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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.

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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.

[Deleted User]

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.

[Deleted User]

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.

Killer Wench

seamus wrote: »

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.

We're not talking short term here. We're talking the long game when people look back at administrations and say, "That happened under his watch, remember?" Not many people can name the Speaker of the House under FDR or Lincoln. Heck, many won't remember the name of Representatives or Senators involved in the mess (unless that Congressman goes on to run for POTUS). This is Obama's administration; he might not be directly responsible for the failure, but in the future, he will have to own it.

Corkfeen

Killer Wench wrote: »

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.

The Tea Party may disgust me but I don't think they'll allow a default. Their most powerful members are wealthy and wealth would be destroyed if they default. Not exactly in their interests.

Doctor Strange

donkeyoaty0099 wrote: »

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

Actually, last I saw, the US Stock market had fallen 50 points. There is no money to be made in it until an agreement is reached on the budget.

Seaneh

Unforgettable _ Fire wrote: »

Actually, last I saw, the US Stock market had fallen 50 points. There is no money to be made in it until an agreement is reached on the budget.

You can make a LOT of money off a stock market doing badly.

Piliger

Killer Wench wrote: »

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.

This must be some kind of comedy sketch ? Trying to dress up a hostage-type anarchist attempt to bring down the government as Obama's responsibility ? Either that or it's just taking the p!$$.

Doctor Strange

Seaneh wrote: »

You can make a LOT of money off a stock market doing badly.

Fair point.

Piliger

Killer Wench wrote: »

We're not talking short term here. We're talking the long game when people look back at administrations and say, "That happened under his watch, remember?" Not many people can name the Speaker of the House under FDR or Lincoln. Heck, many won't remember the name of Representatives or Senators involved in the mess (unless that Congressman goes on to run for POTUS). This is Obama's administration; he might not be directly responsible for the failure, but in the future, he will have to own it.

No he won't. The GOP and tea Party will have to own it because the GOP will lose the House and probably the Senate and spend the next decade recovering. The same happened with Gingrich who everybody remembers, and how Clinton wiped the floor with him and the GOP of the time. Obama will not come out of the NSA scandal well but he will be hugely enhanced by this suicide pact by the GOP.

Piliger

Corkfeen wrote: »

The Tea Party may disgust me but I don't think they'll allow a default. Their most powerful members are wealthy and wealth would be destroyed if they default. Not exactly in their interests.

It would seem not. However if we read their rhetoric recently and the accounts of the meetings a few months ago when they hatched this anarchist plan, they really have no concept of what this default will mean. They have also counted on Obama backing down and the truth is he is showing real balls - again refusing the hostage demands today.

Despite this, the high priest of the nut jobs, Cruz, has been again voted the most popular GOP member at a recent GOP gathering. The GOP are in the middle of a bizarre incestuous process where they have closed their minds to outsiders and think that if they achieve these mad goals, the great Americana will suddenly rise up and vote for them.

It's going to go right to the wire, imho, and we'll see who blinks first.

hmmm

The thing I find most bizarre watching the coverage is the complete lack of a clue that the Tea Partiers have as to how the world's financial systems work. They are giving lectures on why a default won't happen or won't matter and they clearly haven't a clue.

The assumption that the US is the "risk free" currency is the keystone of world finance. Everything else revolves around this, almost everything else is priced off of it. You remove the keystone and there is nothing left to replace it. I couldn't give a clear answer as to what would happen because the effects would be so wide ranging, but it would certainly be chaos.

For the Tea Party to say that default is ok and nothing will happen is nuts. Who is funding these guys, because I can't believe the Republican party backers really want a default to happen.

Piliger

hmmm wrote: »

The thing I find most bizarre watching the coverage is the complete lack of a clue that the Tea Partiers have as to how the world's financial systems work. They are giving lectures on why a default won't happen or won't matter and they clearly haven't a clue.

The assumption that the US is the "risk free" currency is the keystone of world finance. Everything else revolves around this, almost everything else is priced off of it. You remove the keystone and there is nothing left to replace it. I couldn't give a clear answer as to what would happen because the effects would be so wide ranging, but it would certainly be chaos.

For the Tea Party to say that default is ok and nothing will happen is nuts. Who is funding these guys, because I can't believe the Republican party backers really want a default to happen.

I agree with you. These Tea Partyers are essentially Nationalists, Anarchists and Isolationists. They neither know nor care about anything that happens outside the US borders for a start.

They believe in the Wild West Society model. Everyone with a gun. Everyone out for himself. Taxes only for the military. And if you don't make it on your own, or get ill, or have mental health challenges, then charity should be the only thing left for you.