American default on the cards?

dusterd

Hi all.

I've been hearing a lot lately about the Americans going to default, or at least take it down to the wire, on their national debt.

Has anyone considered what impact this will have on us this side of the Atlantic, both as Irish and as European citizens and respective economies.

Would the repercussions of this, if they do indeed default, not drive a stake through the heart of our failing economy and the same with Portugal, Greece, Italy and Spain?

FISMA

dusterd wrote: »

Hi all.
I've been hearing a lot lately about the Americans going to default, or at least take it down to the wire, on their national debt.

N'ah. America is not going to default on her debt. It's just political posturing and grandstanding.

cavedave

The current intrade markets here seem to suggest the amrket expects the US to raise the debt ceiling

FISMA

N'ah. America is not going to default on her debt. It's just political posturing and grandstanding.

Postering and grandstanding lead to a technical default before in 1979 under Carter when failure to raise the debt ceiling lead to 120m of US debts not being paid (for a few weeks) and an increase of .6 of a percent in the interest rate charged to the US, which cost them billions.
http://www.telegraph.co.uk/finance/economics/8639896/The-last-time-the-US-defaulted-and-blamed-the-printer.html

andrew

Moved to US politics, since the whole debt ceiling thing is more of a political issue than an economic one (for the moment at least)

dusterd

But surely since they are seeking to raise the debt ceiling, they cannot pay the debt they owe.

Would it not also be true in saying that if the ceiling were raised even further, this would drive them even further into debt.

Would I be right in saying that the U.S.A. is broke.

andrew

dusterd wrote: »

But surely since they are seeking to raise the debt ceiling, they cannot pay the debt they owe.

Would it not also be true in saying that if the ceiling were raised even further, this would drive them even further into debt.

Would I be right in saying that the U.S.A. is broke.

The debt ceiling is just an arbitrary ceiling that the US government puts on the amount of debt which the US can owe. Without highering it they'll have to default on some debt, not because they can't afford to borrow more, but because of that arbitrary limit. A better metric of whether debt is sustainable or not is the debt to GDP ratio. As you can see from this graph, the current ratio is still below it's historical peak, and so isn't scarily excessive, and within america's ability to pay down.

While the document I linked is dated July 2010, it would appear that the graph only goes up to 2000 for some reason. Here's a link to a more up to date graph.

Elba101

dusterd wrote: »

But surely since they are seeking to raise the debt ceiling, they cannot pay the debt they owe.

Would it not also be true in saying that if the ceiling were raised even further, this would drive them even further into debt.

Would I be right in saying that the U.S.A. is broke.

I think it's more If they raise the debt ceiling they have more time reduce the defict, apparently by $4 trillion over the coming decade...

tara73

as I think as well they will raise their dept limit literally in the last second (prob. night from 1st to 2nd) I would like to know, as the op, what would be the possible impact scenarios for europe, if america doesn't raise their debt ceiling, would europe get stronger or would it be very negative for europe as well?

Mark200

Obama giving a Press Conference right now, saying Boehner has walked out of the debt talks with him. And that earlier today he couldn't get a phone call returned from Boehner.

Republicans should be ashamed of themselves. They were offered a fair deal. A deal that was leaning in their favour. A deal that would have seen Obama and senior Democrats feel serious heat from their base. And the Republicans refused to compromise an inch for the good of their country.

dusterd

News channel Russia Today seem to think a default is imminent.

http://rt.com/usa/news/default-week-us-plosser/

bradlente

https://www.youtube.com/watch?v=BCPk9MPrSmw

Will they just do this as a last resort anyway?

The only problem with that solution is the "list of spending cuts" that Obama may have to make.

Also agree that republican posturing on this topic is pathetic.Why am I not suprised?:rolleyes:

FISMA

dusterd wrote: »

News channel Russia Today seem to think a default is imminent.

http://rt.com/usa/news/default-week-us-plosser/

Buy rubles!

