What, you mean we should stop buying $3 billion computer systems that don't work? (http://www.extremetech.com/extreme/89048-us-army-spent-2-7-billion-on-a-battlefield-computer-that-doesnt-work) That's crazy talk!
Seriously though, it's not necessarily a lie. If a bond issue comes due and there's no new issue, then when it's due you need to have the cash on hand to pay it out. It's not just a matter of matching revenue and expenses (though that really needs doing). But if there's no large payment due immediately and it's just day to day expenses, then yes they could immediately shut some things down and avoid a default. It really depends on how the debt is structured at the time the borrowing taps get cut off.
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Date: 5/7/11 18:46 (UTC)Seriously though, it's not necessarily a lie. If a bond issue comes due and there's no new issue, then when it's due you need to have the cash on hand to pay it out. It's not just a matter of matching revenue and expenses (though that really needs doing). But if there's no large payment due immediately and it's just day to day expenses, then yes they could immediately shut some things down and avoid a default. It really depends on how the debt is structured at the time the borrowing taps get cut off.