Countdown to Extinction, Part 1: Wanna See How Screwed the US's Finances Really Are?

It's hard to imagine how the the biggest economy in the world--and since time immemorial what we Filipinos have considered as the land of promise and endless opportunity--would find itself facing a very real and imminent financial shit fest (for lack of a more suitable term, please pardon my French). For those who don't know yet, the US is broke: broke, not figuratively but for real, broke as in it does not have enough money to pay for stuff it needs. Yes, broke broke. Wait, let me correct that, I'm getting ahead of myself: at least according to Slate, the US will officially run out of money on August 3 (that's one, two... seven days from today, US time), that is unless the US Congress gets its act together by August 2, but that's a story for another post (the last post of July, to be exact). For now, let's just see how screwed up the US financial situation really is with these graphs from the same article from Slate.

First, the state of the US's cash reserves, which shows how money could dry up by August 3.

And finally, a look at the US's debt position, which illustrates a Catch-22-like situation: the US is running out of money to pay its bills and debt obligations, so it needs to borrow more, but the more it borrows, the more money it needs to pay it's existing and new creditors.

All this makes the next few days both scary and exciting for investors like you and I as all eyes are on how the US Congress will handle the situation. And while now is not the time to panic, it is definitely time to act. What we all can do is hedge our bets by cashing in our paper gains now and build up an ample hoard of cash that we can use to take advantage of a buying opportunity if the shit does hit the fan next week.

UPDATE: 7/29/2011, 4:30 PM

Something that will help us better understand how it came to this.

An additional US$ 4.3 trillion in two years brings us up to speed.