While state sponsored media pundits and government spokespeople make every effort to dispel doubts about the economic recovery, we need look no further than the two highest level officials who preside over the monetary and financial workings of the United States.
In January, Treasury Secretary Tim Geithner all but confirmed that we are literally on the brink of catastrophic collapse when he wrote, in a letter to Congress, that “failure to raise the limit would precipitate a default by the United States” and “would have catastrophic economic consequences that would last for decades.”
In recent testimony before Congress, Federal Reserve Chairman Ben Bernanke echoed similar views, suggesting that not raising the debt limit would be a “recovery ending event.”
(Video follows excerpts and commentary)
It would be an extremely dangerous and very likely recovery ending event.
First, it would almost certainly create a new financial crisis, as firms that rely on receiving their interest and principal do not receive it, and they’re unable to make payments, and so that problem would cascade through the financial markets.
Then there would be a massive loss of confidence in US Treasury securities, which are the deepest, most liquid market in the world. Interest rates would spike, and that would in turn affect many other assets as well as Treasuries.
So, the near-term effect would almost certainly be a very sharp resumption of the kinds of instabilities we saw in 2008.
Even if we were able, somehow…to avoid those kinds of effects, very likely the interest rate that lenders would demand of the US to finance our debt going forward would be higher, reflecting the great riskiness and uncertainty associated with funding the US government, and that would make our fiscal problems all the more severe, because interest payments are part of the deficit. So, it means that cuts would have to be sharper, and taxes increases larger, and those things themselves would also be a negative for the recovery.
Broadly speaking, it would be, I think , a very, very bad outcome for the US economy.
If you’ve ever wondered what signs you should look for to let you know that the system is falling apart, Mr. Bernanke just gave you somewhat of a road map.
The very fact that Messrs. Geithner and Bernanke are discussing catastrophic collapse and recovery ending events suggests that no such recovery has taken place, the financial markets have not been stabilized, and a return to global economic pandemonium is assured.
Regardless of the actions Congress will take – our view is that they will likely further extend the debt ceiling, because kicking the can down the road is a favorite American politician past time – there is no way out. If the only way to hide insolvency is to borrow more money to avoid complete bankruptcy, then the end result, which will include everything Mr. Bernanke and Mr. Geithner outlined above, will happen. It can be no other way at this point.
China, Russia, Japan and out other creditors already know what’s happening and raising the debt ceiling is not going to change their minds.
All it really does is give everyone a little more time to take preventative measures on an individual level.
Assuming that the current state of affairs is the same as or worse than the problems facing the country in 2008, it is safe to say that when the system does finally come unglued, we can look forward to what then Secretary of Treasury Henry Paulson warned Congressional members would happen if they failed to pass the TARP bailout. We provided some details in a February 2010 commentary titled Are You 100% Sure They Saved the System?:
Many of us were told in private conversations that if we voted against this bill on Monday, that the sky would fall, the market would drop two or three thousands points the first day, another couple thousand the second day, and a few members were even told that there would be martial law in America if we voted no.
-House Representative Brad Sherman (D-California) Debate on the House Floor, October 2, 2008
…
Consider this: If the system was about to meltdown in 2008 when Henry Paulson et. al. told then President Bush and Congressional leaders that we would have soldiers and tanks in the streets if they didn’t get the $700 Billion in bailout funds, then how serious of a problem was this to begin with?
Try to envision this scenario.
The only reason for declaring martial law and for why tanks and soldiers would need to be deployed on our streets is because the entire system as we know it today collapses and a state of emergency through martial law has to be implemented.
We’re talking economic, political and social meltdown on a massive, unprecedented scale. Basically, America as you know it to be today would no longer exist. This is how serious it would have to be if tanks and soldiers were dispatched throughout America.
Assuming the financial and economic systems were, in fact, on the brink of complete and total systemic meltdown, how confident can we really be that we have avoided disaster?
As we’ve mentioned previously, what we are witnessing first hand is the largest debt crisis and collapse in the history of the world. The outcome, as Mr. Bernanke so succinctly put it, will be very, very bad for the US economy – and the American people.
