If The Us Defaults On Its Debt Next Month...

[up-country_sinclair]

Just looking for opinions on the question posed in the thread title.

Additionally, do you think it will be a long term effect or is it likely to revert back to ~30 once the debt ceiling is eventually increased?

Thanks.

[meom]

What makes you think they will default?

If need be they have enough income to service the debt so it's mostly a lot of political talk about nothing.

And if income ain't enough they can always sell off things like Government assets such as land, buildings and what have you.

The strategic petroleum reserve alone is worth about a trillion dollars.

Gold is another thing. Not sure how much they have but believe it's something like 300 billion worth.

All in all I don't think they will default.

If they do I owe you a beer

[midas]

What makes you think they will default?

If need be they have enough income to service the debt so it's mostly a lot of political talk about nothing.

And if income ain't enough they can always sell off things like Government assets such as land, buildings and what have you.

The strategic petroleum reserve alone is worth about a trillion dollars.

Gold is another thing. Not sure how much they have but believe it's something like 300 billion worth.

All in all I don't think they will default.

If they do I owe you a beer

In fact today Sen. Mitch McConnell on behalf of the Republicans offered to give full powers to the White House to increase the debt ceiling without the involvement of Congress so for the Democrats it's party time

[aussiebebe]

I'm no expert, but don't think that the US can default on it's debt. I think they hit the limit in May but not agreeing to raise the debt limit by August isn't the same thing as defaulting on debt. There is talk of citing the 14th Amendment but historically Congress have always approved raising the limit whenever asked, I think over 70 times....

What's interesting is how US debt doubled during the financial crisis - that's unprecedented. However the US holds no foreign currency demoninated debt so can just print more money.

[Pib]

The U.S. won't default; this is all a political circus in Washington D.C. right now with most of the Democrat and Republican clowns having painted themselves into a corner with all their political rhetoric...and they are looking for a way out of the corner without upsetting their political base too much. It appears that all the political clowns are now getting serious heat from businesses, common folks, millionaires, etc., about pushing this circus to close to the cliff and they better come up with a comprise ASAP! Personally, I think the Republicans will come out of this the most beat up.

[NovaBlue05]

If they did, them everyone else would follow the lead and we would all start over!

[kennalder]

I'm no expert, but don't think that the US can default on it's debt. I think they hit the limit in May but not agreeing to raise the debt limit by August isn't the same thing as defaulting on debt. There is talk of citing the 14th Amendment but historically Congress have always approved raising the limit whenever asked, I think over 70 times....

What's interesting is how US debt doubled during the financial crisis - that's unprecedented. However the US holds no foreign currency demoninated debt so can just print more money.

I would call that a thinly disguised form of default.

And back to the OP's question. If the US continues to print, the dollar will continue down vs any currency that does not devalue.

Edited July 13, 2011 by kennalder

[cloudhopper]

Any sovereign state that prints its own legal tender (unlike Italy or California) at will can never default. These entities do not, in reality, need tax receipts or borrowed money to function. The bond market merely provides Ponzi-like cover for money creation, and taxes, along with their opposite subsidies, are used only to promote and deter activities as desired by the state. The rest is theater.

[BEENTHEREDONETHAT]

I don't know what will happen but Obsama said today that social security checks may not go out if US defaults. That will have interesting effects on many people who count on SS. The first checks that should be stopped are for congress and Obama as they are obviously doing a lousy job and don't deserve to be paiduntil they get it right.

[Pib]

The great majority of folks in Congress and President Obama wouldn't be affected if their paychecks didn't arrive because they are already pretty well off money-wise...I doubt any of them would change their shopping habits or miss a mortgage payment, but they would do the political rhetoric and make it sound like they too would suffer from the missed paycheck. Poor, poor politicians. Politicians are like diapers and need to be changed frequently because they are full of sh&*.

[cloudhopper]

Where's that popcorn-eating emoticon?

http://www.zerohedge.com/article/petulant-teleprompter-obama-walks-out-negotiations

[Sateev]

First, the whole debate is about the wrong thing. It's not about the deficit; it's about jobs.

