two days until US default deadline

donegal__road

Plan B: Central banks getting ready for financial Armageddon.

If US lawmakers don’t reach a budget consensus and raise the debt ceiling by Thursday October 17, the US will become the first Western power to default since Nazi Germany in 1933, and will send markets into uncharted territory.

The rest of the world is bracing itself for what would happen if the bill is rejected, and the US inches closer to defaulting on its debts, which are largely foreign- held in the form of US Treasury Bonds.

Today's budget may not matter in a few days time.

krudler

Is it time for us to crack open each others heads and feast on the goo inside?

zl1whqvjs75cdy

O good, more ****e to **** us over. Think I'll invest all my money in heroin. Everybody loves a bit o smack.

Dermighty

krudler wrote: »

Is it time for us to crack open each others heads and feast on the goo inside?

Yes, it is Kent.

Notorious97

They wont default, id say they are all being stubborn and we will have to listen to the usual 11th hour crap coming out of there!

That being said, id hope for a zombie apocalypse! More fun

Amirani

Not a chance this won't get passed.

Hande hoche!

They will whip something up at the last minute with both Democrats and Republicans taking credit for it.

I am pie

Russia Today. Always always always the place to go for balanced reporting on the US economy.

Hande hoche!

I am pie wrote: »

Russia Today. Always always always the place to go for balanced reporting on the US economy.

Press tv is where it's at.

Seachmall

I am pie wrote: »

Russia Today. Always always always the place to go for balanced reporting on the US economy.

RT's reporting on US affairs is generally more balanced than most US networks.

They've really ruined the two sweetest words in the English language for all of us.

seanie_c

Strangely enough, they do have money for wars overseas.

It's really just a lot of fear mongering.

wp_rathead

I dunno lads, don't underestimate the audacity/stupidity/naivety of the Tea Party members in the GOP
Only hope really is that enough Republicans see sense and basically "Mutiny" and vote with the Democrates against the Republican Speakers wishes

donegal__road

Where is the logic in borrowing more money to pay off your debts by simply raising the amount you can borrow indefinitely. At what point will credit be with held?

Its a bit like saying lend me 20 million dollars but only give me 10 million. Now you owe me 10 million, I owe you 10 million, so we are quits.

zl1whqvjs75cdy

I'm sure some stock traders some where are making a ****ing mint off this. Bastards.

donegal__road

donkeyoaty0099 wrote: »

I'm sure some stock traders some where are making a ****ing mint off this. Bastards.

that's probably what is really going on..

Kippure

donkeyoaty0099

donkeyoaty0099 wrote: »

I'm sure some stock traders some where are making a ****ing mint off this. Bastards.

Go buy stocks yourself then or would ya feel like a bastard if ya did?

Dartz

donegal__road wrote: »

Where is the logic in borrowing more money to pay off your debts by simply raising the amount you can borrow indefinitely. At what point will credit be with held?

Its a bit like saying lend me 20 million dollars but only give me 10 million. Now you owe me 10 million, I owe you 10 million, so we are quits.

US plays something like ****all on its bonds in interest, while inflation is running at a few percent annually.

When the bond matures, it's actual effective value is less than what the bondholder paid for it, since the dollars they're paid back with are worth less than they were when they bought the thing. The US makes a profit on each bond it sells.

seanie_c

donegal__road wrote: »

Where is the logic in borrowing more money to pay off your debts by simply raising the amount you can borrow indefinitely. At what point will credit be with held?

Its a bit like saying lend me 20 million dollars but only give me 10 million. Now you owe me 10 million, I owe you 10 million, so we are quits.

There's a view among some people America borrows money from China but that seems rather silly when you realize America owns the dollar.

Why would the American government need to borrow dollars?
Truth is, they don't.

The real issue here is some wealthy people want to cut spending on medicaid, medicare, food stamp and social security.

The same wealthy people would prefer to hire cheap labor overseas in somewhere like China than give Americans those jobs.

I don't think the same people calling for budget cuts to these social programs have any idea what they're doing.

donkeyoaty0099

donkeyoaty0099 wrote: »

I'm sure some stock traders some where are making a ****ing mint off this. Bastards.

Let's all get into forex!

Days 298

I want them to default just to see what happens. Not getting my hopes up though they always come to an agreement at the last minute.

Cee-Jay-Cee

Of course they'll pass the budget, they will do whatever it takes to ensure they're paid next week and if that means passing something they don't entirely believe in then so be it. Their fat lardy political asses are priority.

donegal__road

Days 298 wrote: »

I want them to default just to see what happens. Not getting my hopes up though they always come to an agreement at the last minute.

like I was saying, I think you take today's budget and put a match to it.

ixoy

CJC999 wrote: »

Of course they'll pass the budget, they will do whatever it takes to ensure they're paid next week and if that means passing something they don't entirely believe in then so be it. Their fat lardy political asses are priority.

