Chope

www.usdebtclock.org

The impending debt default rhetoric is spiraling out of control as both Obama and Boehner went on the air to put their positions forward last night.  Unfortunately, both seem anemic as they only involve a couple of billion in savings spread over 5-10 years when the mounting deficits are $1.5Tn.

In truth, many believe (myself included) that the event will not happen - either because Aug 2 is an imprecise date, the Treasury department has a number of practicable options to shuffle cash-flows so that a default will not occur and some kind of compromise will be reached.

However, the unfortunate outcome is that American credibility is being tested due to all the hyperbole, and IMHO Obama is behaving the worst.   Cracks between traditional Republican's and newer, hard-core "fiscal conservatives"  Tea Party representatives are also likely to grow wider.



[A market related consequence of this is that gold is rallying due to the possibility of financial crisis and currency collapse (or at least severe disruption and weakness).  This firm sponsored a very interesting Conference on Gold earlier this year.  Here is text of comments by anarchist libertarian, Dominic Frisby.   On another cautionary note, Frisby included this old book that documents the monetary collapse of the French franc after the French Revolution.]