As long as the debt/GDP ratio is as high as it is, the US economy will go nowhere. Those who decry printing money don't understand the whole picture. There are TWO ways out of this, namely, create jobs, and boost the GDP (lowering the ratio via the denominator), OR cut the deficit (lowering the ratio via the numerator). If the debt/GDP ratio is low, say around 50% (compared to 80+% now), the economy can withstand, and in fact will NEED, more money.

All this posturing about raising the debt ceiling is just a gigantic game of chicken, with collateral damage off the charts. It's reprehensible, and, the Republicans (Mitch McConnell said so yesterday) are only using this 'crisis' to maneuver the Democrats (Obama) into a losing position in the 2012 elections. They are willing to hold everybody, including global markets, hostage to meet their stated goal: defeat Obama.

The President, inexplicably, has played into their hands, giving territory that was not even challenged. The 14th Amendment ploy will not be used, because if done, the Republicans can point solely at the Democrats as responsible for increasing the debt, while they obstruct all efforts to effect meaningful reform. I believe that's also why the White House is already on record saying that McConnell's offer to give the President carte blanche "is not the preferred option".

Maybe the President is taking a page from the Muhammad Ali playbook, doing the rope-a-dope, while everybody gets tired of the Republicans' obstructionism. But also, maybe, it's too much to hope for...

[cloudhopper]

All this posturing about raising the debt ceiling is just a gigantic game of chicken, with collateral damage off the charts.

[flying]

As others have said it is all a show.

Of course the debt ceiling will again be raised.

Someone like the US will never default as they can print/digitize as long as

the faith of those running to the so called safe haven of the USD continue to do so.

But.....The US is in fact bankrupt. They have as someone pointed out been operating on fumes for awhile now.

Stealing from Fed workers pensions to fuel their needs.

They make a mockery of this whole situation by having folks like Zobama & Bernanke make claims

such as the reason they need to agree to raise it is the money has been spent. Zobama

said they bought the car & drove it & now need to pay for it.

Yet raising the ceiling does nothing for paying for what they have in fact already spent.

All it does is let them continue to spend more of what they do not have.

Think of it this way..... Someone can not pay their bills...They in fact cannot barely pay the interest on their bills....Would it be prudent to give them a higher spending limit to spend even more of what they cannot pay back?

It is a joke & they use it as others said basically for political theater. They will also use it to start yet another QE-3-4-5 or TARP what ever they choose to call it this time. Maybe QE3 Light?

Result is the same they are bankrupt & sinking but trying for a controlled descent. The Euro turmoil will help them briefly as folks run yet again to what they perceive as the strongest of the fiats singing all the while....don't turn the lights on I don't want to see

Edited July 14, 2011 by flying

[Sateev]

As others have said it is all a show.

Of course the debt ceiling will again be raised.

Someone like the US will never default as they can print/digitize as long as

the faith of those running to the so called safe haven of the USD continue to do so.

But.....The US is in fact bankrupt. They have as someone pointed out been operating on fumes for awhile now.

Stealing from Fed workers pensions to fuel their needs.

They make a mockery of this whole situation by having folks like Zobama & Bernanke make claims

such as the reason they need to agree to raise it is the money has been spent. Zobama

said they bought the car & drove it & now need to pay for it.

Yet raising the ceiling does nothing for paying for what they have in fact already spent.

All it does is let them continue to spend more of what they do not have.

Think of it this way..... Someone can not pay their bills...They in fact cannot barely pay the interest on their bills....Would it be prudent to give them a higher spending limit to spend even more of what they cannot pay back?

It is a joke & they use it as others said basically for political theater. They will also use it to start yet another QE-3-4-5 or TARP what ever they choose to call it this time. Maybe QE3 Light?

Result is the same they are bankrupt & sinking but trying for a controlled descent. The Euro turmoil will help them briefly as folks run yet again to what they perceive as the strongest of the fiats singing all the while....don't turn the lights on I don't want to see

I don't know if you are a US citizen, but our President's name is Obama, not Zobama. I note that mods on this forum regularly correct the spelling of Thaksin Shinawatra's name; please accord the same courtesy to the President of the United States of America. Snide and snickering slurs don't help make your arguments; rather they belie an insecurity, and the need for approbation from like-minded nitwits.

