When did it become OK to play political Calvin ball with the faith and good credit of the United States of America?  Such are the hidden whispers that the debt ceiling will be used as yet another gun to the head of America, a hostage taking bargaining chip, in spite of the claims to the contrary.

The debt ceiling is a limit on how much the government can borrow to pay America's bills and Congress has the power to raise it so the United States can meet existing financial obligations.  The U.S. treasury borrows through bonds, known as treasuries or T-bills.  This is not new debt or more spending, it is simply a separate limit on how much debt, through bonds, the United States can issue in order to pay existing spending authorized by Congress and enacted into law previously.

Treasury Secretary Jack Lew has said all resources to avoid a default on U.S. debt obligations will be exhausting by October 17th and pleaded with Congress to raise the debt ceiling.  If it isn't raised by that time, the United States will start to default on her debt as the government will not be able to pay 32% of existing scheduled payments.  These payments include paychecks, social security checks, Medicare reimbursements and interest on the existing debt.  The U.S. Treasury issued a report on the economic consequences of not raising the debt ceiling.

A default would be unprecedented and has the potential to be catastrophic: credit markets could freeze, the value of the dollar could plummet, and U.S. interest rates could skyrocket, potentially resulting in a financial crisis and recession that could echo the events of 2008 or worse.

The Treasury report has precedent as America experiences a time loop from 2011.  Instead of moving forward, the United States is like a hamster on the wheel of political gamesmanship once again.  There are measurable economic consequences from 2011, where even the threat of not raising the debt ceiling hurt the United States economy.  An actual default is catastrophic.  Think Argentina, Russia in the 90's and any other sovereign nation which defaulted on their debt and you get the picture.

In the event of a default, the U.S. economy could be plunged into a recession worse than any seen since the Great Depression. The U.S. dollar and Treasury securities are at the center of the international finance system. In the catastrophic event that a debt limit impasse were to lead to a default on Treasury securities, financial markets could be shaken to their core as was seen in late 2008, which resulted in a recession worse than any seen since the Great Depression.

Treasury Secretary Jack Lew wrote an op-ed detailing even more horrors if the debt ceiling is not raised and unlike much which comes from this administration, Lew is not exaggerating.

If the United States cannot pay its bills in full and on time, each and every American will be affected, including seniors who rely on Social Security, veterans who depend on disability payments, children in need of food assistance, and doctors and hospitals who treat Medicare patients, among others.

The stock market, including investments in retirement accounts, could tumble, and it could become more expensive for Americans to buy a car, own a home and open a small business.

CEOs are now pleading with Congress through Obama to raise the debt ceiling while condemning Republicans in the house.

Goldman Sachs chief executive Lloyd Blankfein, while stressing that the business leaders who met with Obama represented diverse political views, implicitly criticized Republicans for using their opposition to the healthcare law as a weapon that could lead to a U.S. default.

"You can litigate these policy issues. You can re-litigate these policy issues in a political forum, but they shouldn't use the threat of causing the U.S. to fail on its ... obligations to repay on its debt as a cudgel," Blankfein said.

The Treasury makes millions of payments daily on everything from contractor invoices to interest on the debt to social security checks.  States and local governments will take the biggest hit on a default as the government slows payments on large programs like Medicaid.  Seniors would be devastated, but the biggest problem is U.S. treasuries are seen as a very safe asset and why they are purchased around the globe.  U.S. Treasury bonds, or T-bills are U.S. debt obligations and completely interwoven in global financial markets.  Not backing U.S. Treasury bonds by defaulting on the debt is the catastrophe Secretary Lew is referring to.  This doomsday scenario is very real and would make the financial crisis look like a walk in the park.  One would have a domino effect, economic contagion and the global economy would in essence collapse.

Treasuries are already trading at rates not seen since the financial crisis.

Money managers are getting out of Treasuries maturing closest to the debt-ceiling deadline and buying longer-maturity bills, yields indicate. One-month rates touched 0.19 percent today, matching a 45-month high reached in November 2012, while the rate on three-month bills traded at 0.02 percent. The inversion of the spread was the biggest since September 2008.

Credit-default swaps insuring against losses on U.S. Treasuries almost doubled this week as the deadline for raising the nation’s $16.7 trillion debt limit approaches.

Wall Street also thinks those Congressional crazies will do the unthinkable although obviously they are not so sure....yet.  Watch these credit default swaps soar as the deadline approaches further with no Congressional action.

With such a threat of economic Armageddon now fast approaching, of course not just Republicans are using this to harm further America's middle class, but team Obama is as well.  This is a common strategy to use a crisis, be it completely unnecessary and manufactured, to pass into law extremely damaging agendas for America.  People are so panicked and frozen with fear, they don't notice how the entire crisis was used as a smokescreen to take them to the economic cleaners.  That's what is going on, a resurrection of Obama's grand bargain, which is a set of agendas to really dig at middle America's pocketbook, including reducing social security benefits.  The last time we saw a manufactured crisis used to try to screw most of America economically was the fiscal cliff, so we have a pattern.  We get a huge brew ha-ha, with the threat of economic Armageddon and then a shafting of most Americans economically by claiming it was for the greater good.  This time Democrats were hip to the strategy and many on Capitol Hill are raising hell and saying no to any grand bargain.  This is one of the reasons Democrats are refusing to deal with the GOP on the great grandstand, for the hidden agenda is to reduce a host of programs which benefit seniors, the middle class and the poor.

There have been ways proposed to get around Congress not raising the debt ceiling, including minting a trillion dollar coin and using the 14th amendment which says the validity of the public debt authorized by law shall not be questioned.  The 14th amendment can be interpreted as Congress holding the debt ceiling hostage is in violation of the U.S. constitution, a threat to national sovereignty by invalidating the U.S. debt and therefore the debt ceiling itself is unconstitutional.  The entire idea of the administration going ahead and raising the debt ceiling themselves, justified by the 14th amendment has consittutional scholars raging, yet rumors are circulating the administration is considering doing just that.

Then there is Greece.  Remember Greece hiding their massive public debt through various bond manipulations and derivatives?  The United States could do the same thing, thus getting around the debt ceiling.  The Treasury can play bond games since the debt ceiling limit only applies to bonds at face value and not their worth in the market.  One can roll over the debt into different bonds with lower face values yet will actually raise much more money through their payout interest rates associated.  Dealbook explains the mechanics of such a scheme.

As with most manufactured crisis, there is the dust storm and then there is what is hidden beneath it.  We'll update this article with any new events but the latest is some sort of grand bargain will occur which rollis in the debt ceiling increase, re-opening the government with some sort of major reduction in middle class benefits and services so much of America relies on to survive.  No doubt additional extremely outrageous agendas will be packaged up and passed, justified by the claim America must avoid total economic annihilation.  The real crisis of all of this is how to stop Congress from taking America hostage.  That crisis has not even been acknowledged or addressed, never mind answered.