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Default Wouldn’t Be That Bad


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#1    questionmark

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    Cinicus Magnus

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Posted 09 October 2013 - 12:31 PM

NY Times said:


WASHINGTON — Senator Richard Burr, Republican of North Carolina, a reliable friend of business on Capitol Hill and no one’s idea of a bomb thrower, isn’t buying the apocalyptic warnings that a default on United States government debt would lead to a global economic cataclysm.

“We always have enough money to pay our debt service,” said Mr. Burr, who pointed to a stream of tax revenue flowing into the Treasury as he shrugged off fears of a cascading financial crisis. “You’ve had the federal government out of work for close to two weeks; that’s about $24 billion a month. Every month, you have enough saved in salaries alone that you’re covering three-fifths, four-fifths of the total debt service, about $35 billion a month. That’s manageable for some time.”

As President Obama steps up his declarations about the dire consequences of not raising the debt limit, increasing numbers of Congressional Republicans are disputing that forecast, as well as the timing of when the Treasury might run out of money and the implications of a default, further complicating the negotiating situation for both Mr. Obama and Speaker John A. Boehner, who must find a way out of the impasse.

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Well guys, be careful what you wish for: you could get it.

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#2    and then

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Posted 09 October 2013 - 12:48 PM

View Postquestionmark, on 09 October 2013 - 12:31 PM, said:

Well guys, be careful what you wish for: you could get it.
They know which side the bread is buttered on.  When the real crunch comes they will listen to their masters and make a deal.  'Til then I'm happy to see Obama be stiff armed for a change.

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#3    Rafterman

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Posted 09 October 2013 - 02:17 PM

I've often wondered that myself.  So what if we default?  We're still the strongest economy in the world with the largest military to back it up - not much anyone can do about it.

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#4    questionmark

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Posted 09 October 2013 - 02:23 PM

View PostRafterman, on 09 October 2013 - 02:17 PM, said:

I've often wondered that myself.  So what if we default?  We're still the strongest economy in the world with the largest military to back it up - not much anyone can do about it.

Wishful thinking. The military would have to be cut down by at least 50% (that is how much of it is paid by debts), the dollar would go straight to hell and gas will cost $20 at the pump.

I don't think that anybody would want to do anything to the US except what is done to all who default on their debt, don't give em anything unless they put money on the table. And what everybody will consider money is certainly not US dollars.

If we default we can kiss our way of life goodbye. Think 1920s and 30s.

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#5    Rafterman

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Posted 09 October 2013 - 05:59 PM

View Postquestionmark, on 09 October 2013 - 02:23 PM, said:

Wishful thinking. The military would have to be cut down by at least 50% (that is how much of it is paid by debts), the dollar would go straight to hell and gas will cost $20 at the pump.

I don't think that anybody would want to do anything to the US except what is done to all who default on their debt, don't give em anything unless they put money on the table. And what everybody will consider money is certainly not US dollars.

If we default we can kiss our way of life goodbye. Think 1920s and 30s.

I'm not so sure about that given that those who hold are debt are as dependent upon us to pay it as we are dependent upon them to loan it.

Remember when the crash happened in 2008 and consumer spending plummeted?  China practically went into panic mode because if we're not buying, they're not able to sustain their lopsided system.

Besides, even if there was default, it's not like it wouldn't get paid eventually.

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#6    questionmark

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Posted 09 October 2013 - 06:10 PM

View PostRafterman, on 09 October 2013 - 05:59 PM, said:

I'm not so sure about that given that those who hold are debt are as dependent upon us to pay it as we are dependent upon them to loan it.

Remember when the crash happened in 2008 and consumer spending plummeted?  China practically went into panic mode because if we're not buying, they're not able to sustain their lopsided system.

Besides, even if there was default, it's not like it wouldn't get paid eventually.

Well, not this time, China's government has changed and they are now more interested in developing the country inwards than outwards ('cause if they don't do something soon they will have a new revolution on their hands). Don't expect them to lend more (in fact they are not already). Except for the Japanese and the Saudis every country has shortened its holdings in US bonds, mostly because at a yield of one point something you might as well keep the money under the pillow, safer and your loss of total risk is near 0.