That said, Mr. Obama inherited a mess, and, unfortunately, hasn't yet done much to fix it. This is certainly by Republican/Tea Party extremist design. That he has played into their hands somewhat is regrettable, but it is NOT unprecedented. An FDR-like move to return the economy to productivity would go a long way toward mitigating the existing debt, as would modest adjustments to the tax code. People who have benefited tremendously from the system, owe it some commensurate support. Period.

Look at it this way: being in debt to the tune of a few trillion dollars, for the US in its current state, is like someone working at McDonald's being in debt on a house, car and plasma TVs. Someone, fully employed, or in a successful business might hardly feel the outlay of interest every month. And they might even take on more debt to finance their continuing education, or the expansion of their business - the goal being to be even more productive and/or marketable.

So, what I need to hear, and what has yet to come from the President, is how he plans to get America back to productivity - making things, providing real services, and not just acting as middlemen, taking a cut from both directions (Wall Street). Show me a plan, and then the (deficit) money is yours...

edit: corrected Shinawatra

Edited July 14, 2011 by Sateev

[cloudhopper]

So, what I need to hear, and what has yet to come from the President, is how he plans to get America back to productivity - making things, providing real services, and not just acting as middlemen, taking a cut from both directions (Wall Street). Show me a plan, and then the (deficit) money is yours...

Unfortunately not even the president and his sycophants greatest advisors cannot alter mathematical and physical reality.

See also - http://www.wardsbookofdays.com/12november.htm

[flying]

I don't know if you are a US citizen, but our President's name is Obama, not Zobama.

That said, Mr. Obama inherited a mess, and, unfortunately,

Yes American living in America not Thailand...As such I am free to call him anything I like.

You remember the rights of Americans dont you? Respect is earned not gifted due to title.

What he inherited is a job through $$$$ donated by the same too big too fail folks he later bailed.

The sooner he is gone the better.

Not to say the nitwit before him was any better. The so called system has been beautifully broken long ago.

As for the need for approbation from like-minded nitwits as you put it....That is more like those waiting 3 years to "hear" what they need from a hollow shell that can not deliver any of his campaign lies promises. Yes blame it on what he inherited or how he played into others hands...yet for three years there it is...proof for any thinking person to see.

Edited July 14, 2011 by flying

[a99az]

What makes you think they will default?

If need be they have enough income to service the debt so it's mostly a lot of political talk about nothing.

And if income ain't enough they can always sell off things like Government assets such as land, buildings and what have you.

The strategic petroleum reserve alone is worth about a trillion dollars.

Gold is another thing. Not sure how much they have but believe it's something like 300 billion worth.

All in all I don't think they will default.

If they do I owe you a beer

Very funny post, the US has been going into debt for many years and could not settle it's debt or interest today if it wanted too, the rest of the world knows that, but the fed reserve keep lending the US government more and more money (debt). As for gold, are you joking, how much do you think you would need? The US only keeps going because the rest of the world would collapse with the US if it called in the debt.

[midas]

I don't know if you are a US citizen, but our President's name is Obama, not Zobama.

That said, Mr. Obama inherited a mess, and, unfortunately,

Yes American living in America not Thailand...As such I am free to call him anything I like.

You remember the rights of Americans dont you? Respect is earned not gifted due to title.

What he inherited is a job through $$$$ donated by the same too big too fail folks he later bailed.

The sooner he is gone the better.

Not to say the nitwit before him was any better. The so called system has been beautifully broken long ago.

As for the need for approbation from like-minded nitwits as you put it....That is more like those waiting 3 years to "hear" what they need from a hollow shell that can not deliver any of his campaign lies promises. Yes blame it on what he inherited or how he played into others hands...yet for three years there it is...proof for any thinking person to see.

people have called him much worse than Zobama

Billionaire Steve Wynn Calls Obama A Political Liar

http://politicalvelcraft.org/2011/04/22/billionaire-steve-wynn-politely-calls-obama-a-liar-and-the-destroyer-of-the-working-middle-class-cavuto-agrees/

[cloudhopper]

people have called him much worse than Zobama

Billionaire Steve Wynn Calls Obama A Political Liar

http://politicalvelc...-cavuto-agrees/

I'll see your billionaire and raise you one US congressman (re-posted from gold thread)

[midas]

people have called him much worse than Zobama

Billionaire Steve Wynn Calls Obama A Political Liar

http://politicalvelc...-cavuto-agrees/

I'll see your billionaire and raise you one US congressman (re-posted from gold thread)

Ok i will see your US congressman and raise you Obama himself ( this is a great ad ! )

[cloudhopper]

Well played Midas (emoticon for folding like fan)

[55Jay]

Hey, foul! Elected officials are denegrating the US Navy! The old time statement of "Spending money like a druken sailor" is getting too fashionable again in this argument.