Ben Bernanke testifies before Congress:
Hat tip Charlie McGrath
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He could brief me 6 days a week & I still wouldn’t respect him.
Well, Happy Tuesday!
Bad for the recovery? The banks are doing just fine. How about a bail out for the home owners. Would you like to see more employment? Think Iceland and how pissed the European bankers are because the fishermen rejected to pay them for bad / risky investments.
It will go down this way for the average American as well. The only difference is that the time is not right, at present, for our wonderful banker friends, who would go out of business and turn the world into a debt terd and include everyone.
he’s an ass hat
THE DOLLAR IS BASED ON FAITH IN SO MANY WORDS(IRONIC WE HAVE ON IT”IN GOD WE TRUST”) . THEY ARE LYING TO US SO WE AND OTHER COUNTRIES WILL HAVE “FAITH” IN THE ECONOMY SO WE WILL START SPENDING AND KICK START THE ECONOMY, BUT THE PROBLEM IS WE AND OTHER COUNTRIES ARE LOSING FAITH IN THE DOLLAR AND THE ECONOMY WHICH OF COURSE IS HURTING THE DOLLAR. JUST MY 2 CENTS
honest question has to be asked…
so if it all goes in the dumper..how would this change much for the common man..VS what it would do to this government and the banksters, and all those crooks?
seems to me it would probably be much worse on them, than us..or am i seeing this wrong?
I mean a government that cant wipe its ass with both hands tied behind its back is what we have now..and if they run out of money to play their games against us average joe’s is that all so bad?
sure it might cause some things to go bye bye..but probably most of those things would be a betterment to the average joe if they did.
Hell I dont know , Im just talking off the top of my head, can anyone help me with the reality of such an event for the man on the street?
because i could really care less if it screwes with TPAB or the chosen ones..or the “so called elected ones” etc..because as far as i see it .. their time and day has been long past due.
im open to any opinions on this..its just an honest question…..got an honest answer?
Im not really looking for speculation..I live in the here and now..reality for today
His head is upside down on his neck.
There is going to be a story in the media, who knows when but it will be soon, and it will be about the surge in kidnappings for ransom of bankers, speculators, and other high finance folks, who accidently drove through the wrong part of town (most parts of town these days). Gangs of angry homeless or recently disposessed men and women pulling people out of their limos and holding them hostage like they do in South American countries. It won’t be long after that the security state kicks into gear with checkpoints and roadblocks as the wealthy retreat to their compounds in the Hamptons or Long Island. Just wait for the kidnappings to start, it’s coming to high income per capita neighborhood near you. Unfortunatley even the middle class will look rich to the poor, and where will we go to hide, but home.
I would have to put off buying a new truck. The stars would come out tonight & the sun would come up tomorrow. Bring out your dead.
More self-serving BOOGA! BOOGA! to feather the nest for QE3.
The only ‘event’ that’ll effect the ‘recovery’ will be a cessation of money generation out of thin air. It’s Quantitative Easing’ to infinity! The end will finally and exclusively come when the currency is worth less than toilet paper… if only because it’s harsher on the ass.
I can’t watch the lying sack of shit Bernokio tell the people that QE isn’t the reason for the hugely rising inflation in the food and energy sectors. Freaking Ivy League assholes, who have never run a business and know nothing but what their Liberal Egghead asshole professors taught them (who never had a real job either or ran a real business). It’s a never ending cycle of lose, lose for the American taxpayer and it WILL END this beautiful Country’s prosperity soon enough. The leechs have only so much blood that they can suck before the host dies, and that is where we stand right now-leaning dramatically to one side, ready to fall to our deaths as a country.
P.S. Please load up on silver, food, water and weapons to protect yourselves and your loved ones from the impending collapse. Your local law enforcement will not be able to protect you from those who have not prepared.
Mike F.