So what remains is that the Fed revolving door system will have to increase: The Fed prints money, lends it for less than 1% and the banks buy debt bonds with 1.5%. They can live quite well from that half percent.

As long as the greenback is the reserve currency that will work for quite a while yet. It will not be as soon as the US defaults. Nobody will want to touch dollars with a ten foot pole. And then it will be evident that the emperor gots no clothes.

The rest, well have a look what happened to Argentina when they defaulted in 2005, same story.

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#7    CyberKen

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Posted 09 October 2013 - 06:17 PM

View Postand then, on 09 October 2013 - 12:48 PM, said:

They know which side the bread is buttered on.  When the real crunch comes they will listen to their masters and make a deal.  'Til then I'm happy to see Obama be stiff armed for a change.

It's not just China and Japan.  The entire world economy is at stake.

China and Japan will do whatever it takes to push Obama to the compromise table with Speaker John Boehner.

The Boehner Compromise is reasonable. Obama will sign on the bottom line.


#8    RavenHawk

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Posted 09 October 2013 - 06:20 PM

If the solution is to print more money, I'd rather see default.

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#9    questionmark

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Posted 09 October 2013 - 06:23 PM

View PostRavenHawk, on 09 October 2013 - 06:20 PM, said:

If the solution is to print more money, I'd rather see default.

Will end in the same, they will have to print faster with default because the dollar will loose value fast, and. as the whole economy is dependent on imports to even give a semblance of functioning, inflation will skyrocket.

They should have stopped printing money 12 years ago. But then it was more important to give supporter a tax break.

Edited by questionmark, 09 October 2013 - 06:24 PM.

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#10    CyberKen

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Posted 09 October 2013 - 06:26 PM

View PostRavenHawk, on 09 October 2013 - 06:20 PM, said:

If the solution is to print more money, I'd rather see default.

Positive Effect: China has stopped buying more T-Notes.

QE-Infinity has discouraged the Chinese from investing in more T-Notes that are losing value fast.

It's our own version of : Currency Manipulation :yes:


#11    questionmark

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Posted 09 October 2013 - 06:29 PM

View PostCyberKen, on 09 October 2013 - 06:26 PM, said:

Positive Effect: China has stopped buying more T-Notes.

QE-Infinity has discouraged the Chinese from investing in more T-Notes that are losing value fast.

It's our own version of : Currency Manipulation :yes:

Which is another reason why the Chinese have no influence in the White House (or anywhere else except with the companies manufacturing there).

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#12    ninjadude

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Posted 10 October 2013 - 03:29 AM

View Postquestionmark, on 09 October 2013 - 12:31 PM, said:

Well guys, be careful what you wish for: you could get it.

he posts here as cyberken

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#13    Yamato

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Posted 10 October 2013 - 03:38 AM

View PostRavenHawk, on 09 October 2013 - 06:20 PM, said:

If the solution is to print more money, I'd rather see default.
Of course, because Mitt Romney isn't President and we're not spending a trillion dollars on Iran right now.   I'd rather have seen default 10 years ago.   We'd be well on our way to an actual recovery right now.   Would I care that a bunch of greasy democrats playing politics stick the mud on the republicans for it?   No, because politics doesn't determine right from wrong, and as a bonus, for once in my life I'd be able to say that the republicans did the right thing.

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#14    Yamato

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Posted 10 October 2013 - 03:49 AM

Cutting the military in half would lower prices military pays for the stuff it needs.  So instead of paying $600 for a Halliburton toilet seat lid, it might only cost $50.  A hammer that costs $90 might only cost $10 when the military starts shopping at Walmart instead of trying to maximize the cost of everything with Cost-Plus accounting scams run by the Pentagon.

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#15    Sir Wearer of Hats

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Posted 10 October 2013 - 06:12 AM

The US defaulting will cause havoc - "do you have food for two weeks to a month" level havoc - around the globe.





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