Alan Greenspan does not believe the debt ceiling talk will be resolved by Aug 2. Interesting, very interesting...
From an interview with CNBC on Jun 30, 2011:
"GREENSPAN: WE'RE GOING TO GET UP TO AUGUST THE 2nd AND I THINK ON THAT NIGHT, WE ARE NOT GOING HAVE THE ISSUE SOLVED. WHAT THAT WILL MEAN IS THAT, REMEMBER WHAT THE DEBT CEILING IS ITS NOT LIKE A CR CONTINUED RESOLUTION WHERE THE TREASURY SECRETARY CAN STRETCH IT OUT. THIS MEANS THAT AT MIDNIGHT, ALL OF A SUDDEN 40 CENTS OUT OF EVERY DOLLAR OF SPENDING CANNOT BE SPENT. THE QUESTION IS, WHO MAKES THE DECISION? THERE IS NO CONCEIVABLE POSSIBILITY THAT I CAN EVEN COME CLOSE TO THAT SUGGESTS TO ME THAT ANY SECRETARY OF THE TREASURY WILL NOT HAVE AS FIRST PRIORITY, AND HE WILL CONVINCE THE PRESIDENT AS WELL ON THE DEBT OF THE UNITED STATES IN INTEREST PAYMENTS, WHICH IS REALLY WHAT IT IS. WERE WE TO DEFAULT ON INTEREST RATES, IT WOULD BE RICOCHETING THROUGH THE INTERNATIONAL FINANCIAL SYSTEM AND OUR AAA CREDIT STANDING AND FAR MORE IMPORTANTLY, OUR VIEW AS THE SAVER OF LAST RESORT WOULD DISAPPEAR. WE CAN'T AFFORD TO DO THAT. WHAT'S GOING TO THEREFORE HAPPEN IS WE WILL DEFAULT ON EVERYTHING ELSE.FIRST, THERE WILL BE A HUGE AMOUNT OF ARREARS, WHICH YOU CAN TAKE FOR A NUMBER OF DAYS BEFORE A LEGAL DEFAULT TAKES INTO PLACE. BUT WE HAVE A VERY LARGE PART OF OUR DEFICIT WHICH WILL, BY ANY USE OF THE TERM, IS IN DEFAULT. AT THAT POINT, I THINK WE'LL ALL COME TO OUR SENSES AND RESOLVE THE ISSUE. I THINK THAT WE MAY FIND THAT, DEPENDING ON HOW THE SCENARIO WORKS OUT, THAT AS SCARY AS THE EXERCISE HAS BEEN, IT MAY, IN THE LONG RUN, HAVE ACTUALLY HELPED THE UNITED STATES. THAT'S A VERY TRICKY GAME TO PLAY."