|Source: Bianco Research|
Here's a quotation from James Bianco's post on The Big Picture on April 30 (with a more detailed chart):
"Once this ceiling is hit, Geithner can steal borrow from some government trust funds to help fund the government. In 2011 Geithner borrowed enough from trust funds to keep the government going about eight weeks before the debt ceiling had to be raised (see “May 16″ below).
It will be interesting to see how Congress deals with the debt ceiling and fiscal cliff through the end of the year. And if the market and economic growth gets hit hard by fiscal tightening. The market crashed after Standard & Poor's downgraded U.S. debt to AA+ when Congress raised the debt ceiling by $1.2 trillion and missed S&P's deficit reduction target (the technical setup & crash in the E-mini S&P future). And Treasury bonds rallied as a result! (1, 2, 3) When will that trend reverse itself? Zero Hedge posted a chart of projected U.S. debt issuance vs. the debt ceiling as well.
Watch James Bianco discuss the debt ceiling on Bloomberg TV with Tom Keene and DoubleLine Capital's Jeffrey Gundlach.
And here is Treasury Secretary Timothy Geithner talking about hitting the debt limit at the "2012 Fiscal Summit" in May.