Tuesday, November 25, 2008
More Proof That Uncle Sam Is In Trouble
PhD economist Marc Faber thinks the U.S. will go bankrupt. He's not alone.
Credit default swaps betting that America will default on its obligations keeps going up and up and up:
(click for full image; and see this).
The failure of Citigroup has put the viability of the entire banking system in question.
And as a MarketWatch commentator points out:
Washington needs credit counseling. The federal government has an $11.32 trillion credit limit, and it's carrying a balance of $10.66 trillion, according to a Treasury Department spokesman.
Government officials stress there's no borrowing planned as a result of Citigroup Bailout No. 2. But they also acknowledge the government doesn't have any cash to cover Citi's losses.***Throw in some tax cuts and declining demand for our debt overseas, and we have the ingredients for a toxic mix that could end up making our debt more expensive, even if we avoid default."There's no God-given gift of a 'AAA' rating," Standard & Poor's John Chambers told Reuters in September. "The U.S. has to earn it like everyone else."
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