On Oct. 8, the Bipartisan Policy Center (BPC) issued a new report in which they are forecasting the date of government insolvency to occur sometime during the last week in October. This think tank for government analysis sees several default events occurring between Oct. 22 and Oct. 31, making Halloween the potential end game for Washington D.C. as by this date they should be completely out of money, and have several debt obligations due they cannot pay.
As BPC’s X Date Window Narrows, Economic Risks Grow
BPC’s Updated X Date Range: October 22 – November 1
Major Debt Rollovers: October 17 - $120 billion; October 24 - $93 billion
Major Payments Due During X-Date Range: $12 billion in Social Security benefits on October 23;
$6 billion in interest on the public debt on October 31;
Over $55 billion in major payments on November 1 - Zerohedge
To make matters worse, if you extend the total amount of Treasuries that are due for maturity or rollover to Nov. 15, the total amount of debt obligations rise to a whopping $441 billion. This equates to 8.6% of the entire budget for fiscal year 2013.
The U.S. government is stuck between the ogre's choice in regards to either increasing the debt ceiling, or having the fortitude to reign in 30 years of fiscal irresponsibility. If Washington votes to increase the amount in which the government can borrow, the real threat of interest rates getting out of control, like they did as recently as September, will create a frenzy of selling by foreigners who hold trillions of dollars in U.S. reserves. However, if the U.S. decides to cut back and impose even the slightest measures of austerity onto the economy, then both the stock markets and productivity will decline rapidly, ushering in an even greater recession than that of 2009.
For both the Republicans and the Democrats, resolving the budget and debt ceiling issues do not appear to be of high priority to legislators, as several days have now passed with few attempts taken to come to a consensus on this year's funding. And as each day ticks away, and the Treasury Department dips more and more into pension funds and other emergency caches, this year's Halloween may prove to be more trick than treat and create a crisis strong enough to end America's supremacy in the global monetary arena.