WASHINGTON, DC--The United States government has declared bankruptcy and entered Chapter 11 bankruptcy protection from its creditors.
"We had no other choice," explained President George W. Bush at a hushed White House news conference. "The demands of our foreign creditors were getting just too immense. Japan and China and other countries have been cashing in our government treasury bonds, and they are insisting on higher interest rates if they are to continue to buy our debt. So with deep regret, the US government has been forced to take this drastic action."
Observers note that the net US government debt has continued to grow and recently exceeded an unsupportable level of $7,796,608,905,813.86, or nearly $8 trillion dollars, with much of it owed to international lenders. The US has been living beyond its means, and cannot even pay the interest on its debt without issuing new debt. The growing US budget, trade and current account deficits continue to cause worries and this has led to lenders ending their purchases of new debt. Many are also worried about the prospects for the energy-intensive US economy as oil and other energy prices remain high.
There is also the debt of US corporations, consumers, agencies, and other levels of government which raises the debt total much higher. This aggregate debt is around $50 trillion dollars, much of it owed to foreigners too. A number of consultants have also determined that the government of the USA has additional unfunded liabilities over the next several years of over $50 trillion, including pension, Medicare and other social service obligations.
"We've been living beyond our means," admitted Vice President Dick Cheney. "Our attempt to grab the assets of foreign governments like Iraqi oil fields to serve as collateral for our growing debt just hasn't been going so well, too."
In order to maintain a working government, the Bush Administration is undertaking a sale of certain government assets in order to pay the wages of everyday government workers, and other costs. A number of prime real estate properties have been put on the market, and defense department and other government assets are being auctioned off at international auctioneers such as Sotheby's, Sotheby's International Realty, and by others like eBay.
"We shall prevail, however," Bush assured the assembled reporters, many of whom were from foreign news services. "We'll get our finances balanced one way or another, even if it causes some short term pain."
Administration officials have reportedly been irritated at being pestered by foreign collection agencies for the last several months, many of which have been looking over US government assets and accounts for possible seizure.
The US dollar fell against other currencies after the earth-shaking declaration at the White House. All new government debt issuances have been ended, and the value of existing bonds is falling.
"It is highly irregular for the US government to be seeking bankruptcy protection from international and domestic creditors under a domestic US law like Chapter 11," commented Felix Minderbinder, an analyst with Credit Suisse First Boston.