuts for specific agencies but U.S. solvency. Nobody is saying that the United States will immediately default on its entire sovereign debt – it remains the most reliable debtor in the world.

The trouble lies elsewhere:” Read more.

Bernanke: Debt ceiling breach ‘calamitous’ – “Federal Reserve Chairman Ben Bernanke was back on Capitol Hill Thursday, warning that failure by Congress to raise the debt ceiling would be ‘a calamitous outcome.’… And he said while the Fed would do what it could to respond to such a default, that the central bank would not be able offset the impact of the damage. His remarks echoed recent warnings from credit rating agencies that there could be a downgrade in the nation’s credit rating if the debt ceiling isn’t raised.” Read more.

Moody’s put U.S. credit rating under review for potential downgrade – “Moody’s Investors Service raised the pressure on U.S. lawmakers to increase the government’s $14.3 trillion debt limit by placing the nation’s credit rating under review for a downgrade… The rating may be reduced to the Aa range, and there is no assurance Moody’s would restore its top rating, even if a default is quickly ‘cured.'” Read more.