Jaafa

andrew wrote: »

The debt ceiling is just an arbitrary ceiling that the US government puts on the amount of debt which the US can owe. Without highering it they'll have to default on some debt, not because they can't afford to borrow more, but because of that arbitrary limit. A better metric of whether debt is sustainable or not is the debt to GDP ratio. As you can see from this graph, the current ratio is still below it's historical peak, and so isn't scarily excessive, and within america's ability to pay down.

While the document I linked is dated July 2010, it would appear that the graph only goes up to 2000 for some reason. Here's a link to a more up to date graph.

It must over or close to 100% at this stage no? Seeing as the last year shown there is 2009 and it looks close to 90% there.

FISMA

Mark200 wrote: »

Republicans should be ashamed of themselves. They were offered a fair deal. A deal that was leaning in their favour. A deal that would have seen Obama and senior Democrats feel serious heat from their base. And the Republicans refused to compromise an inch for the good of their country.

Yes, give the gov't more money and things will be fine.

Giving more money to politicians is like giving light beer to an alcoholic. You are not helping them. Rather, you are still enabling them.

Spending must be cut.

Unfortunately,: (1) no politician wants to cut their spending, (2) no-one wants their entitlement program touched, and (3) everyone wants more money, but no one can suggest from where this money should come.

Mark, this is a bipartisan problem and needs both sides to give up something.

It is not as if this problem blind sided the States, it has been a long time coming. Was it wise for Obama to spend much of his first year looking to spend more money on his Obamacare entitlement? Just wait until those entitlements are in full effect and demanding payment.

As for a fair deal, I cannot imagine why anyone would believe that raising the debt limit would do any good other than kicking the can down the road.

You're talking to a group of people that have heard the economic Armageddon prophecy too much. In the past three years, we have been told that we'd collapse if it wasn't for: bailouts, TARP, the stimulus, QE 1, QE2, and buying treasuries, TALF, EESA, and more. Now we're on QE2.5 they say and things don't look too rosy.

How many more times can you expect the people to buy the spend more/print more line?

It's time to stop spending. If not now, when?

Sticky_Fingers

FISMA wrote: »

Yes, give the gov't more money and things will be fine.

Giving more money to politicians is like giving light beer to an alcoholic. You are not helping them. Rather, you are still enabling them.

making an alco go cold turkey can kill them stone dead, the same can happen to an economy. The debt problem needs to be faced up to but this grandstanding BS the republicans are engaging in helps absolutely no one. Time needs to be bought and raising the debt ceiling has to occur to allow room for maneuver regarding the deficit.

Spending must be cut.

Agreed but taxes also need be raised, the only way out of this is to raise more cash, taking a hatchet to the budget will only get you so far.

Unfortunately,: (1) no politician wants to cut their spending, (2) no-one wants their entitlement program touched, and (3) everyone wants more money, but no one can suggest from where this money should come.

Taxes and cuts, kinda like the plan Obama is proposing and the republicans are fighting against.

Mark, this is a bipartisan problem and needs both sides to give up something.

Absolutely but the ones who are unwilling to compromise are the republicans not the White House.

It is not as if this problem blind sided the States, it has been a long time coming. Was it wise for Obama to spend much of his first year looking to spend more money on his Obamacare entitlement? Just wait until those entitlements are in full effect and demanding payment.

Was it wise to spend so much money, one school of thought was that it needed to be done to stimulate the economy to avoid an outright depression. As for social healthcare, you may have a point on the timing but it was now or never with regards getting it through, Obama realised that he may not have congressional support if he waited until the mid term elections and had to push ahead with it. As it stands its a messy fudge job that is not fit for purpose but it's the best deal he could come up with at the time.

As for a fair deal, I cannot imagine why anyone would believe that raising the debt limit would do any good other than kicking the can down the road.

