Monday, March 06, 2006

US Government Weeks From Defaulting on Debt and Raiding Government Pension Funds

Find the Washington Post Story Here:
Excerpts Here:

WASHINGTON -- Treasury Secretary John Snow notified Congress on Monday that the administration has now taken "all prudent and legal actions," including tapping certain government retirement funds, to keep from hitting the $8.2 trillion national debt limit.

In a letter to Congress, Snow urged lawmakers to pass a new debt ceiling immediately to avoid the nation's first-ever default on its obligations...

...Snow in his letter notified lawmakers that Treasury would begin tapping the Civil Service Retirement and Disability Fund, which Treasury officials said would provide a "few billion" dollars in extra borrowing ability.

Treasury officials also announced that on Friday they had used the $15 billion in the Exchange Stabilization Fund, a reserve that the Treasury secretary has that is normally used to smooth out volatile movements in the value of the dollar in currency markets.

Treasury has also been taking investments out of a $65.3 billion government pension fund known as the G-fund...

...The formal title for the G-fund is the Government Securities Investment Fund of the Federal Employees Retirement System....

Couple this with the fact that the Federal Reserve will quit publishing the M3 this month, the end of the Yen carry trade, potential war with Iran, etc. and expect a dollar in free fall. Got Gold? - Etienne