Am I the only person who actually expects the USA to default on its debt, with disastrous results? Everyone I talk with says “it will all work out” or words to that effect. I seem to be the only one within my circle who does not agree; I have a sick feeling that we will default and that the consequences will be horrendous.
I know that I’ve been obsessing about it even though no one else seems to be. I’ve also been told that I’m paranoid, which I well might be.
But the people I talk to on a regular basis have to solid reason to back up their statements that “it will all workout” other than that it has worked out in the past. This time I just don’t think it will.
Up until last night I thought it was going to work out. Now I don’t think so. Is there anything I can do in the next two weeks to get out of the economy, so this idiocy doesn’t hurt me or my family?
Those things are not going to happen nor is it worth while to discuss them; if we default, those things will happen along with a lot of other bad stuff.
You are quite correct. The United States will default on its debt. There is no way that the USA can pay off its ever increasing huge debt. The USA has no intention of paying off its ever increasing huge debt. It will be soon that the USA will owe more money than anyone will even be able to lend the USA even if they wanted to. Nobody out there has a few hundred trillion dollars sitting around available just waiting to lend out.
The USA can not borrow its way out of this problem. It will not work.
The USA will default one way or another, if nothing else, by massively inflated US dollars.
Either way, the US dollar will become worthless, the USA economy will collapse, and it will then send the entire world into a world wide Depression. Additionally, the Euro and the Pound probably also will collapse in value to being worthless. There will be no world currency which will plummet world trade.
One could “hope” that the US government will immediately massively cut spending and run federal budget surpluses and pay down its debt, today, this weekend, but that would be pure fantasy and wishful thinking.
Well, Susanann’s answer has at least given me hope; she hasn’t been right about anything she has ever posted so I can hope her trend continues. On the other hand, if one continually forecasts doom and gloom, one will be right someday. So now my hope is destroyed again. Damn. At any rate, with my dying breath, I will curse the Tea Party branch of the Republican Party to the deepest pits of Hell.
If anyone has an answer that makes sense, I hope they will post it and restore what faint hope I still cling too.
I wrote my attempt to explain what the Republicans are doing on my blog here. As I understand it, they’re pretending to be insane because, from a game theory perspective, that puts them in the strongest possible position for negotiations. Recall that during the spring we had similar negotiations about a possible government shut-down. The Republicans bragged and blustered for months about how they refused to consider any sort of compromise. Then, with literally minutes to spare, they compromised. I believe they’ll do the same things in this round of negotiations and all further ones.
Also, as Quartz has pointed out, failure to raise the debt ceiling does not mean defaulting on the federal government’s debt. The government has some inflows and some outflows. If we can’t increase borrowing, inflows will fall far short of outflows, but there will still be enough money for the government to do some things. Making interest payments on the debt is one of the things that the government will do, even if it means cutting elsewhere.
Some sort of resolution will be announced tomorrow afternoon, before the Asian stock markets open. You can bet that Republican House member’s phones are ringing off the hook this weekend from angry small and large businesspeople. Raising their borrowing costs is going to do more damage to them than raising their personal income taxes.
Boehner is useless as a leader - he has no ability to organize his troops. I suspect the state legislators and big money people will get the Tea Party Republicans in line.
The Tea Partiers remind me of the campus hippy protestors in the 60’s. “SHUT IT DOWN!!”
I know. It’d take like a 3% tax increase on the richest people in our country to get us running surplusses again. Which we all know would be worse than any sort of economic collapse or kitty stomping or holocaust or cold fries the world has ever seen.
Cuts will have to be made. And taxes will have to go up a bit. Folks making seven figures and more are gonna have to cough up just a little more.
I propose the following cuts.
Military)
Bring back soldiers from Germany, Korea, Afghanistan, Iraq…do we still have guys in the Philipines? Close the bases and get out of the leases.
Only pay what a contractor bids. The low bid is worthless if the they can’t bring in the job for that amount.
No more Star Wars nonsense
Congress)
none of these guys get government health care anymore. They are making good money, they can afford a plan of their own. They will have to cut their staff by 6%. And a 6% pay reduction (for elected federal officials including POTUS and the COS) and no more pay increases. They should feel the pinch too. Come to think of it, the same for Cabinet Members, the A.G.'s office, Ambassadors, etc. Do away with ‘franking’. I cannot believe we still do this!?!?
Law Enforcment)
Stop the war on drugs. I don’t care about taxing dope, just stop making it a crime. Stop incarcerating people just for using and selling dope. Stop the multi-billion dollar war machine that has only managed to drive up the price but not put a dent in availability. Just stop.
Social Security)
We will have to raise the retirement age a couple of years. We will have to shrink benefits* somewhat*. I know, I don’t like it either. I’ve been paying into it for 28 years and I’m gonna need the checks when I’m done, but there will have to sacrifices.
NEA)
Screw it. I know, in comparison to the federal budget, it’s a drop in the bucket. But the drops add up and there is no sense subsidizing art when the goverment cant pay its bills.
Anyone have more suggestions for things that will never happen?
I heard Mexico has a lot of job openings for toilet scrubbers and groundskeepers.
/snerk
Stop being so paranoid. Worry about it if it happens. If it’s going to happen, there isn’t shit we proles can do to stop it. I’m lucky enough to have a job, hopefully I’d hang onto it. I think the formation of local trading “black” markets would be really interesting to behold.
Frankly, though, you don’t have to worry about this. So stop it.
While I admit that I’m more concerned after last night’s speeches, I still believe that it won’t happen. For one thing, it would force the end of the Republican party as we know it, and they are way too power hungry to go down like that. But they will wait until the last possible moment, hoping Obama caves into their idiotic demands.
The Republicans know that this game that they’re playing can come full circle, so it is in their best interest to NOT devalue “the full faith and credit” of this country.
The fact is that there is no such thing as a debt limit. It is a self-created problem. And during slow economic times, the only way out is to increase government spending; i.e. deficit spending. It’s a proven technique, but you have to keep doing it until it works. Unfortunately, we’ve only done it half-assed and it’s hurting the economy…to the pleasure of the right-wing. The only time to cut taxes and reduce government spending is when consumption and investment are high. And that is not now. By spending, the government is spending to buy what the consumer isn’t and to invest in what the businesses aren’t. You don’t need a degree in economics to know this.
The Republicans just made this an issue now to kill the economy, blame Obama on it, and gain power in the next election. And it’s lucky for them that so many of their supporters are willfully ignorant. But they will quickly educate themselves once everything goes to shit.
As Churchill said once {paraphrase}: “Americans always do the right thing…after they’ve exhausted all the other alternatives.”
Countries have defaulted on their debts before and the sky didn’t fall, although there were a lot of unhappy creditors. Remember though that the US debt at the end of WW II was something like 125% of its GNP. Healthy taxes after the war (top marginal rate under Eisenhower was 91%) not only reduced it to something like 40% and the economy boomed.
I find it interesting that so many people are saying that the reason the government will default is that the Republicans want it to, so Obama can be blamed.
Maybe they actually believe that the solution is to drastically cut spending, and that if Obama believes all of the dire things that will happen if the government does default, then he will have to accept their proposal. If Obama, vetoes their bill, wouldn’t that mean he doesn’t really believe all of the dire consequences that he said would happen if we default.