It's only can kicking if the politicos stick their heads in the sand and refuse to do anything about the problem. It has to be tackled soon, everyone agrees that but now is definitely not the time for some apocalyptical showdown with the markets, the US won't come out if it very well and that's not in anybodies best interests be they Tea Party members or Democrats.

You're talking to a group of people that have heard the economic Armageddon prophecy too much. In the past three years, we have been told that we'd collapse if it wasn't for: bailouts, TARP, the stimulus, QE 1, QE2, and buying treasuries, TALF, EESA, and more. Now we're on QE2.5 they say and things don't look too rosy.

People may have bailout fatigue but that is no reason to dismiss the very serous situation the US is currently in. In this particular game they are playing for all the marbles, the whole lot is on the line, not the banking sector or the unemployment numbers. All that stuff is small beer when compared to the solvency of the largest economy in the world being questioned.

It's time to stop spending. If not now, when?

I agree with the sentiment but not the timescale, stop spending immediately and you risk the whole economy, the US needs to be weaned off the debt gradually, anything else is inviting economic disaster.

FISMA

I think the then White House Chief of Staff summed it up best when he said...

https://www.youtube.com/watch?v=VjMTNPXYu-Y

Looks like the Republilcans are taking a page out the Democrats book!

Politic'ng 101

matthew8

Obama wasn't keen to cut spending until someone asked him to stop kicking the can down the road and he realised that he couldn't get away with it.

Overheal

matthew8 wrote: »

Obama wasn't keen to cut spending until someone asked him to stop kicking the can down the road and he realised that he couldn't get away with it.

Just like every President.

matthew8

Overheal wrote: »

Just like every President.

Were you not defending Bill Clinton's fiscal discipline on another thread?

Overheal

matthew8 wrote: »

Were you not defending Bill Clinton's fiscal discipline on another thread?

I was. The ceiling was still raised during his Presidency though, several times. Though you are correct, he opposed it. But it was under a GOP Senate and Congress nonetheless. In fact the GOP seemed very keen, until it fell under this presidency, to raise the debt ceiling quite a lot. Why is that?

Specifically though if you want to get down to the brass tacks of it I'm looking at Bush and Reagan as particular examples of two presidents that kept trying to kick the can down the road. Ultimately you think Obama is special somehow in how he is reacting to the situation. That's just not true.

irishh_bob

tara73 wrote: »

as I think as well they will raise their dept limit literally in the last second (prob. night from 1st to 2nd) I would like to know, as the op, what would be the possible impact scenarios for europe, if america doesn't raise their debt ceiling, would europe get stronger or would it be very negative for europe as well?

they will eventually come to an agreement , the likes of golman sachs will ensure that both the GOP and the democrats avoid a default , when this happens , the dollar will weaken , stocks will rally ( money has to go somewhere ) the euro will strengthen , gold will rise and the can will be booted down the road untill we catch up with it again , i cant see anything happening next year with an election , a default would kill obamas presidency

andrew

Regarding the OP's original question I suppose, nobody has a clue what'd happen in the event of a US default. It'd be an event so unimaginable that the consequenes are similarly unimaginable. It'd be like Bill Gates defaulting on his mortgage because the bank won't give him an overdraft.

Amerika

I’m hearing an agreement had been reached between Democrats and Republicans, but President Obama nixed it for political reasons.

It seems House majority leader Boehner (R), Senators Reid (D) and McConnell (R) had reached an agreement on a framework of a two-part plan with a short-term increase in the debt limit -- with cuts greater than the increase, and an agreement for a committee to find long-term savings before another debt increase would be considered.

It seems Reid took the plan to the White House and Obama said NO! So it looks like Obama is willing to put the countries finances at risk because he doesn’t want the debt talks to come up again closer to the election for POTUS.

What a leader! If this turns out to be true Obama now takes full responsibility for the debt ceiling crisis.

