FEDERAL DEBT CEILING TO BE HIT IF IT ISN'T RAISED

From USA Today:

Treasury Secretary Henry Paulson told Congress on Wednesday that the federal government will hit the current debt ceiling on Oct. 1.

He urged quick action to increase the limit, saying it was essential to protect the "full faith and credit" of the country, especially at a time of financial market turmoil.

The current debt limit is $8.965 trillion. Unless Congress votes to raise that ceiling, the country would be unable to borrow more money to keep the government operating and to pay debt obligations coming due. The United States has never defaulted on a debt payment but the decision on whether to raise the debt ceiling often sparks a prolonged political battle in Congress.

The Senate Finance Committee earlier this month approved increasing the limit on the national debt to $9.82 trillion. That boost of $850 billion would be the fifth increase in the government's borrowing limit since President Bush took office in 2001.

SENATOR CLINTON EXPRESSES CONCERN ABOUT FOREIGN-OWNED U.S. DEBT

Senator Hillary Clinton expressed concern about the "economic vulnerabilities" posed by foreign interests owning large amounts of U.S. debt. On the Senate floor, and in letters to Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson, Senator Clinton said that President Bush's economic policies have contributed to an "erosion of U.S. economic sovereignty" and added that it is "undeniable that the exponential growth of foreign debt in the last six years has undermined our economic standing."

From The Wall Street Journal:

Currently, the U.S. imports more goods than it exports from places like China, resulting in a trade deficit, and it borrows heavily from abroad to finance its domestic investment. Foreign interests own about $2.2 trillion of U.S. Treasury securities -- or about 52% of the public debt not held by the U.S. government, compared with about 20% in the early 1990s, during the Clinton administration. The U.S. has come to rely on foreign capital because Americans don't save enough to finance the nation's domestic investment.

...there is broad concern that the growing reliance on foreign investors puts the U.S. at risk, and some say the way to address it is to begin saving money at home by erasing the current $248 billion budget deficit, moving into a surplus and putting money aside to pay for costly obligations like Social Security and Medicare.

FORD RAISING $18 BILLION MORE DEBT, $15 BILLION SECURED

In an effort to raise capital to help finance a turnaround of its North American operations, Ford Motor Company will be taking on another $18 billion of debt, $15 billion of which will be secured by core automotive assets. Ford will be pledging nearly all of the company's North American automotive assets as collateral, marking the first time in its 103-year history that such a move has been made and underscoring the severity and seriousness of the problems Ford is facing. The announcement of the move caused the three main credit rating agencies to slash Ford's existing debt further into junk, or non-investment grade, status.

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