Economic Showdown, Round 1

Reuters speaks to the insanity that will be coming our way -

The United States could hit the legal limit on its ability to borrow as soon as March 31 and faces serious consequences unless Congress acts by then to raise it, Treasury Secretary Timothy Geithner said on Thursday.

"Even a short-term or limited default would have catastrophic economic consequences that would last for decades," Geithner said in a letter to U.S. Senate Majority leader Harry Reid that was issued by Treasury.

Geithner said it was hard to pin down exactly when the current $14.3 trillion ceiling on the debt limit would be pierced but urged Congress to act before the end of the first quarter.

"The Treasury department now estimates that the debt limit will be reached as early as March 31, 2011, and most likely between that date and May 16, 2011," he wrote.

He said Treasury could engage in extraordinary measures, such as suspending sales of state and local government securities, but preferred not to because it is disruptive.

He warned that failure by Congress to raise the debt limit, which would effectively put the United States into default on its obligations for the first time in its history, would have consequences "potentially much more harmful than the effects of the financial crisis of 2008 and 2009."

The Real Effect
Eh, I'm a little ahead of the curve as usual, but this will definitely be a huge issue coming up. What is the most interesting is how the different people are being publicly positioned. Note the following:

• Anyone for raising the debt ceiling is being portrayed as being responsible. (This is akin to an unemployed man being responsible if he secures a new credit card when he's already defaulting on his previous cards.) Most Democrats and some Republicans.
• Anyone talking about cutting some spending is seen as either responsible or insane depending on the side doing the observing. (Akin to the same man not buying a 65" plasma TV, but perhaps a 50" instead.) Some Republicans and some Tea Party.
• Anyone discussing actually balancing the spending with debt and even going so far as to suggest massively cutting spending programs are regarded as insane and perhaps even responsible for the calamities that follow. (Akin to the man blaming the decline of his credit card as being the reason as to why he's in such a mess.) Very few Tea Party members.

The pain is coming, very soon. What will be telling is who blames who for the fallout. I believe the Democrats will blame Bush and the new Republicans for being crazy. (Laughable) Republicans will blame Obama. (Equally laughable seeing as how the "crisis" started before Obama took over). Of course those foolish Tea Party members are getting to the party just in time to get thrown under the bus, or drive it right off the cliff.

Time to check your undies, we're headed towards an accident.