Jaafa

Amerika wrote: »

I’m hearing an agreement had been reached between Democrats and Republicans, but President Obama nixed it for political reasons.

It seems House majority leader Boehner (R), Senators Reid (D) and McConnell (R) had reached an agreement on a framework of a two-part plan with a short-term increase in the debt limit -- with cuts greater than the increase, and an agreement for a committee to find long-term savings before another debt increase would be considered.

It seems Reid took the plan to the White House and Obama said NO! So it looks like Obama is willing to put the countries finances at risk because he doesn’t want the debt talks to come up again closer to the election for POTUS.

What a leader! If this turns out to be true Obama now takes full responsibility for the debt ceiling crisis.

Source?

Overheal

Overheal wrote: »

Just like every President.

Correction: Excluding Truman, since Eisenhower

http://www.politifact.com/new-jersey/statements/2011/jul/21/richard-codey/new-jersey-sen-richard-codey-claims-every-presiden/

Overheal

Jaafa wrote: »

Source?

Heard it on the news as well. I didn't like the sound of the plan, it required Republican demands to be met now, with a second vote to be required for phase 2 next year. Which just (irony) kicks the can down the road to a convenient time for the Republicans. Oh look, both parties know what a can is, and how to kick it.

Amerika

Jaafa wrote: »

Source?

http://www.washingtonpost.com/blogs/right-turn/post/white-house-stokes-debt-ceiling-crisis/2011/03/29/gIQAvx8DYI_blog.html

Amerika

Overheal wrote: »

Heard it on the news as well. I didn't like the sound of the plan, it required Republican demands to be met now, with a second vote to be required for phase 2 next year. Which just (irony) kicks the can down the road to a convenient time for the Republicans. Oh look, both parties know what a can is, and how to kick it.

"Kicks the can down the road to a convenient time for the Republicans?"

Huh... how about just passing Cut, Cap and Balance then! We can then tackle the problems right away, and not "kick the can down the road"! What a deal! (the only one on the table that saves our rating)

Overheal

Amerika wrote: »

"Kicks the can down the road to a convenient time for the Republicans?"

Huh... how about just passing Cut, Cap and Balance then! We can then tackle the problems right away, and not "kick the can down the road"! What a deal! (the only one on the table that saves our rating)

And whats wrong with cut, cap, balance and revenue then? Oh thats right, the Republicans took off their ties, acted like blue collar americans and pulled a GHWB. I recall.

https://www.youtube.com/watch?v=BqRHlZQYDak

ILikeBananas

I asked this in another thread but it's probably more applicable here:

How has the US managed to accumulate a $14 trillion national debt whilst maintaining it's AAA credit rating?

If the republicans hadn't put their foot down and voted to increase the ceiling like they had done under Bush, how high could it have gone before their credit rating would be affected?

gargleblaster

Will Obama use the 14th Amendment?

- Senior republicans have called up the teaparty for being unrealistic and childish.

- The public overwhelmingly disapproves of the GOP's part in this situation.
http://www.cbsnews.com/8301-503544_162-20080250-503544.html

It might just be a masterclass in "Politic'ng" for him to wait till the last minute, then use the 14th Amendment, scold the Republicans for putting the world economy in jeopardy over utterly unrealistic nonsense, make it clear they forced him to do it, thereby saving the social safety net that so many Americans depend on.

matthew8

gargleblaster wrote: »

Will Obama use the 14th Amendment?

- Senior republicans have called up the teaparty for being unrealistic and childish.

- The public overwhelmingly disapproves of the GOP's part in this situation.
http://www.cbsnews.com/8301-503544_162-20080250-503544.html

It might just be a masterclass in "Politic'ng" for him to wait till the last minute, then use the 14th Amendment, scold the Republicans for putting the world economy in jeopardy over utterly unrealistic nonsense, make it clear they forced him to do it, thereby saving the social safety net that so many Americans depend on.

Trying to pay back 14 trillion dollars of debt by getting into more debt is unrealistic.

