Karl Denninger's "Defcon" Gauge For The Government Debt Ceiling

04-12-2011 • Market-ticker.org

Why did I put this up? Because I fully expect our government to be dumb enough to fail to deal with the deficit for the simple reason that doing so is going to force recognition of the hidden damage that they've been covering up for the last three years with all the deficit spending! As such I fully expect the condition of our fiscal and financial house to deteriorate, until "2" and then finally "1" is lit. There is also one level worse than "1" that is already present in the table. History says that when governments refuse to deal with these matters on an honest and forward basis, eventually the "worse than 1" happens. We "practiced" the "worse than one" scenario when I was a school child. I still remember it and it sucked. Should I see meaningful progress toward dealing with our budget, tax and banking systems, I will move the indicator to "4". Should we actually address these issues the indicator would move to "5". I don't expect to see either "4" or "5" lit, but I'd like to be pleasantly surprised. "4" is not "$100 billion" in cuts, nor is it Rep. Ryan's BS game that he is trying to run and which the CBO says would produce more debt rather than less. To get "4" to light up I need to see a credible plan with immediate execution that takes no less than 1/3rd of the deficit off this year, another third next year, and whatever is left the final year, plus no less than $300 billion in surplus to start paying down the debt. No games, no gimmicks, no BS or there's no light movement. Doing the right thing will result in recognition of the rot in our economy that we've been trying to hide...