This was the same problem in the pit thread and I’m not going to deal with the same bullshit here again. If people aren’t going to read the thread and follow the arguments, I’m ignoring you except to point this fact out.
I’ve already stated what my point is and I’m not repeating it. If you haven’t been able to glean that from my previous posts, well, that’s unfortunate.
You’re wrong. I was subject to those constraints for a while and during that time it was made very clear that I was not to post anything that could be remotely construed as financial/market advice or commentary anywhere without clearing it with compliance and that the consequences to such a post would be severe.
I don’t doubt that. But what in house counsel advises and what you’re actually prohibited from doing aren’t necessarily the same. When you have huge gray areas like those created by securities laws, the best advice is to stay as clear of those areas as possible until the boundaries have been better defined. But the fact of the matter is, what I’ve been talking about is general principles of economics and finance. How the fed regulates the money supply. What happens to bond prices if interest rates go up. Things you find in text books. Things that cannot under any reasonable definition be considered market advice.
I would rather not argue that with the compliance lawyers.
And you shouldn’t - as long as they can give you some idea of what constitutes “market advice.” Because if they can’t, then at least in theory, you can never say anything to anyone.
Okay, let’s try again …
There are two distinct questions here: one, that US defaulting on its obligations would be devastating event with unpredictable dynamic and second, how likely is it to happen.
Add a third, is US Government shutdown in any way consequential to US debt defaulting.
Good so far?
No. The problem is a dysfunctional govt that is causing these problems and has already damaged the economy by virtue of the endemic and persistent uncertainty it has created as well as removing needed govt participation in the recovery both by way of things like the sequester as well as its inability to fund new programs.
Right now, the economy has habituated to the current level of stress created by this level of dysfunction and seems to be fighting its way back in spite of it, but a worsening of the situation will raise the stakes, possibly to a tipping point.
I just realized this thread is in “Mundane Pointless …” :o
Moved MPSIMS --> Great Debates.
And the easiest.
This has happened before, and S & P downgraded the credit rating. There was a bump in interest rates, and I do emphasize bump. Everything smoothed out. That is likely what will happen again, based on past experience.
S & P is the same outfit that rated the mortgage debit swaps as a low risk. Given a chance to have stock in S & P itself, or it’s today US cash equivalent in crisp benjamins, which would you choose?
As Karl Malden would say if he had said it for the US instead of American Express:
“The almighty fuckin’ US dollar. Don’t leave home without it. Bitch.” S & P stock. Not so much.
Or, to steal Capital One’s trademark line? “What’s in your wallet?”
The two tents of the circus, I mean, chambers of Congress, are fighting over fundamental assumptions about the value behind the dollar. Either way, rich people get richer and poor people get poorer.
What is going to happen is that the owners of Wall Street, who are the owners of the members of Congress, are going to get on the phone and make damn sure that all their T-bills get paid. Count on it.
USTs (Treasury notes and bonds) are considered dollar equivalents and tend to trade with the dollar. So if other countries lose confidence in the USD, the value of the dollar declines and so does the value of USTs. Since the interest rate on debt is inversely proportional to its value, as the value of USTs decline, the interest rate goes up. Since USTs are the benchmark for all other debt as it determines what is considered the risk-free rate, it tends to affect all interest rates across the yield curve.
So people outside the US won’t abandon the dollar. They can’t. But they can like it less - consider it less valuable and reflect that in exchange rates on the Forex markets.
We have had shutdowns before, never missed a payment:
This is political gamesmanship, and if the Tea Party attempted to go so far as to miss debt payments, that would be the rest of the Republicans to vote with the Democrats and end it.
Government shutdown when we keep paying military, social security, debt? Not enough people care.
Miss a debt payment driving up interest rates to compensate for the change in reliability and predicability? Now we have issues. Of course, we still have extremely low interest rates, so even a 1 point jump would still have us at pretty low rates historically.
[ETA I held a Series 7 long ago in a market far far away, when email was just starting out and we were not allowed to email without each message being approved by our Principal with Principles.)
Why in the world does deltasigma’s attitude, past or present, matter at all in this conversation? He posted a citation to what he said. A magazine article, by an actual financial expert of some kind, says that a default is a big deal, and points out that the S&P’s rating was precisely because of the risk of this sort of thing happening again. The more often we go to the brink, the more likely we will slip up and actually default.
If you think this logic is faulty, why don’t you argue against it? Or, better yet, find a citation backing you up?
You guys do understand that, by default, the guy with citation wins, right? If you find the guy so insultingly wrong, prove that instead of attacking his character or getting into pointless digressions on what experts are or aren’t allowed to talk about.
Since when?
Thanks BigT but I think this issue is too closely related to partisan politics for people to see clearly. I’m generally pretty liberal in my political leanings but I don’t vote and I’m not politically active. Where I live, except for local elections perhaps, my participation would be mostly irrelevant anyway.
The point though is that I don’t have a blind allegiance to any particular point of view - which by the way I think is the same that is true of the vast majority of people until you start talking about the populations of internet message boards. Then things seem to go in the opposite direction.
So… you’re asking BigT… for a cite?
It’s 1939 summer vacation, all over again :eek:
What’s the debate here?
This thread wasn’t originally in GD. See post 69.
For someone who doesn’t understand treasury auctions (one of the basic building blocks of our financial markets), you seem to be pretty critical of others.
I suspect you know a little something but a little bit of knowledge is a dangerous thing. A little bit of humility on this board is usually well advised, I learned that the hard way.