He’s a liar. The truth is that the higher the debs celing and the more money we print, the more money and power he and all his banker buddies will have and the higher the stock market will go. Meanwile the dollar is devalued and everyday people get screwed by inflation and a falling dollar. The truth is that our government takes in enough money to pay the debt and other stuff. They just don’t want cut any spending even though we are broke and headed off of a cliff. These idiots aren’t going to stop until they have robbed everyone and destroyed our country. But do we have the will to elect people with morals, integrity and common sense instead of the incompetent corrupt that we have now. I hope so but doubt it so I continue to prepare for the worst.
More scare tactics, you can bet his Wednesday first ever news conference will be just as staged as his Congressional statements.
Stop Spending.
Stop Lending.
It’s Inevitable… that is what I hear. How can the collapse be avoided? It can’t, it could only be delayed!
No one wants the great American economy to collapse, so this is how “they” delay the final collapse and they’ll continue to do so until they themselves stop believing their own lies and we find ourselves against a brick wall.
Get ready and be ready, they’re telling us it’s going to happen, it’s just a matter of time!
Personally, I find all the attention this press conference is getting quite comical.
Sure, The Bernank may SAY a thing or two that suggests when he’s going to raise rates, etc…which will probably have some effect on our ponzi-scheme financial markets…
…but other than that, I simply can not comprehend why anyone, anywhere really gives a damn about what this two bit ass clown SAYS. He hasn’t gotten a single damn thing right in the past seven years – the recession in general, housing, sub-prime being contained – take your pick.
I would put the chances of any predictions he makes tomorrow (even concerning his own future actions) of actually coming to fruition at 0%.
I can only pray that someone at the press conference actually has the balls to ask him if he in concerned about being investigated by Eric Holder for his direct participation in the manipulation/speculation in commodities, especially oil…as suggested by The Big O last week.
All I seem to keep thinking for the last couple of weeks is about a story on msm about a young girl aged somewhere around 13 who spent a few months researching the family history of all the presidents. It turns out that they are all related to some King James in England if I remember correctly, except for ONE.
To myself, it would appear that everything is rigged from the get go just based on this information. Sucks not to be a bloodline if only for the knowledge of truth.
Eric Holder is a bought boy.
“Recovery ending event” == “end of confidence in Federal Reserve Notes” == end of Federal Reserve hegemony. A horrible mess, for certain, but no worse than the “death by 1000 cuts” ahead of us through continued QE (monetary inflation). Which would be better: immediate, disruptive pain and suffering or being bled to death by the Federal Reserve and, as we pass away, knowing our great, great grandchildren will still be debt slaves to them? I personally prefer to get it over with right away. Bring it on. Just saying…
RECOVERY ? WHAT RECOVERY ????
Ben Bernanke looks like a kid I knew in jr high school named Damon Kunz. I used to beat the crap out of that kid. If only I had access to Ben Bernanke………:)
Rick: The likelihood of Eric Holder investigating BB is ….. nil. Folks transfer what assets you can into assets that benefit from inflation. The comment the other day with the link to buy Yuan was a good idea.
Use it if you can
Comments…..
It’s time to push teh ‘reset’ button………….let’s start over.
We know what to watch for now when voting…and oh yeah, if they screw up the first 6 months—they serve time…real time.
The Fed was set up to keep bankers & the elite in total control of our economy. When will someone have the guts to take them on & get rid of them? Who is their boss? Who are they really? Bernake looks like lucifer.
They are spreading the Fear useing the media machine .How many times do people get rooked from it over and over ! The matter is they will do QE# .The Fed will do an hour speech concering the Federal Reserve and have questions and answers later .Folks-this a media ploy to fool the sheeple once again . This is apreemptie strike to appease the people and put them back in thier slumber adn promiseign them that they will take cars of them and not to worry.The ceiling Debt,well we all know its going higher , all the rest of the talk is nonsence .The TRUTH is were going to be in more debt by 2012 in the Trillions . Nothing is gong to stop and of cource the politicions will makeing thier ponts to the media but in the end it will happen .When they finally announce a worser Recession or Double dip or finally a Depression , everybody will point fingers in our leadership and not much will done but You all will be a lot Poorer and that is for sure !Between June and December of this year,Expect a lot of inflation coming on strong . Your Food,Gas , Medical care,insurance its all going up . the Lies will continue to be bigger and the promises even more but dont be deceived !!!