FISMA

matthew8 wrote: »

Trying to pay back 14 trillion dollars of debt by getting into more debt is unrealistic.

America can handle 14 trillion in debt. That state could sell off assets. I say we sell Hawaii. I never did like their flag:D.

The real problem is the unfunded liabilties: social security, ObamaCare, and all. That figure is over 100 trillion, I hear closer to 140 trillion.

Now that's a problem...

gargleblaster wrote: »

Will Obama use the 14th Amendment?

I think that's the whole idea gargleblaster.

Back in 2006, the Republicans could increase the debt ceiling without the Democrats. So if you were a Democrat looking to get re-elected, why bother voting for it?

The Republicans are taking a similar approach now, right before the election cycle starts again. They're trying to make the debt ceiling Obama's call. If, Obama can use the 14th Ammendment to lift the ceiling, then why not force his hand? What Republican wants to go into elections having voted to raise the debt limit?

Finally, I find it ironic that in the most recent rounds, Beohner's plan actually did call for increase gov't revenues (taxes) whereas Harry Reid was fighting for NO taxes!

At first it did not seem to make sense to me, however, there are a lot of Democrats worried about next year. If things continue on the current note, the Dems could lose more than the Presidency.

Finally,

gargleblaster wrote: »

- The public overwhelmingly disapproves of the GOP's part in this situation.
http://www.cbsnews.com/8301-503544_162-20080250-503544.html

If a poll from Fox or Bill O'Reilly showed "the public overwhelmingly disapproves of the Dem's part in this situation." What would you say to that?

jackiebaron

FISMA wrote: »

America can handle 14 trillion in debt. That state could sell off assets. I say we sell Hawaii. I never did like their flag:D.

The real problem is the unfunded liabilties: social security, ObamaCare, and all. That figure is over 100 trillion, I hear closer to 140 trillion.

Now that's a problem...



I think that's the whole idea gargleblaster.

Back in 2006, the Republicans could increase the debt ceiling without the Democrats. So if you were a Democrat looking to get re-elected, why bother voting for it?

The Republicans are taking a similar approach now, right before the election cycle starts again. They're trying to make the debt ceiling Obama's call. If, Obama can use the 14th Ammendment to lift the ceiling, then why not force his hand? What Republican wants to go into elections having voted to raise the debt limit?

Finally, I find it ironic that in the most recent rounds, Beohner's plan actually did call for increase gov't revenues (taxes) whereas Harry Reid was fighting for NO taxes!

At first it did not seem to make sense to me, however, there are a lot of Democrats worried about next year. If things continue on the current note, the Dems could lose more than the Presidency.

Finally,

If a poll from Fox or Bill O'Reilly showed "the public overwhelmingly disapproves of the Dem's part in this situation." What would you say to that?

What's "obamacare"? And from what I understand Social Security is fully funded for the next 28 years. In fact the pot is actually owed money by the Fed.
I am with you in that loss making programs should be slashed. Social Security isn't one of them though. It's the most efficient and popular program the Federal Government has ever effected. Not only that....but it's not an ENTITLEMENT program. It's a SAVINGS program. The money paid in was paid by those who now want their money given back slowly when they're old. That simple.

gargleblaster

jackiebaron wrote: »

What's "obamacare"? And from what I understand Social Security is fully funded for the next 28 years. In fact the pot is actually owed money by the Fed.
I am with you in that loss making programs should be slashed. Social Security isn't one of them though. It's the most efficient and popular program the Federal Government has ever effected. Not only that....but it's not an ENTITLEMENT program. It's a SAVINGS program. The money paid in was paid by those who now want their money given back slowly when they're old. That simple.

They want that money in the private sector (Wall Street). They've been trying to get their hands on it for years now. Bush couldn't get it done when he was in office despite having majorities in both houses, that's how unpopular the idea is.

