Debt crisis threatens world economy

[Big Bad Voodoo]

http://www.theguardian.com/business/2013/oct/03/christine-lagarde-us-debt-crisis-shutdown

Shares in New York fell sharply on Thursday after the US Treasury warned that the budget fight between Republicans and Democrats in Washington risked plunging the world's biggest economy into its worst slump since the Great Depression.

....

I wonder how much of all this was planed by Morgan and similar?

[Jeremiah65]

They need to raid your retirement mutual funds again.

[Kowalski]

I don't trust a d**** thing the IMF says.... Not at all....

They need to raid your retirement mutual funds again.

Their after that and the pension plans....

[Leonardo]

Meh. Just default and get this crisis over and done with. At least then we won't have to put up with "World In Financial Meltdown" headlines every 6 months.

[spartan max2]

Wohooo lets all burn

[Raptor Witness]

The madness that we've seen recently in Washington clearly isn't confined to people with a diagnosed mental illness.

The movers and shakers are infected with the same spirit of chaos, which will grow to levels not seen since the Dark Ages, I suspect.

Rich or poor, it won't matter. The only hope is for debt forgiveness across the entire spectrum of civilization.

All the books must be reset, if this is to succeed. If you owe a mortgage on your house, you will own it. If you owe credit card debt, you're balance is reset to zero. If you have a student loan, it's forgiven in the blink of an eye. All liabilities could be instantly turned into assets, but it would have to be across the board, with no exceptions, including nations, if this is to succeed.

[acidhead]

You're on glue.

[+and-then]

You're on glue.

Actually I think something very like this will be the final solution. At least it will be "sold" as an amnesty and a reboot. But the truth is that the wealthy will still control everything and the average person will find some sort of servitude to be the price for this largesse from the government. I'm not smart enough to explain how the mechanisms of it all would work but I see no other way out of this level of debt.

[Sir Wearer of Hats]

You're on glue.

Honestly, I think it's the only way forward. It'll be a seachange, instantly you revive the economy like a shot of adrenaline to the heart - kill or cure, with a lot of risk and damage but it'll save the patient.

[Frank Merton]

Pull something like that and no one will ever invest or loan again. Unbelievably stupid.

[Sir Wearer of Hats]

It'd stimulate the economy, which is all that matters (to some people) right now.

[Frank Merton]

It'd stimulate the economy, which is all that matters (to some people) right now.

How? Seems to me it would halt all economic activity. How for example are employers going to pay wages after something like that?

[lightly]

A LOT of debt is already being paid off by Tax Payer money.. as part of the Bank "bailout". If you were stupid enough to get into over $10,000 worth of credit card debt.. and show no obvious signs of ever being able to pay it off.. you may Qualify for "debt relief" .

Of course it's being touted as helping People in debt... but the obvious truth is .. it's to benefit the banks that were handing out credit cards irresponsibly.

There are many forms of Debt "relief" going on... all at tax payer expense.

[Frank Merton]

A LOT of debt is already being paid off by Tax Payer money.. as part of the Bank "bailout". If you were stupid enough to get into over $10,000 worth of credit card debt.. and show no obvious signs of ever being able to pay it off.. you may Qualify for "debt relief" .

Of course it's being touted as helping People in debt... but the obvious truth is .. it's to benefit the banks that were handing out credit cards irresponsibly.

There are many forms of Debt "relief" going on... all at tax payer expense.

Sometimes I think the US government is really stupid. Can't they see that this sort of thing is just an invitation to do it again, plus hugely unfair to the frugal?

[Sir Wearer of Hats]

How? Seems to me it would halt all economic activity. How for example are employers going to pay wages after something like that?

Simple really, instead of having to pay off loans and debts people will have more money to spend on other things.

[Jeremiah65]

Well....to speak a little sideways....

They are either going to willingly reset this machine...or it's going to break and have a forced reset...it doesn't matter if people like it or not. One will be unfair to some...the other will be catastrophic to nearly everyone. Choose your pain.

As far as "no one will lend or finance again"...maybe that is not such a bad thing. Usery has always carried and caused pain so...perhaps....time to toss the cycle of debt and servitude out the window.

The banks got bailed out....why not the average schmuck? They aren't good enough? they aren't suffering and hurting too? Are they not human? Corporations are people now and they get bailed out....all at taxpayer burden....how about bailing out the little guys? Can't hurt any more than bailing out the big guys.

[Frank Merton]

Simple really, instead of having to pay off loans and debts people will have more money to spend on other things.

Why not just give everyone a tax break; same effect, fewer bad lessons and more fair.

[lightly]

Sometimes I think the US government is really stupid. Can't they see that this sort of thing is just an invitation to do it again, plus hugely unfair to the frugal?

Not so much stupid as ineffectual? The government seems helpless and creating policy at the whim of those wielding the most power?

[Sir Wearer of Hats]

Why not just give everyone a tax break; same effect, fewer bad lessons and more fair.

Tax money pays for vital services, tax breaks will cut into them.

[Frank Merton]

Tax money pays for vital services, tax breaks will cut into them.

Take the money they spend on the credit card bailouts and give it back in lower taxes.

[ninjadude]

Take the money they spend on the credit card bailouts and give it back in lower taxes.

presumably you mean the bailouts that occurred during the previous administration. But even so, it'd be tough to use a tax break with no job.

[Sir Wearer of Hats]

Basically, the US (and the rest of us it seems) is at a point where debt is like a gangrenous hand.

Now, either you cut off the hand and live with the consequences or you leave it and die.

In this case, the solution seems to be "wipe out all debt".

Any government debt held within the United States - gone. Any personal debt - gone (which will deal with what I hear is crippling student loans).

Will that stop loaning in the future? It shouldn't, but I suspect a lot of banks will pull out of the loaning business and some of the specific loaning businesses will die. But it's a Free Market, I think others will step up to the plate and take their place, and whatever banks do still loan will have people beating paths to their doors.

It's a damn shame my country won't follow suit, as I'd LOVE to be shot of my HECS/HELP debt (basically my student fees).

[Gromdor]

A lot of the US debt is actually from social security. If we wipe it, we wipe that as well.

[Jeremiah65]

A lot of the US debt is actually from social security. If we wipe it, we wipe that as well.

How old are you Gromdor? I ask because if you are not of a certain age or beyond, you might not know the "whole" truth about why SS is causing debt.

Ronald Reagan stole...erm...I mean...borrowed from the fund to balance the budget. Up to that point it had literally trillions of dollars in the black.

The gov likes to tell the young people that SS is part of the debt and a drag on society because they don't want to pay back what they "borrowed" from a "trust"...you know...it was a "trust"...it was not ever supposed to be touched for anything but paying the people.

Social Security would have lasted many-many years into the future...but alas, it is doomed. Too many people drawing from it now for retirement or disability and not enough working people with "decent" wages paying into it...the pay in is a percentage of income...if you have a low wage, you are not paying much in...so the system is running dry at an accelerating rate...

BUT...do not talk about it being the old folks fault or the ideas fault...it was a fine idea and would have worked had GOV kept their fingers out of it...

[Gromdor]

Yup, I knew. That is what I am talking about. The #1 owner of the US Debt is Social Security at 2.72 trillion dollars.