America's Debt: Shame on Them

Discussion in 'Politics' started by Modbert, Jul 9, 2011.

  1. Modbert
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    Modbert Daydream Believer Supporting Member

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    America's debt: Shame on them | The Economist

    The article sums up the current situation quite well.
     
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  2. CrusaderFrank
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    CrusaderFrank Diamond Member

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    So, wait a second, is running up annual trillion dollar deficits not a good idea?
     
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  3. Trajan
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    Trajan conscientia mille testes

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    wasn't this posted in another thread?:eusa_eh:

    and in 3 weeks they will not go into default, they will shuffle the revenue 'ins' to pay the interest 'outs' on debt., and start cutting down on sending checks out to or funding operating budgets.
     
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  4. Trajan
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    Trajan conscientia mille testes

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    and another view if the default actually take splace;


    What If the U.S. Treasury Defaults?
    'People aren't going to wonder whether 20 years ago we delayed an interest payment for six days. They're going to wonder whether we got our house in order.'

    Stanley Druckenmiller, with James Freeman

    snip-

    He contemplates the possibilities for bond investors if a drawn-out negotiation in Washington creates a short-term problem in servicing the debt but ultimately reduces spending:

    "Here are your two options: piece of paper number one—let's just call it a 10-year Treasury. So I own this piece of paper. I get an income stream obviously over 10 years . . . and one of my interest payments is going to be delayed, I don't know, six days, eight days, 15 days, but I know I'm going to get it. There's not a doubt in my mind that it's not going to pay, but it's going to be delayed. But in exchange for that, let's suppose I know I'm going to get massive cuts in entitlements and the government is going to get their house in order so my payments seven, eight, nine, 10 years out are much more assured," he says.

    Then there's "piece of paper number two," he says, under a scenario in which the debt limit is quickly raised to avoid any possible disruption in payments. "I don't have to wait six, eight, or 10 days for one of my many payments over 10 years. I get it on time. But we're going to continue to pile up trillions of dollars of debt and I may have a Greek situation on my hands in six or seven years. Now as an owner, which piece of paper do I want to own? To me it's a no-brainer. It's piece of paper number one."

    Mr. Druckenmiller says that markets know the difference between a default in which a country will not repay its debts and a technical default, in which investors may have to wait a short period for a particular interest payment. Under the second scenario, he doubts that investors such as the Chinese government would sell their Treasury debt and take losses on the way out—"because I'll guarantee you people like me will buy it immediately."

    Now suppose, Mr. Druckenmiller adds, that he's wrong. If the market implodes on day two of the technical default, Mr. Obama and Congress would be motivated to finally come to agreement. But he doesn't expect such market chaos. "My guess is that the bond market would rally as long as it believed the ultimate outcome was going to be genuine entitlement reform—that we wouldn't even have to find out about a meltdown because it wouldn't happen. And I have some history on my side here."

    And the scars to prove it. In 1995, Bill Clinton was threatening to veto budget cuts advanced by the Republican House. In return, congressional leaders threatened not to increase the federal debt ceiling. Back then, before Americans knew what a real government spending crisis was, the debt stood at less than $5 trillion. (It has nearly tripled since then and is poised to race some $10 trillion higher in the next decade.)

    Mr. Druckenmiller had already recognized that the government had embarked on a long-term march to financial ruin. So he publicly opposed the hysterical warnings from financial eminences, similar to those we hear today. He recalls that then-Secretary of the Treasury Robert Rubin warned that if the political stand-off forced the government to delay a debt payment, the Treasury bond market would be impaired for 20 years.

    "Excuse me? Russia had a real default and two or three years later they had all-time low interest rates," says Mr. Druckenmiller. In the future, he says, "People aren't going to wonder whether 20 years ago we delayed an interest payment for six days. They're going to wonder whether we got our house in order."

    more at-

    The Weekend Interview with Stanley Druckenmiller: What If the U.S. Treasury Defaults? - WSJ.com
     
  5. CrusaderFrank
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    CrusaderFrank Diamond Member

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    "There is no good economic reason why this should be happening. America’s net indebtedness is a perfectly affordable 65% of GDP..."

    Translation: we're ignoring the important $1.6 trillion deficit and draw your attention to a quasi-meaningless statistic.
     
  6. shintao
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    shintao Take Down ~ Tap Out

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  7. shintao
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    shintao Take Down ~ Tap Out

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    Hmm, and the answer is,...........I HOPE THE FUCK IT WAS!!!! lol!
     
  8. Modbert
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    Modbert Daydream Believer Supporting Member

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    From the opening paragraph:

     
  9. DontBeStupid
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    DontBeStupid Look it up!

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    I still have yet to see any GOP "Leaders" explain why our having debt is a bad thing. So bad, that we need to risk default in order to stop it.
     
  10. Grampa Murked U
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    Grampa Murked U Diamond Member

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    Funny, blame republicans and leave out the fact that you just blew a trillion dollars. That money could have kept us afloat if we went beyond the so called deadline.

    When I get into financial trouble the solution I always turn to is spending more money.
     
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