Debt Ceiling Showdown Imminent?
David Stockman has been steadfast in his claim of a bloody debt ceiling showdown over the next few months. Please see MUST WATCH: Why Trump’s Tax Plan Is Dead On Arrival
Today, Treasury Secretary Steven Mnuchin called on Congress to raise debt limit as deadline approaches. Here is what it looks like on a chart.
In a letter to congressional leaders dated Wednesday, Mnuchin said the Treasury will stop issuing certain state and local securities on March 15, when the most recent suspension of the debt limit expires. Mnuchin said the Treasury will likely start taking "extraordinary measures" the next day, when the U.S. will be at its statutory limit, to prevent default.
"As I said in my confirmation hearing, honoring the full faith and credit of our outstanding debt is a critical commitment. I encourage Congress to raise the debt limit at the first opportunity so that we can proceed with our joint priorities," Mnuchin wrote.
Why is this so important and deadly for the stock market?
Once the debt ceiling is hit on March 15th, the Treasury will have 60-90 days of cash left. With most in the legislative branch busy repealing and replacing Obamacare, Trump will not be able to get the tax ceiling raised. Which is a feat in itself. The debt crisis that ensues should be of historic proportions. And that should crash the financial markets. Much more about this in our upcoming post.