The idea of a social safety net is anathema to these people. There is no reasoning with them. Anything that helps the poor but doesn't profit those at the top is da eeevul soshlisum. This is why the rich fund all those think tanks, to try to sway public opinion to their side. This idea that it's an entitlement and that benefits have to be cut NOW is just more propaganda from those who put the needs of the rich ahead of the needs of the poor.

nagilum2

jackiebaron wrote: »

What's "obamacare"? And from what I understand Social Security is fully funded for the next 28 years. In fact the pot is actually owed money by the Fed.
I am with you in that loss making programs should be slashed. Social Security isn't one of them though. It's the most efficient and popular program the Federal Government has ever effected. Not only that....but it's not an ENTITLEMENT program. It's a SAVINGS program. The money paid in was paid by those who now want their money given back slowly when they're old. That simple.

Unfortunately, that money was not saved. It was stolen by politicians, deliberately

How do we know? Well, the we can look at the Social Security and Medicare Trustees Report: http://www.ssa.gov/oact/trsum/index.html. The total outlays in 2010 were $1.235T. But also in 2010, the funds took received revenues worth $1.267T.

Wait, so, even now in the midst of a huge economic downturn, the funds still took in more than they received? What's the problem? We should have no issues this year, right? In theory, that's correct.

That would be true, except the Treasury has been stealing the tax revenues and replacing them with IOUs, and making the payments with current revenues to pay for other stuff. A couple decades of these kind of funny-money policies have resulted in tons of debt (in the form of future obligations) that weren't really counted in the budget. This began in Reagan's second term, and really took off in the 90's. So sorry democrat fans, Clinton never ran a surplus. He just took money from Social Security and called it income. And GW Bush followed suit, using the exact same accounting tricks, and running deficits that were actually way worse than claimed. The money he borrowed went to pay for wars and offset tax reductions.

It's not unlike the ponzi-scheme the banks ran over the last decade. They lent out depositors money from for other investments, rather than keep it in safe holdings. They then lost it, then had to run to the governments of the world for a bail-out because they blew all the savings they were entrusted with. In fact, you could argue that Social Security is actually the world's biggest ponzi-scheme. Social Security, has collected about more than $3T. But there are no actual assets backing that debt other than the US's ability to collect revenues - it's simply a promise of the US Government to pay, just like any other government bond. And that money was already spent long ago. Like any ponzi scheme, this system works great, as long as you have way more people continuing to "invest" money in the fund than you have people withdrawing from it.

Guess where that trend is going? Oops... :eek:

nagilum2

nagilum2 wrote: »

It's not unlike the ponzi-scheme the banks ran over the last decade. They lent out depositors money from for other investments, rather than keep it in safe holdings. They then lost it, then had to run to the governments of the world for a bail-out because they blew all the savings they were entrusted with.

That isn't a very accurate description of what happened.

marble pie

jackiebaron wrote: »

What's "obamacare"? And from what I understand Social Security is fully funded for the next 28 years. In fact the pot is actually owed money by the Fed.
I am with you in that loss making programs should be slashed. Social Security isn't one of them though. It's the most efficient and popular program the Federal Government has ever effected. Not only that....but it's not an ENTITLEMENT program. It's a SAVINGS program. The money paid in was paid by those who now want their money given back slowly when they're old. That simple.

I agree, Social Security is fine right now and will be properly funded until 2036:

http://www.cepr.net/documents/publications/ss-2010-09.pdf

As for Medicare, it's the most efficient and cost effective medical insurer in America and while it's costs are rising at a worrying rate, it's mainly because of the rising health care costs in the private sector that provides the care that Medicare funds.

