With all of the hysterics and fear-mongering in which the Obama Administration has engaged concerning the dire need for raising the debt ceiling, including the 'Chicken Little' alarmists with their 'the sky is falling' alarm bells that the U.S. will default on its debt unless the ceiling is raised, one would think that the muddle-headed minions of the Marxist mafia would keep a close eye on such matters. After all, they have made themselves out to be the guardians of America's good credit standing, which has been shot to pieces anyway with our unsustainable debt load.
However, according to Market guru Karl Denninger of 'Market Ticker,' the Treasury actually defaulted on the debt on June 30, 2011--last Thursday--in a deliberate, strategic move. The result was an artificial boost in the stock market.
In Denninger's Friday piece entitled, 'Did Treasury Just Strategically (Intentionally) Default?' the author points to the Treasury Department's daily cash statement for June 30.
The statement can be found here.
But the problem with Treasury's statement is found in Table III-C--'Debt Subject to Limit.'
Denninger maintains that the line shaded in pink is the clincher. The numbers did not move except for a slight decline. They should have gone up drastically. Denninger explains the reason:
It should have gone up - a lot - because the "Trust Funds" (you know, Social Security and Medicare?) that you folks on the left keep bleating about being "money good" and "actual debt" had a coupon payment from Treasury due yesterday.
IT WAS NOT MADE.
IF IT HAD BEEN, IT WOULD HAVE BLOWN THE DEBT LIMIT.
Thus, Treasury defaulted on the debt by failing to make a significant payment into the Social Security and Medicare Trust Fund, which was due on June 30.
Denninger explains the dramatic consequences of that failure:
That's a default, and it instantaneously destroys both the claim that such activity is not "selective" or, if you prefer, "strategic" and it also destroys the argument that Medicare and Social Security Trust fund "debt" - not just public debt - is subject to the 14th Amendment and thus is "protected" against the Treasury choosing to blow it off.
By the way if you're curious about how much this should amount to (~$90 billion, more or less) have a look at the June 30th, 2010 DTS statement.
Oh, and as for Geithner? He said that any default on any obligation would trigger an immediate market panic. Well, this did - straight up on the S&P and DOW. So much for Timmy's lies.
So where was the panic? Where were the dire warnings from Geithner, Obama, Reid, Pelosi, and other major Democrats? Why was this not reported as the lead story on all of the network news programs?
Perhaps the deafening silence was due to the fact that all of the doomsday admonitions from the Administration and Congressional Democrats are patently false. Treasury defaulted on part of its obligations, and the stock market rose sharply and hardly a ripple was noticed anywhere, particularly the government.
No doubt that a major U.S. default on all of its debts would result in definite negative consequences. But the scenaio from last Thursday proves that a partial default does nothing to cause widespread panic around the world, as Administration officials have claimed.
House and Senate Republicans have contended all along that the nation does not have to raise the debt ceiling and that by merely paying the interest on the debt load, a default will be prevented. Considering what was learned from last Thursday, apparently they are right.
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