What happens if US debt is Downgrade?

[LibocalypseNow]

these same credit agencies had AIG as AAA a few days before they imploded

Yes they're wrong most of the time. Some Politicians are just using these bogus Credit Rating Agencies to scare the People. It is working on many unfortunately. These bogus Credit Ratings Agencies can't scare me though. Because i know they're full of shit most of the time. People just need to quit being so afraid and start getting informed. These Politicians count on the sheep being spooked and uninformed. The last thing they want is for people to get informed. They know their house of cards would fall if that happened. Just don't let them scare you. Not raising the Debt Limit wont be the end of America. That's just Bullshit.

If the debt ceiling is not raised we would eventually default on much of our debt. The Tea Party would get what they want, about 1/3 of the the government would totally disappear quite abruptly. That would suck about 1.5 trillion dollars out of the economy and a couple of hundred thousand government jobs along with many millions in the private sector, state, and local government jobs that depend on the federal government.

Nah you're just buying into their Fear Mongering Bullshit. Cuts would have to be made but cuts are going to have to be made anyway. This just forces their hand. And that's probably the only way they'll get their House in order. Cuts will happen. It's just a matter of when and how much. $16 Trillion in Debt isn't gonna just magically disappear. Tough decisions have to be made and they might as well start now. No need to put it all off. Lets address these serious issues right now. We owe that to future generations. The time is now.

 

[Flopper]

Looks folks those debt instruments are underpinning a lot of balance sheets.

If the debt's value significantly falls on secondary markets dominos are going to start falling.

Those t-bills are counted as good as cash.

If the debt market loses that confidence in them molly bar the door.

I do not think that this will happen, but if it does, those of you who are now whistling in the dark are going to be in for a rude awakening.

It's hard to say who gets hurt the most from a downgrade or default but I would save holders of treasury bonds are pretty high on the list.

Although the U.S. citizens and businesses own 75% of the US debt,
China holds almost 1.5 trillion
Japan holds nearly a trillion
About 40 other countries hold about 1.25 trillion.
Social Security Trust fund owns 2.5 trillion.
Local and state governments, banks and credit unions hold a total of 1.2 trillion.
Federal Reserve Holds 2.2 trillion.
The remaining 5.3 trillion is held by individuals, mutual funds and businesses.

The loss in value of treasury bonds from downgrading or default is unknown however prices of treasury bills have been sharply lower at recent auctions. The bond market is beginning to take this threat seriously.