But the budget wasn't passed and a significant number of those working for the government aren't getting paid until it is. It just happens that Senators and Congress men will continue to get paid, whether they've passed the budget or not.

The debt ceiling is a different issue but being tied to the budget by strong-arm tactics by a core group of Tea Party extremists.

BabyGorilla

Buffet said they'll take it to the very edge, **** themselves, and then it will pass.

flanzer

seanie_c wrote: »

There's a view among some people America borrows money from China but that seems rather silly when you realize America owns the dollar.

Why would the American government need to borrow dollars?
Truth is, they don't.

The real issue here is some wealthy people want to cut spending on medicaid, medicare, food stamp and social security.

The same wealthy people would prefer to hire cheap labor overseas in somewhere like China than give Americans those jobs.

I don't think the same people calling for budget cuts to these social programs have any idea what they're doing.

Nail on head. You only have to look at Donald Trumps anti-China sentiments, yet has a Donald Trump Signature clothing line that's manufactured in..... you've guessed it..... China

Dempsey

Cant see the US defaulting

Piliger

seanie_c wrote: »

There's a view among some people America borrows money from China but that seems rather silly when you realize America owns the dollar.

Why would the American government need to borrow dollars?
Truth is, they don't.

Wrong.

China owns about 8 percent of publicly held U.S. debt. Of all the holders of U.S. debt China is the third-largest.

KyussBishop

donegal__road wrote: »

Where is the logic in borrowing more money to pay off your debts by simply raising the amount you can borrow indefinitely. At what point will credit be with held?

Its a bit like saying lend me 20 million dollars but only give me 10 million. Now you owe me 10 million, I owe you 10 million, so we are quits.

National debt doesn't work like bank debt; the US are giving holders of US dollars, an interest-bearing place to put their money, by buying up bonds (i.e. by the government expanding their debt).
As long as there are people holding US dollars, who have no better place to invest it (interest-rate wise), there will be no shortage of willing buyers of US bonds.

With quantitative easing making banking reserves flush with money, this also assures there is an abundance of money within the banks, and since they aren't lending it out to the economy or investing it (thus not getting much return on it), it means they can snap up bonds eagerly (and it assures low interest rates on the bonds for the US too).

Central bank prints money, creating excess bank reserves (quantitative easing), government borrows printed money from banks (and pays them interest, on top of the money just created for them...), thus expanding national debt.
That's what actually happens, just don't mention cutting out the middleman taking a slice from all of this (banks/finance), or you get barraged with browbeating/trolling from financiers and financiers-to-be, trying to convince everyone this would bring about a financial apocalypse.

donegal__road

cheers KyussBishop, that has put it in plain English.. Im glad I didn't take economics!

UCDVet

I really don't get why we care about US debt? The US doesn't owe Ireland any money afaik, right?

Rascasse

I read something during the week, on a fairly sensible website, that said something like by forcing a default Congress is going to create a breech of the Constitution (14th amendment). That would, in theory, allow the president to act to prevent it (presumably at the last moment).

No way the US will default. By hook or by crook it will get sorted, for now.

AlmightyCushion

UCDVet wrote: »

I really don't get why we care about US debt? The US doesn't owe Ireland any money afaik, right?

Things like pension funds and that would probably hold some US debt but it's more the knock on effect it could have on the world economy.

My name is URL

Kippure wrote: »

The funny thing about that video is that it's over two years old.

He mentioned in it that both republicans and democrats needed to stop kicking the can down the road and deal with a problem that was spiralling out of control, even back then.

Really prophetic stuff. They should have taken his advice because it's all coming to a head now.

Renegade Mechanic

Im beginning to hope it really is technically impossible for US to default.

Kippure

If Obama came out and said what that reporter said he would go the way of J F kennedy.

He ,s right American politicians have no balls. Congress is bought. Untill that changes America is screwed.

My name is URL

Renegade Mechanic wrote: »

Im beginning to hope it really is technically impossible for US to default.

Whether they can realistically default or not, something drastic needs to happen. The only thing that's impossible for sure is that they can continue to operate under the current system without the shit hitting the fan in a big way down the line.

KyussBishop

My name is URL wrote: »

Whether they can realistically default or not, something drastic needs to happen. The only thing that's impossible for sure is that they can continue to operate under the current system without the shit hitting the fan in a big way down the line.

They can continue just fine; if anything there's not enough debt-funded spending, to boost their economy.
They're not stuck in a monetary union like us; they don't get screwed on debt interest rates, and have loads of room for spending.

Amerika

Real wrath of God type stuff.
Fire and brimstone coming down from the skies! Rivers and seas boiling!
Forty years of darkness! Earthquakes, volcanoes...
The dead rising from the grave!
Human sacrifice, dogs and cats living together... mass hysteria!
Or Not.

My name is URL

KyussBishop wrote: »

They can continue just fine; if anything there's not enough debt-funded spending, to boost their economy.
They're not stuck in a monetary union like us; they don't get screwed on debt interest rates, and have loads of room for spending.

