Storms Ahead?

There appears to be some trouble brewing for our friends across the way in the US. Given that we are pretty much the 51^st state, that means there is trouble brewing for us.

 

The Background……

Back in December 2012 the US Government had literally ran out of money and were unable to borrow further due to a previous Congress bill that had set a ceiling on borrowing (which had been reached). The current Government were within just a few hours of not being able to meet obligations in relation to pensions, military salaries and medical payments. Quite a state for the biggest and most powerful economy in the world!

 

Anyway, fear not! Congress passed a bill in January 2013 that increased the borrowing cap (a ‘public debt ceiling’) to $16.7 trillion. And for dramatic effect, that’s $16,700,000,000,000.00. Congress justified this as it was a ‘one off extraordinary measure’. 

 

Current Issue……

Well, who would have thought it……the US Government are running out of money again. The current US Treasury Secretary Jack Lew has warned and predicted that there will be no cash left in October 2013. The US are literally down to the last $50 billion.

 

Now, any self-respecting Government would borrow to fund this……simple. But when the Government is prohibited from doing so, you’ve got a problem.

 

Solution……

There is only one option in the eyes of President Obama……to increase the borrowing cap for another ‘one off extraordinary measure’. However, this would need agreement from all political sides and it will get very messy with no agreement a real possibility if previous experiences are the yard stick. 

 

The one thing for sure is that this will be a long drawn out affair that will leave many feeling uncertain about the economic super power that is the US. And that really isn’t good on many levels.

 

All eyes on Uncle Sam this autumn……again.