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On Saturday in his weekly address, President Obama warned of a 'dangerous game' ahead if Congress resists raising the debt ceiling. US debt has hit the current limit – $16.4 trillion.

President Obama said Saturday that he's willing to compromise with Republicans on taxes and spending cuts in coming months, but will not budge on honoring America's obligations as the national debt this week topped $16.4 trillion – the congressionally set "debt ceiling."

"I will not compromise over ... whether or not Congress should pay the tab for a bill they’ve already racked up," Mr. Obama said in his taped weekly address, his first of the new year. "If Congress refuses to give the United States the ability to pay its bills on time, the consequences for the entire global economy could be catastrophic. The last time Congress threatened this course of action, our entire economy suffered for it. Our families and our businesses cannot afford that dangerous game again."

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My Comment: So typical of Washington today .... the perpetual crisis. But what irks me the most is how much everyone is in denial with the situation .... that taxing, borrowing, and printing more money is going the solve the problem of government spending .... when in reality all that government does when it gets more money is to spend it and leave the debt crisis for another generation.

For anyone who is interested .... the best explanation that I have ever read that explains America's debt crisis is here.

Update: As to what is my prediction on the upcoming debate to raise the debt ceiling .... the Republican leadership have signaled that they are going to fight .... but I have seen zero evidence from this leadership that they have ever kept their promises on reining in spending. As far as I am concerned .... this is all Kabuki theater .... and in the meantime institutions like the Pentagon and those who are dependent on government for assistance are going to be put at the edge again .... even though I know that the debt ceiling is going to be raised again, and false promises of cutting the budget will be announced by everyone involved.

(Reuters) - With only a week left before a deadline for the United States to go over a "fiscal cliff," lawmakers played a waiting game on Monday in the hope that someone will produce a plan to avoid harsh budget cuts and higher taxes for most Americans from New Year's Day.

Though Republicans and Democrats have spent the better part of a year describing a plunge off the cliff as a looming catastrophe, the nation's capital showed no outward signs of worry, let alone impending calamity.

The White House has set up shop in Hawaii, where President Barack Obama is vacationing.

The Capitol was deserted and the Treasury Department - which would have to do a lot of last-minute number-crunching with or without a deal - was closed.

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My Comment: If there is a time for Presidential leadership and the ability to make different parties agree to a deal .... this is it. But Ed Rogers (Washington Post) is probably right .... it is not going to happen with this President.

What do I expect .... a short term solution that will buy some time .... followed by the same policies and actions that got us into this mess in the first place. But in the event that the U.S. does go off the cliff .... expect short term financial chaos, massive cuts in the Pentagon, higher taxes, and a President who will then rush in and propose a plan that everyone will quickly agree to .... but .... it will again be the same policies and actions that got us into this mess in the first place.

My Comment: Here is an easy prediction .... this story will be dominating the headlines in the U.S. for the next week (or two). And for our kids .... they will be living with this story for the rest of their lives.

Chuck Hagel once seemed a widely respected former GOP senator and emerging thought leader on defense and national security issues who would cruise through the confirmation process if tapped for a Cabinet post. That’s no longer the case, and some senators say the Obama White House is dropping the ball.

When Susan Rice withdrew from consideration to be secretary of state on Dec. 13, the conventional wisdom in Washington political and national security circles was the move would pave the way for Hagel to become defense secretary. Insiders were nearly certain late that Rice’s exit would clear the way for Sen. John Kerry, D-Mass., to be tapped as the next secretary of state. That would take the Senate Foreign Relations Committee chairman out of the defense secretary race and open the door for Hagel to join President Obama’s Cabinet.

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My Comment: The vetting process is always difficult .... and politics is always involved .... having said that .... I do not see any differences with how this administration is approaching the appointment of people to key positions to how past administrations appointed their key personnel..

PENTAGON — The part of the U.S. government set to be hurt the most if U.S. lawmakers and the White House don't reach a budget deal is the Defense Department, which is set to take about half the budget cuts. Discussions have been going on at the Pentagon on where the U.S. military will have to make nearly 10 percent reductions totaling $500 billion in the next decade.

The cuts are set to be massive, $50 billion a year for 10 years, and so are the consequences.

That's the warning from officials including the nation's top military officer, General Martin Dempsey.

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My Comment: If sequestration hits .... it would make the 2013 defense bill moot. And the consequences .... hard to imagine. But at this moment the only thing that is going through my mind is that while I do understand the political reasons on why the Democrats agreed to sequestration last year .... what I do not understand is why did the Republicans agreed to it also .... why did they believe that the Democrats would not put them in the position that they find themselves in today. In short .... what the hell were they thinking?