I meant more politically than economically. Having an opposition party which is powerful enough to order the virtual shutdown of federal government when it doesn't get its way, and consisting of individuals, some of whom have uncomfortably close ties to those with private interests, isn't exactly a sign of a healthy democracy.

Andrewf20

Probably not as id have a heart attack while in the middle of finishing off with the bread.

All money is debt! it is loaned into existence by banks who can create it at will as and when they want to, the only reason they don't "create" too much as it will devalue as the volume of money could grow quicker than the bank's ability to profit from the interest it earns.
The only reason money is valuable is because people have trust in it!

All this "debt ceiling" stuff is just a political football that will be kicked about until someone drops it and lets the other side score.

It's hard to imagine a group of politicians getting so boneheaded that they'll cause a default.

seamus

UCDVet wrote: »

I really don't get why we care about US debt? The US doesn't owe Ireland any money afaik, right?

The US basically owes everybody money. Since WWII they've effectively been writing cheques which say, "We're good for it, we're the USA, don't worry about it". If they default it means that everyone will try to cash in those cheques at the same time.

What happens then is an unknown. Think of the "burn the bondholders" tactic suggested for Ireland, except that the bondholders are the rest of the world. Will people keep trading with the US because they're so huge, and just manage the debt? The value of the dollar would collapse, which will throw futures markets into crazytown, considering that oil is traded in dollars. Any country whose currency in underpinned by the dollar will see its economy collapse.

Though given the pervasiveness of the dollar in trading markets, every currency is effectively underpinned by the dollar to some extent. So every currency will see a huge fall in value.

But it's a total unknown. It may be that the US is so big, that their default is like whipping out a tablecloth from under cutlery. Because everyone is equally affected by it, the relative effect is just a bit of economic wobbling, and any countries who don't have excessive export trade with the US will be able to recover quickly.

All pie in the sky anyway. It's not going to happen.

Killer Wench

Sadly enough, I can see the Republican Party allowing it to happen.

First, it would be the first time that the US has failed to pay its debt. That moment of history wouldn't fall on the legacy of Congress; it would be Obama's legacy to own.

Second, for those looking for impeachable grounds, I believe that it could open the door.

cml387

The best explanation of financial matters is in The Hitchikers Guide to the Galaxy, when the inhabitants of Ark B crash landed on the planet that later transpired to be the Earth.

They decided to adopt the "leaf" as their unit of currency and all of course instantly became immensly rich.

Unfortunately, inflation devalued their currency to the point where 1 peanut was worth three deciduous forests.

In order to restore fiscal stability it was decided to burn down all the forests.

seamus

Killer Wench wrote: »

First, it would be the first time that the US has failed to pay its debt. That moment of history wouldn't fall on the legacy of Congress; it would be Obama's legacy to own.

This isn't the same world though. At the last default, the USA was enormous as an economy compared to everyone else. "Too big to fail" comes to mind.
And you had the threat of the Cold War looming, with all western eyes relying the US to protect the world from the USSR.
So countries were simply more willing to overlook it.

It's not the same game now. The US is still big, but it's not the only big boy in town anymore. The willingness of countries to overlook a default will be far lessened if they can turn to the Euro or the Yuan instead of the dollar.

And of course, there is no Oceania anymore. Nobody is concerned that the collapse of the US would let the Commies run roughshod across Europe and Asia.

Killer Wench

seamus wrote: »

This isn't the same world though. At the last default, the USA was enormous as an economy compared to everyone else. "Too big to fail" comes to mind.
And you had the threat of the Cold War looming, with all western eyes relying the US to protect the world from the USSR.
So countries were simply more willing to overlook it.

It's not the same game now. The US is still big, but it's not the only big boy in town anymore. The willingness of countries to overlook a default will be far lessened if they can turn to the Euro or the Yuan instead of the dollar.

And of course, there is no Oceania anymore. Nobody is concerned that the collapse of the US would let the Commies run roughshod across Europe and Asia.

To me, your post might reflect what will happen outside of our border, but within the border, people will need someone to blame for what will be viewed as a huge f*ck up.

Yep! The Chinese could make a very big deal if they wanted to and knock the US dollar down a fer pegs.

seamus

Killer Wench wrote: »

To me, your post might reflect what will happen outside of our border, but within the border, people will need someone to blame for what will be viewed as a huge f*ck up.

Yeah, but nobody seems to be siding with the Republicans. They're more and more looking like a tiny elitist minority trying to take the ball and go home, even though the game's not over and the ball doesn't even belong to them.

Obama's being seen as reasonable and humanitarian, whereas the Republicans, as one person put it, are fighting because they want to pay billions of dollars to send people overseas to die, but not billions of dollars to save lives at home.

Whatever the truth of the situation, I'm not sure if Obama is gonna come out of this as the bad guy.

Celly Smunt

Lads,relax.The U.S will just have grand ceilings by the deadline.