Overall, the idea of talking about massive spending cuts and slashing public welfare programmes now during one of the worst recessions/ depressions in a century is ludicrous. Japan has had a far higher debt to GDP ratio during it's heyday; this really is a non-issue. Debt to GDP has been far higher in America in the past too and never has the result been this kind of mean-spirited demands by any political party. Cutting spending to social safety nets right now would in real terms mean untold suffering yet sadly I'm sure this is what will be announced later today or tomorrow when Obama bends over backwards to get the backing of the opposition.

old_aussie

PIGS will be ok.

matthew8

America needs stability right now. It doesn't need tax increases. In order to get stability they must default now and get the pain out of the way, balance the budget through slashing medicare, medicaid, military and justice spending, leave education to the states, aim to leave other programs to the states and they can balance the budget. Abolish corporation tax, make up for the loss in revenue through less tax breaks and loopholes for billionaires. Then abolish the federal reserve and return to the gold and silver standard. This may take a while but at the end there will be stability and certainty and businesses can move in. We should do something similar in Ireland, of course the cutting bit would be far easier because we really are wasting 20 billion of our budget.

Overheal

matthew8 wrote: »

America needs stability right now. It doesn't need tax increases. In order to get stability they must default now and get the pain out of the way, balance the budget through slashing medicare, medicaid, military and justice spending, leave education to the states, aim to leave other programs to the states and they can balance the budget. Abolish corporation tax, make up for the loss in revenue through less tax breaks and loopholes for billionaires. Then abolish the federal reserve and return to the gold and silver standard. This may take a while but at the end there will be stability and certainty and businesses can move in. We should do something similar in Ireland, of course the cutting bit would be far easier because we really are wasting 20 billion of our budget.

I don't see how you equate Default with Stability. You have genuinely no concept of what you are talking about.

matthew8

Overheal wrote: »

I don't see how you equate Default with Stability. You have genuinely no concept of what you are talking about.

Default is inevitable. People would rather set up a business in a country where the pain is over and they are able to get back on track than one where they could go asleep one night and wake up to find out that that country has defaulted.

As for having no concept of what I'm talking about, most of the dems on this forum don't even seem to know who's president!

Overheal

matthew8 wrote: »

As for having no concept of what I'm talking about, most of the dems on this forum don't even seem to know who's president!

First of all, who said they were a Democrat? Can I imply you are a Republican then? A member of the GOP? I think I shall, for funsies.

Secondly you're the only one on this thread who's impermeable to the fact that existing tax code matters in today's politics. Regardless of how long ago they were signed in. Though let's bear in mind for the Umpteenth Time, they were extended again in December 2010 by Barack Obama, 37 Senate Republicans, 138 House Republicans, 43 Senate Democrats and 139 House Democrats.

Did I not mention this current situation doesn't have a whole lot to do with George Walker Bush? Or are you hard of reading?

Default is inevitable. People would rather set up a business in a country where the pain is over and they are able to get back on track than one where they could go asleep one night and wake up to find out that that country has defaulted.

And how many months, years, do you expect this Default period to go on for? Do you think businesses are going to hang out here while our interest rates spiral out of control? Do you have any analyses to support your argument that default will somehow be good for our country?

matthew8

Overheal wrote: »

First of all, who said they were a Democrat? Can I imply you are a Republican then? A member of the GOP? I think I shall, for funsies.

Secondly you're the only one on this thread who's impermeable to the fact that existing tax code matters in today's politics. Regardless of how long ago they were signed in. Though let's bear in mind for the Umpteenth Time, they were extended again in December 2010 by Barack Obama, 37 Senate Republicans, 138 House Republicans, 43 Senate Democrats and 139 House Democrats.

Did I not mention this current situation doesn't have a whole lot to do with George Walker Bush? Or are you hard of reading?

And how many months, years, do you expect this Default period to go on for? Do you think businesses are going to hang out here while our interest rates spiral out of control? Do you have any analyses to support your argument that default will somehow be good for our country?

