U.S. in technical default
Scape @ Mon Jan 30, 2006 12:09 am
Congress mandated debt ceiling has been breached by $5.5 Billion
Toro @ Mon Jan 30, 2006 10:25 am
A "technical default" is when a debtor cannot pay interest obligations. It has nothing to do with a debt ceiling. A company is not in "technical default" when debt hits, say, 70% of its capital structure, which is essentially what the author is arguing only applied to the United States. Its only in "technical default" when it doesn't make an interest payment.
Financial Sense University? "In Search of Truth"?
Er, the author's argument doesn't make "sense" as it is understood in finance, and does not give an accurate reflection of "truth".
Scape @ Tue Jan 31, 2006 9:13 am
$1:
The federal government does not have the legal authority to borrow above the statutory debt limit, which raises the prospect of emergency congressional action to avoid a full-fledged default.
US can not borrow when the ceiling has been breached and must pass emergency measures in order to either raise the ceiling or borrow more from the Federal Financing Bank to get the debt under the ceiling.
That will be no problem, the goal posts are easy to move. It just shows how out of control the debt is at this point.