October 14, 2013
President Obama has rallied the Democrats with him against the Republicans in a battle to resolve the impending debt default by the US.
Jack Lew, Secretary of the US Treasury warned last week that the US is quickly running out of cash, “this is our early-warning radar telling us that the bond market is beginning to focus on this as an increasing probability.”
Lew said : “The reality is that if we run out of cash to pay our bills, there is no option that permits us to pay all of our bills on time, which means that a failure of Congress to act would for the first time put us in a place where we’re defaulting on our obligations as a government.”
It is the stance of the US Treasury that if the debt ceiling is not raised by October 17th, the federal government will have to operate with cash in hand and that “could severely impact financial markets and the broader economy.”
Obama met with House Speaker John Boehner to discuss raising the debt ceiling for 6 weeks to reopen the US government.
Democrats were ordered to agree to entitlement cuts.
Negotiations failed as House Representative Greg Walden said: “The president now isn’t negotiating with us.”
In response, Obama said in his weekly address to the nation that certain House Republicans were holding against Obamacare which has forced a government shutdown.
Annual meetings have concluded with central bankers, the International Monetary Fund (IMF) and the World Bank (WB) wherein European Central Bank president Mario Draghi said that the theater being acted out on Capitol Hill is facilitating the “unthinkable, that an agreement won’t be found.”
Lew and the Group of 20 (G20) have commented that “the US needs to take urgent action to address short-term fiscal uncertainties.”
Anton Suilanov, finance minister for Russia said: “Our American colleagues are doing everything possible in order to find a mutual understanding or agreement with the Congress. . . We trust that the administration and the Congress will arrive at a mutually acceptable solution.”
At the meeting, IMF Financial Committee chairman Tharman Shanmugaratnam said: “[The debt stand-off] is a clear negative when you think about the key element of recovery which has to take place in the next one to two years, which is recovery of private investment [which] hinges on confidence. If we don’t get clear resolution of the US fiscal deficit and debt issue, it is going to be hard to see how confidence is going to come back anywhere, so it’s a critical issue.”
These statements are significant when considered with the Global Financial Stability Report (GFSR) released by the IMF that outlines how much of a challenge containing the “side effects” of the mortgage-backed securities (MBS) will have on an international transition within the economy to build investor confidence.
The IMF stated: “At the same time, the Fed must take care in calibrating an exit. If it moves too soon, by cutting its bond purchases before the end of the year, for example, the central bank could stunt growth for years.”
A long term government shutdown in the US could be “quite harmful” to the global economy.
The IMF points out: “Even more importantly, a failure to promptly raise the debt ceiling, leading to a US selective default, could seriously damage the global economy. The major economies must urgently adopt policies that improve their prospects. Otherwise, the global economy may well settle into a subdued medium-term growth trajectory.”
The Federal Reserve Bank (FRB) was “cautioned” as they begin “normalizing” their ultra-low interest rates and easy-money policies.
The IMF said : “The eventual transition toward the normalization of monetary policy… should be well-timed, carefully calibrated, and clearly communicated.”
The government shutdown, that is not really a shutdown, has wrought havoc onto the American people.
At the National WW II Memorial, US veterans have been roughed up, locked out of public monuments and met with security guards hired by Obama to make sure they did not enter the restricted areas.
Recipients of the Supplemental Nutrition Assistance Program (SNAP) in 17 states were unable to purchase groceries because their government-issued EBT cards did not work.
Jennifer Wasmer, spokesperson for Xerox (the corporation that administers the program) said that “the outage occurred during a routine test” which lead to beneficiaries of the SNAP, TANF “and other programs” to be refused from accessing these programs.
Xerox later reported that the problem was resolved.
This part of the plan is meant to incite anger and fear within the general American public – and it is working perfectly.
With the Democrat/Republican theater on Capitol Hill playing while the citizens fight against the system for access to public lands and promised welfare subsidies, the American public has put on their proverbial Donkey and Elephant caps to battle against each other in support of the play being acted out by our “representative” government.
When polled, 72% of Americans disapprove of the shutdown.
Even within the Republican Party, 48% approve and 49% disapprove of the government shutdown.
It was determined that 57% of Tea Party members approve of the shutdown.
Americans are being presented with 2 options by the “powers that be”.
First, the central bankers, IMF, WB, Democratic Party and the Obama administration are calling for the raising of the debt ceiling, in an attempt to stave off the inevitable default of the US.
This kicking-of-the-can will position the US economy for default just before Black Friday – the day when consumerism in America is at its peak.
Secondly, if the script being purported by the Republicans is played out, the US Treasury will run dry this week which will ensure a US default.
Christine Lagarde, managing director of the IMF said to a crowd at George Washington University earlier this month the debt ceiling issue should be considered “mission critical” because it could destroy America.
Echoing Lagarde, Obama said: “As reckless as a government shutdown is, as many people as are being hurt by a government shutdown, an economic shutdown that results from default would be dramatically worse.”
Either way the theater on Capitol Hill is played out – either the debt ceiling being raised as Obama wants or Republicans get their way – the US economy will default because it is built into the script.
These steps being currently taken are meant to lead to what financial analyst Jim Sinclair refers to as a bankster bail-in.
Sinclair explained : “Bail-ins are coming to North America without any doubt, and will be remembered as the ‘Great Leveling,’ of the ‘great Flushing’ (of Lehman Brothers). Not only can it happen here, but it will happen here. It stands on legal grounds by legal precedent both in the U.S., Canada and the U.K.”
According to Sinclair “bail-ins do not require a crisis to occur and can surface one bank at a time, spread out over years. The major situation is deposits above insurance levels in banks too big to fail. Those deposits are directly in harm’s way.”
This means that the next target is retirement accounts as the “IMF and governments to secure as fonts of capital into which to place sovereign paper.”