I am following the investment advice of my stock broker,”Invest in canned goods and ammunition!”
If we go down, so does everyone else! I plan to barter with copper, lead, and brass!
Greeting everyone!
Just wanted to say thanks to Mac Slavo for the missive of
Fed Chairman Warns of “RECOVERY ENDING EVENT”.
I suspected we’re about to enter(3months,1 year?) the long dark times of the American Great Depression #2 (this time however,common people won’t go hungry and will take what they need by force to feed their families).Tim G. and Ben B. both will be footnotes in history as part of America’s collapse(if there’s a history left to write).In the mean time,planning for the soon to be dismal future should be at the top of one’s personal agenda.Just read FORBES magazine articles about California and how bad it’s getting there.The UBER-Rich might not care behind their walled communities of 10,000 Sq.Ft. homes and guarded shopping malls,but everyone else suffering does.Even San Francisco,Ca. houses are losing massive amounts of value as we speak.And the rest of California is resembling Camden, New Jersey.I doubt Obama(or The REPOCRATS in general) will be able to shoot spit-wads at what’s coming.Don’t fear though,the “Asian Tigers”(China,India,ETC)will collapse even faster and deeper than us,just a New York minute later.After all,who else besides America will buy their toxic toys,counterfeit products and shoddy “used to be made in America” products ?? Argentina and Greece ?? Besides all that,with the magnetic poles shifting,global climate change,the joys of how The Japanese(to save their Corporate faces)STILL continue allowing their broken nuclear plants to spread Radioactive Pollution around the globe into the air and sea. And FYI, last but not least the coming of planet X(bet you won’t see than one on FOX NEWS,It’s 4x bigger than Earth for starters)near Earth!What a Nucking-Futs time we’ll all going to have!!!Having a large group of friends to associate for mutual support/aid might possibly become just as important as a multi year’s supply of foodstuffs(perhaps more so!).Sorry to carry on for so long.I’ll try to be briefer in the future…
Best to Everyone,hope you are safe and warm,
GFG
Comments…..whether we go bust today or next week, or next year…it doesnt make much difference to me. i will still have to get outta bed each morning, look myself in the mirror, and scratch for my living. i would however, take great delight to see the pain and suffering of our top leaders of this country…
Unfortunately if we go down caryn, those at the top will not go down. They might even be a bit better off. The top 1% would have 90% of the wealth instead of half of it.
Truth is no one knows when or how this will end. Dying, arrogant, aggressive superpowers can do extremely stupid things. They`ll probably get us into WWIII with Russia and China before this is all over. When all else fails war and the printing press is all they`ve got. Besides most of them are not sane.
He would be among my top ten people I’d most like to see assume room temperature.
In confused!!! Are these consequences of not raising the debt ceiling all part of Bernanke’s “self-sustaining” economic recovery of which he so proudly spoke back in January?
Bernanke: “The economic recovery that began a year and a half ago is continuing” and there is “increased evidence that a self-sustaining recovery in consumer and business spending may be taking hold”.
Well, at least Bernanke and Geithner are now on the same page.
GA Mom, you are correct and history shows it here in the U.S. over and over from 1913 to present. The fed is a consortium of banking elite from all over the globe. They have no respect for governments or their people, their only motive is profit and control. This will all be twisted in future history lessons to show how, WE (the citizens), allowed the financial crisis to spiral out of control. Thomas Jefferson warned us about these guys but the bribes and threats were just too great for our elected officials to overcome. You can read an in depth analysis in a book from G. Griffin titled “The Creature from Jekyll Island”.
