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Debt Ceiling - The one that has "limits"

It has been more than a week since US Treasury Sectary Announced that the country is most likely to default on its obligation by 1st June. But this might only be limited to a techno default and result in a rating downgrade similar to 2011.

The main problem is that if the debt limit is not raised, then it is estimated that the US Treasury will run out of cash to support the payments. This date as per some estimates is mid or late July. That is why it becomes a bigger risk for global financial stability than anticipated.

Another impact will be on the defence spending that has been allocated $857.9 Bn that includes the aid given to Ukraine. This also might be the reason why Ukraine's President has been travelling Europe and Germany giving one of the biggest aid to Ukraine.

As of now the discussion relating to the debt limit has seen similar trends in 2011. The Republicans demanded cuts before passing the bill and the administration wanted to pass it without any cuts.

Though US treasury is due to provide an update on the extract default deadline next week. A deadline of passing the bill this week looks unlikely as per the Republican leader. The solution as previously seen can be a short-term limit rise while the discussion goes on.


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