Drunken sailors, excluding the hip wader wearing Coast Guard, stimulates the economy.

They drink beer, which stimulates the whole range of industry from production, glass bottles and labels, trucks for shipping product, and creates neat bars to hang out in which provides jobs to the local community, and at each stage, taxes are paid to the government. In turn, they get drunk and fight each other, or Marines, and break all sort of things which stimulates industry by creating a demand for replacement glasses, furniture, windows, wall patching, etc. Shore Patrol comes and scrapes them up off the floor, at no extra charge as the Sailors are doing SP as an extra duty, thus no additional municipal services are used - yet local and state govs get the increased revenue from the additional tax base created along the way, thus reducing in some measure, their reliance of federal assistance to the state.

The sailors (and Marines) get busted down in rank and pay, which reduces the DOD labor $ demand but still, has no real impact on the aforementioned paragraph. It's a beee-u-ti-ful thing!

So, I see your billionaire and congressman, and raise you one Speaker of the House.....and at least one drunken sailor.

Edit: I forgot to mention the recycling business too. All those bottles and aluminum cans! Therein, side benefit is drunken sailors also helps save the planet.

Edited July 14, 2011 by 55Jay

[NovaBlue05]

I don't know what will happen but Obsama said today that social security checks may not go out if US defaults. That will have interesting effects on many people who count on SS. The first checks that should be stopped are for congress and Obama as they are obviously doing a lousy job and don't deserve to be paiduntil they get it right.

What Barama didn't say was that it would be up to him whether the SS checks went out in the event a deal isn't reached. The money will be there however, he may choose to use it for other obligations....like his ongoing liberation of Libya

[Sateev]

I don't know if you are a US citizen, but our President's name is Obama, not Zobama.

That said, Mr. Obama inherited a mess, and, unfortunately,

Yes American living in America not Thailand...As such I am free to call him anything I like.

You remember the rights of Americans dont you? Respect is earned not gifted due to title.

What he inherited is a job through $ donated by the same too big too fail folks he later bailed.

The sooner he is gone the better.

Not to say the nitwit before him was any better. The so called system has been beautifully broken long ago.

As for the need for approbation from like-minded nitwits as you put it....That is more like those waiting 3 years to "hear" what they need from a hollow shell that can not deliver any of his campaign lies promises. Yes blame it on what he inherited or how he played into others hands...yet for three years there it is...proof for any thinking person to see.

Strangely, I don't totally disagree with your assessment of his performance, and I also understand you have the right to say whatever you want about him, and the right to call him names, or make slurs about his origins, etc. However, it just puts you in the same category as the other wingnuts and assorted losers who act like kindergarteners, calling names, and saying, na,n,na,n,na,na.. Grow up, and maybe someone of substance will pay attention to you. I still think the holder of the office of the President of the USA deserves some respect. Ask yourself this: would you say those things directly to his face? You wouldn't to mine, and be able to walk away...

So many 'keyboard warriors', sh*t oh dear!

[tigerbalm]

I do hope the American Money men know what they are doing for the sake of the American people, does raising the dept mean the 14 Trillion of dept at the moment(if this is the correct figure)is going to be added to, one trillion dollars looks quite a bit, this link puts it in to perspective, http://www.globalresearch.ca/index.php?context=va&aid=12754

mind boggling to think The USA has 14 times that.

I have a question to those more in tune with the mechanics of this dept scenario, and that is, if i assume correctly that the Fed Loans the government the money, where does the fed get it from in the first place,and does the government have to pay it back to the Fed with interest.

TB

[55Jay]

I don't know if you are a US citizen, but our President's name is Obama, not Zobama.

That said, Mr. Obama inherited a mess, and, unfortunately,

Yes American living in America not Thailand...As such I am free to call him anything I like.

You remember the rights of Americans dont you? Respect is earned not gifted due to title.

What he inherited is a job through $ donated by the same too big too fail folks he later bailed.

