"We are out of money."
Barack Obama May 23, 2009
Obama openly says what anyone with common sense has known for quite some time: the US is broke, and will not be able to honor its financial and fiduciary obligations.
The question remains how the US restructures that debt and how big a haircut the debt holders will take.
20%? 30%? More like upwards of 50% at least in real terms.
And who are these debt holders?
Anyone who hold Treasury debt obligations and financial assets, from the Long Bond to the US Dollar, and assets guaranteed by the Federal Reserve and the Treasury.
Technically the debt will be serviced and the interest paid according to the terms of the agreements, with devalued US dollars.
The process will continue until the debt is restructured and the dollar is replaced with a new dollar. This may take some years.
The Incontrovertible Truth About Debt, Deleveraging, Devaluation and Recovery
Why the US Has Gone Broke: Chalmers Johnson
Marc Faber Sees Bankruptcy for the US
In 2009 the US Will Be Forced to Selectively Default and Devalue Its Debt
A Credit Bubble of Historic Proportion
Shhhhhh.... Here is a Secret Worth Remembering
Didn't you just know they would spill it over a long holiday weekend?
Don't be too concerned, there will be more spin and denials after this trial balloon has been floated, and life will go on.
"Oh, that's not what Obama meant. He means we have a problem but there are the means and the time to address and repair it before it becomes too great."
People have an enormous capacity for delusion bordering on selective amnesia. Go back and read the posts on this blog starting in September 2008. Then reflect on what has been said recently on Wall Street and you will see what we mean.
We are now in the endgame of an historic credit bubble that will result in a currency crisis of epic proportions. Source
More: The Terrifying Future Facing America, by Eric deCarbonnel, May 23, 2009
And more: China Grows More Picky About Debt