Wow to that ocean of debt!

So the politicians have until 2 August to agree to terms which will allow for an increase in the amount of money that the US government can borrow or if not the government will default on its obligations, be unable to pay its civil service -in effect a  shut down & (even worse a repayment crisis) with the usual doomsayers predicting a financial meltdown if that occurs.

There  are negotiations and horse trading in return for agreement on increasing this limit between the political parties, the congress and the white house, which is turning into a bun fight about cutting spending,  raising taxes and the rest .

[ I cannot quite grasp the point of this, given that it took half a year to get the 2010-2011 budget agreed and it was a compromise agreement anyway, as one would assume that when this was voted upon Senators and Congressmen  might have had  an inkling that the debt ceiling would be breached during the year- which it did 1 month after the budget was finally passed- it is not as if the Congress does not have its own non-partisan budget office, but perhaps some-one else would like to explain this to me, as I really am at a loss about it].

The problem with the US debate (as it is in the UK ) is that I  would suggest that the politics has gotten into this debate a bit too much  or  perhaps the wrong type of politics,because the difference between the two parties (as in the UK) are relatively trivial when you have a $14,400 billion debt to repay. For example, the 2011-2012  budget debates have started in earnest, but from what I can gather the difference between Democrat and Republican spending plans is $200 billion; i.e. Democrats  (more accurately Obama) want $200 billion more, Republicans $200 billion less. $200 billion is a colossal amount to me and to the reader, but note - the US is borrowing $150 billion a MONTH adding to that already high overall figure previously mentioned-so $200 billion in this context is  little ink blot  in the sea of red  which is the US government debt.

One final thought on this- even if the debt ceiling is increased , there will be a time when the bond market will simply not be able to buy the vast amounts of bonds which are being used to fund the US government or becomes convinced that there is simply no way that the US will ever, ever pay back what it has borrowed, because of the refusal of the political elite to grasp economic fundamentals- a failure to  understand that even an economy as vast as the US cannot borrow $ + 1,000 billion a year forever. This hasn't been a problem so far because of the QE programme, but even that will not and can not be sustained for much longer.