Obama had 2 years to scrap the Bush tax cuts. 2 years in which he could do whatever he wanted. He decided instead to force people to buy insurance. You may say "his plan was to just let them expire". However, the writing was on the wall by July 2010 that he couldn't and had a choice:
1. Do nothing and let republicans vote it down with the house after the elections
2. Scrap them and lose the senate

He decided to play the politician and do nothing.

I am a proud republican. After all Gary Johnson and Ron Paul are republicans, and the whig party joined up with them.

I believe Ron Paul was calling for default, he seems like far more of an expert than most in Washington. Default is inevitable. It WILL happen. It won't be pretty but it's inevitable.

Overheal

Of course he could have let them expire and he relented to the GOP. My point though is if you want to solve the debt crisis you need to generate revenue as much as anything else, but thats being opposed because of the idea that tax increases equate to job losses. I've demonstrated however that is not true.

matthew8

Overheal wrote: »

Of course he could have let them expire and he relented to the GOP. My point though is if you want to solve the debt crisis you need to generate revenue as much as anything else, but thats being opposed because of the idea that tax increases equate to job losses. I've demonstrated however that is not true.

Tax hikes also equate to less fairness because the government is taking money off of people that they won't see again.

Overheal

matthew8 wrote: »

Tax hikes also equate to less fairness because the government is taking money off of people that they won't see again.

Could you break that statement down for me? You mean they won't see the money again or the taxpayers?

Understand that the government has already spent your money it's only a question of when their actually going to collect it from you. I don't actually understand what the fair bit is: The Government taxes you to supply the budget which gets used to pay for the services that the government operates, like Defense, Social Security, the Justice Department, and all that malarky. Seems fair to me. You pay the government to protect you from foreign and domestic aggressors, regulate through bodies like the FTC and FCC, etc.

What seems unfair to bondholders is that we asked them for money to pay for joe the plumber's tax break, and now we don't want to pay back the bondholder. So the bondholder has given us money and gotten nothing in return if we default. And now you have lost the confidence of the bondholders and the investors.

Which leads me back to my question from earlier which I am still hoping you can answer as I find it rather compelling that you support it: How does Default work out as a Good Thing for the USA? If you could provide some examples, references, expert analyses or some substance to that argument I would love to hear it, in the interest of seeing all sides of the issue.

matthew8

Overheal wrote: »

Could you break that statement down for me? You mean they won't see the money again or the taxpayers?

Understand that the government has already spent your money it's only a question of when their actually going to collect it from you. I don't actually understand what the fair bit is: The Government taxes you to supply the budget which gets used to pay for the services that the government operates, like Defense, Social Security, the Justice Department, and all that malarky. Seems fair to me. You pay the government to protect you from foreign and domestic aggressors, regulate through bodies like the FTC and FCC, etc.

What seems unfair to bondholders is that we asked them for money to pay for joe the plumber's tax break, and now we don't want to pay back the bondholder. So the bondholder has given us money and gotten nothing in return if we default. And now you have lost the confidence of the bondholders and the investors.

Which leads me back to my question from earlier which I am still hoping you can answer as I find it rather compelling that you support it: How does Default work out as a Good Thing for the USA? If you could provide some examples, references, expert analyses or some substance to that argument I would love to hear it, in the interest of seeing all sides of the issue.

Default is inevitable. That is the reason they should default. Not because it is good for them, but because it is inevitable.

Overheal

matthew8 wrote: »

Default is inevitable. That is the reason they should default. Not because it is good for them, but because it is inevitable.

And what do you think will happen to the Domestic if not the Global Economy in the aftermath of this inevitable default. And how will it work out well for us?

jank

matthew8 wrote: »

Default is inevitable. That is the reason they should default. Not because it is good for them, but because it is inevitable.

Dying is inevitable. That is the reason we should all die. Not because it is bad for us, but becuse it is inevitable.

matthew8

jank wrote: »

Dying is inevitable. That is the reason we should all die. Not because it is bad for us, but becuse it is inevitable.

If we hold off death it doesn't become worse, unlike default.