July 19, 2011
If the debt ceiling talks fail, is Aug. 2 really the drop dead date for a U.S. default?
Perhaps!
U.S. President Barack Obama has said that the Congress needs a deal by July 22 to get legislation through Congress by Aug. 2. I don't buy it.
As long as a deal is struck by Aug. 2, something can be patched together. However, the president and Treasury Secretary Timothy Geithner have so convinced most everyone that Treasury will be out of money by Aug. 2, that a week before, interest rates investors demand on Treasurys may rise precipitously and the bond market routs.
At that point, there may be no turning back.
It is unfortunate the president and Treasury secretary are spreading around calamity scenarios because the Treasury really does have options after Aug. 2, if they don't scare the markets into panic before then.
The Treasury will still be receiving 55 percent of its tax revenues and can easily pay the interest on the debt and should then be able to roll over bonds coming due.
Read full article and more @ http://www.upi.com/Top_News/Analysis/Outside-View/2011/07/19/Outside-View-Funding-the-government-after-Aug-2/UPI-29791311075420/#ixzz1SfdAKkGd
