U.S. Contingency Plan Gives Bondholders Priority (Bloomberg)

[chill_wind]

U.S. Contingency Plan Gives Bondholders Priority

By Peter Cook and Cheyenne Hopkins - Jul 28, 2011 7:07 PM ET

July 28 (Bloomberg

The U.S. Treasury will give priority to making interest payments to holders of government bonds when due if lawmakers fail to reach an agreement to raise the debt ceiling, according to an administration official.

The official requested anonymity because no announcement has been made. The Treasury has said about $90 billion in debt matures on Aug. 4 and more than $30 billion in interest comes due Aug. 15. Overall, more than $500 billion matures in August.

The $90 billion in six-month Treasury bills maturing Aug. 4 pared losses after the comments. Obama administration officials will brief the public no earlier than after financial markets close tomorrow on priorities for paying the nation’s bills if the $14.3 trillion limit isn’t raised, a Democratic Party official said earlier.

“The announcement is reassuring, but there’s really no alternative to favoring the bondholders,” said Christian Cooper, head of U.S. dollar derivatives trading in New York at Jefferies Group Inc., which as one of the 20 primary dealers is obligated to bid in Treasury sales. “The alternative would point to a default”

more: http://www.bloomberg.com/news/2011-07-28/u-s-contingency-plan-gives-bondholders-priority.html

[aquart]

1. One in nine households is getting food stamps?

Will they be paid? Because hungry people get mean.

[jwirr]

2. Over vital programs that keep the poor alive?

[pscot]

3. Gasp! No-one could have predicted this

[chill_wind]

4. Interesting DU thread here, too.

Mechanics of default

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x1604107#1604304

[blindpig]

5. This is Capitalism....

ya want them to fail to exercise due diligence ro something?

Kill Capitalism.

[soryang]

6. How is not paying SS not a default?

What about medicare? Are hospitals going to get their checks. These people have loans, mortgages, debts and other obligations to pay as well. The house of cards will collapse, regardless of this "reassurance" that bond holders will be paid.

The word of the United States is indivisible. The notion that you can reassure "bond holders" is nonsense really. Once that word is breached, the house of cards will collapse.

[MadHound]

7. Gotta keep our wealthy overlords satisfied and happy,

After all, they pay for the politicians' warchests.

[Trillo]

8. belongs on greatest page

not because it's a good story, because it's an important story.