The sooner he is gone the better.

Not to say the nitwit before him was any better. The so called system has been beautifully broken long ago.

As for the need for approbation from like-minded nitwits as you put it....That is more like those waiting 3 years to "hear" what they need from a hollow shell that can not deliver any of his campaign lies promises. Yes blame it on what he inherited or how he played into others hands...yet for three years there it is...proof for any thinking person to see.

Strangely, I don't totally disagree with your assessment of his performance, and I also understand you have the right to say whatever you want about him, and the right to call him names, or make slurs about his origins, etc. However, it just puts you in the same category as the other wingnuts and assorted losers who act like kindergarteners, calling names, and saying, na,n,na,n,na,na.. Grow up, and maybe someone of substance will pay attention to you. I still think the holder of the office of the President of the USA deserves some respect. Ask yourself this: would you say those things directly to his face? You wouldn't to mine, and be able to walk away...

So many 'keyboard warriors', sh*t oh dear!

Here here! I also don't like the playground level stuff on here........ but if you call me names to my face, I'm gunna beat you up!

[manarak]

I do hope the American Money men know what they are doing for the sake of the American people, does raising the dept mean the 14 Trillion of dept at the moment(if this is the correct figure)is going to be added to, one trillion dollars looks quite a bit, this link puts it in to perspective, http://www.globalresearch.ca/index.php?context=va&aid=12754

mind boggling to think The USA has 14 times that.

I have a question to those more in tune with the mechanics of this dept scenario, and that is, if i assume correctly that the Fed Loans the government the money, where does the fed get it from in the first place,and does the government have to pay it back to the Fed with interest.

TB

The "money men" can't do anything.

They don't raise the debt and are incapable of lowering it.

They can only sit and watch in horror as the debt raises by itself.

The great market crash was a godsend, because it destroyed so many dollars, thus slowing inflation.

There is NO WAY at all for the US to get out of its debt other than a gradual depreciation of the USD.

Either that (soft landing) or a default (hard landing) - default is very improbable, because it would mean the world would stop to accept USD as a means of payment.

[midas]

I still think the holder of the office of the President of the USA deserves some respect.

Doesn't the Constitution of the US similarly deserve some respect?

[JimGant]

The debt ceiling will have to rise. A complete 'no brainer,' as short term obligations, which tax receipts will only cover by 60% or so, will need to be met with borrowing. To tie together, as the radical element of the Republicans demand, short term obligations with long term deficit reduction is ludicrous -- the time lines are completely out of synch. Yet, the majority of voters are against raising the ceiling. Makes one reflect back 230 years -- when voters had to be 'educated' (i.e., white, male, land owners only could vote -- Bangkok elite probably have latched onto this....). Democracy can really make you want to cry....

Yes, the deficits need to be addressed. Simpson-Bowles, or something akin, will have to be incorporated -- once the economy is off life support. Obama has already addressed going after entitlements -- to the shrieking of that bich Pelosi. But Simpson-Bowles is long term, to include its recommendations for tax overhaul that would add revenue (shrieking he-bich Cantor, at this juncture). As these deficit reduction elements are folded in, we can get down to an acceptable ratio of GDP to national debt. But, again, the time lines of deficit reduction and raising the debt ceiling are on two different planets.

The Republicans' glee that, not raising the debt ceiling will force the US to fix its deficit problems, is simplistic. First, even if the economy was in top notch shape, abruptly terminating programs -- and employment -- would in itself be counterproductive. But, now, when the economy is still on life support, short term cuts in government spending would definitely send us back into Great Recession Two. Fortunately, unlike Greece, and others, the US still has the option to prime the pump. But, unfortunately, we're stuck with a new breed of Republican -- who's rejected (although, most likely, never studied) Keynesian theory, no doubt too involved with trying to kill the teaching of evolution -- a la Michelle Bachmann.

Yes, for sure we have to address -- and fix thru some hard choices -- the deficit problem. But, this can wait 'til the economy has recovered.

However, near term, the deficit ceiling has to be raised, so it will be. I just hope this brinksmanship hasn't raised the cost of servicing this debt by at least 25 basis points, as I've seen mentioned in several reports. Thus, putting us already further behind the power curve in solving our deficit problem. I can't believe I voted Republican for so many years... Certainly, we live in different times.