Read the book and you will understand exactly why we are in this situation. It is a big one, but reads like a mystery novel. I couldn’t put it down!
the powers are trying to start WW3 to get things moving again, we’re in Iraq,Afgan,soon to be in Libya,Syria,Yemen with Iran in their sites all the time, then the oil fields of Saudia will be shut down making sure we have no gas so we’ll be stuck in our homes raising our own food to survive or in the military.Just the oil people and bankers will end up with all the gold and silver.
I have a freezer for you to borrow Scott if you don’t live on the N Pole. Who is your top ten to post in the Post Office?
I hope BB doesn’t cry & shit his pants today. You know he’s going to stuuuuuuder.
Recovery? Where besides WallStreet? My house is now worth half of what it was…and still headed down. Jobs are not coming back to keep pace with even the birthrate. Lies Lies Lies. Nero is tuning up his fiddle and handing out the matches to his insiders. Prepare to Survive boys and girls
Comments….. Ol’Bernankum-spankum has one of those old eight balls he shakes before he makes his predictions. Its telling him”outlook not so good”. The only thing “taking hold” regarding Bernanke’s statement is the tightning grip around our doodads. Everyone, “keep your powder dry”!
ATTENTION Everyone!–Don’t give in to paranoia. That’s my job. All this is is another lying media show by the lying dogs of DC. Don’t get your panties in a wad over it. The floor is getting creakier but the bottom is not falling out yet. When you see major diplomatic sphincter-tightening from washington aimed at china or a nuclear armed foe (pakistan, maybe iran, or n korea) AND at the same time, economic conditions so bad that even the lame stream media can’t deny it , then we’re stepping over the cliff. Til then it’s just another “leg down” and more of the daily slide towards the bottom.
And as for ” a recovery ending event” how do you end something that never started? Ben is an idiot. And senator Warner is a sycophant weenie the way he set the question up. What a couple of dip sticks.
How can the recovery end when it never began? There’s never been a recovery, just more Jewish engineered depression. Thanks Jews!
-John
http://www.ncoalblog.com
John – Take it elsewhere…….
Bill, I’m with you.
Ya,take it somewhere else son,and dont be misusing my flag in that manner,lots of good men fought and died under that banner!
Comments…..all bernanke did was give a big “tip” to wall street . he is a liar and a thief-borrowing from peter to pay paul while peter had better get his ducks in order and stock up on beans bullets and bandaids cause paul dont give a shit about paying back what he borrowed.
This is a hoot considering the fact that the “recovery” is only a fragment of the gubmint’s indigestion. Tell the unemployed who are exhausting benefits and having to take a job at Home Despot about the “recovery”.
@GA Mom – Ron Paul does? (to your first question).
it’s only a matter of time…
first most grocery stores will run out of food in three days…
then looting… robbing your neighbors… stealing gas…
within three weeks 3 weeks… people will be grilling long pork!
buy your bar-b-que sauce now!!!
I got a case right by my grill ready to go… yum yum yummy … grilled ass! ;0)
The Federal Reserve prints money that has no backing whatsoever, and lends it to the government at interest. The Federal Reserve is buying 83% of U.S. Treasury bills with money they print, so they receive interest on those T-bills. Can you say fraud? Ponzi scheme?
The Fed will continue printing money until the whole thing collapses and their lying butts are hauled out and hung for treason. As long as we continue to pay out a portion of our incomes to support this system, they will continue to do this.
Yes, the politicians will try to cut all of the benefits we’ve been paying into the system to receive… calling social security and medicare “entitlements”. They will do anything rather than cut foreign aid and the military spending. The only people who profit from this is the banksters. Time to cut them off. Time to stop the revolving door between the regulatory agencies (SEC) and the banks. Time to start making arrests.
Just a very short note…What we need is a people’s prez.I believe it was President Andrew Jackson who pulled all the Government’s money out of the previous so-called “FED” of his time.They tried to threaten him with their “funny money”.HE left them high and dry and and THEY failed and went bankrupt,and the country went on about it’s business just FINE.Shame the Bankers were reduced to poverty,but that’s what they tried to do to common man.’Ole Hickory showed them why he was called ‘Ole Hickory.THAT’S the kind of President we need now…..
LTR,
GFG