Let the nation default?

[hangover]

Rand Paul and a few other teabaggers are now saying that if we don't raise the debt limit, the government won't default. Obviously Paul believes his ink pen is a magic wand.

In the real world, they're talking about a six week extension, so we can go through this all again at Christmas time. That way the cons can play the Grinch, and steal all the children's presents.

"If your heart is in the right place, it's on the left." That explains a lot about the cons, don't it.

 

[KissMy]

We'll see. Though I am heavy in bonds right now and would not be upset Most of the time when folks cry about a predictable disaster that disaster is already factor into the market price.

There will be a relief rally every time the street feels there is agreement & debt crisis may be averted. But those should be sold, because they will be short lived just like the extended Fed printing $85 billion rally was short lived.

lol... the new Fed Chair likes to print money for her master. I don't think there will be a shortage of cash for buying stocks and any time soon and with the dollar's slide continuing based on running the printers 24/7 I don't see a reason to assume the share prices won't continue to go up against the dollar.

Well the relief rally did start with her announcement, so the belief is that she will extend or increase the printing. That could make bring the market up & hold bonds down.

 

[g5000]

I would like it noted that there are psychopaths within the GOP who are now saying that letting the October 17th deadline pass without raising the debt ceiling won't be a big deal.

So if and when that happens, the GOP will have full ownership of that insanity.

Remember that when they roll out more cancer kids affected by their dick move. Rembember that when buyers of US Treasuries push up the interest rate on our debt.

 

[RKMBrown]

There will be a relief rally every time the street feels there is agreement & debt crisis may be averted. But those should be sold, because they will be short lived just like the extended Fed printing $85 billion rally was short lived.

lol... the new Fed Chair likes to print money for her master. I don't think there will be a shortage of cash for buying stocks and any time soon and with the dollar's slide continuing based on running the printers 24/7 I don't see a reason to assume the share prices won't continue to go up against the dollar.

Well the relief rally did start with her announcement, so the belief is that she will extend or increase the printing. That could make bring the market up & hold bonds down.

I would think a falling dollar props stocks, bonds, & commodities no?

 

[Toro]

As companies begin reporting third-quarter financial results this week, executives are warning that a long-term government shutdown could crimp their businesses, especially if they are close to federal installations or have customers near the poverty line. ...

The biggest casualties will be government contractors, aerospace and defense companies and firms, such as pharmaceutical makers, that rely on agencies such as the Food and Drug Administration for approvals. But in addition, companies that serve budget-conscious customers, such as Costco Wholesale Corp. COST +0.50% , are feeling the impact.

When the government last shut down for 21 days ending in January 1996, the gross domestic product was sliced by 0.5 percentage point for the 1995 fourth quarter, and "the technology boom of that time made underlying growth much stronger than it is today," said Mark Zandi , chief economist at Moody's Analytics.

Intel Corp. INTC +1.75% Chief Financial Officer Stacy Smith is worried about another battle over raising the debt ceiling.

"We saw it with the last fight: It had a real impact on the economy for the past couple of quarters," he said in an interview last month. "It impacted people's confidence."

Wolverine World Wide Inc., WWW +2.00% meanwhile, was more specific. Its new risk-factor disclosure cautioned of "delays in importing products at U.S. ports, supply-chain disruption and reduced purchasing by the Department of Defense or other military purchasers." ...

Asked by a stock analyst whether there was anything strategic Costco was doing because of the shutdown, CFO Richard Galanti deadpanned: "Other than scratching our head in disbelief?

What CFOs Are Saying About the Shutdown - WSJ.com

 

[Toro]

By Tony
JAMES

I have always been amazed that anyone would choose to play Russian roulette. Who could ever be so bored, so irresponsible, or have such low future aspirations that they would flirt willfully with death while having nothing to gain?

Yet Congress is doing just that with the debt ceiling. Except there won't be just one victim. Every American will suffer. ...

There is a suggestion that the Treasury can pay certain priority items (such as interest) and not others (such as contractors).

The question is whether even this is feasible. Other than interest on U.S. government debt, which is paid through the Fedwire system, the Treasury makes over 80 million individual payments each month through a computerized payment system.

When a legitimate obligation of the government is submitted, it is paid. Paying all of certain obligations, part of others and none of some would require a massive reprogramming of complex systems in an impossibly short time. Even if this task were technically possible, choosing among claims for special treatment is of questionable legality and would surely be the subject of massive lawsuits for years to come. Never having defaulted on the national debt, the country is drifting blindly into uncharted waters. ...

All this is the "good" scenario. I say good because it assumes that the government can continue to borrow. Can we be sure that the government can avoid default on its Treasury debt while defaulting on nearly all of its other obligations? If not, the result is catastrophe. Treasury's modest cash reserves will evaporate overnight. By mid-November, if the Treasury can't refinance the principal due on its bonds, the government will be behind by an additional $3.3 trillion. By Dec. 31, it will be behind $5.5 trillion.

A Treasury debt payment failure will also trigger defaults in the massive credit default swap and derivatives markets that nearly brought the country to its knees in 2008. Many of these are written on Treasurys or otherwise are tied to them. The financial system could melt.

Half of all the U.S. debt is owned by non-Americans. If foreign owners of U.S. debt, including foreign governments, grow wary of rolling over the maturing debt they own, U.S. Treasury financing will fail. Maybe foreign powers in the Middle East and Asia will be kind to us—but at what long-term costs and obligations? After all, beggars can't be choosers. ...

Mr. James is president and chief operating officer of Blackstone.

Tony James: A Federal Default Invites Catastrophe - WSJ.com

 

[Spoonman]

I would like it noted that there are psychopaths within the GOP who are now saying that letting the October 17th deadline pass without raising the debt ceiling won't be a big deal.

So if and when that happens, the GOP will have full ownership of that insanity.

Remember that when they roll out more cancer kids affected by their dick move. Rembember that when buyers of US Treasuries push up the interest rate on our debt.

except for the fact the democrats and obama still refuse to negotiate. you can not say it is our way or nothing and not accept partial responsibility

 

[RKMBrown]

By Tony
JAMES

I have always been amazed that anyone would choose to play Russian roulette. Who could ever be so bored, so irresponsible, or have such low future aspirations that they would flirt willfully with death while having nothing to gain?

Yet Congress is doing just that with the debt ceiling. Except there won't be just one victim. Every American will suffer. ...

There is a suggestion that the Treasury can pay certain priority items (such as interest) and not others (such as contractors).

The question is whether even this is feasible. Other than interest on U.S. government debt, which is paid through the Fedwire system, the Treasury makes over 80 million individual payments each month through a computerized payment system.

When a legitimate obligation of the government is submitted, it is paid. Paying all of certain obligations, part of others and none of some would require a massive reprogramming of complex systems in an impossibly short time. Even if this task were technically possible, choosing among claims for special treatment is of questionable legality and would surely be the subject of massive lawsuits for years to come. Never having defaulted on the national debt, the country is drifting blindly into uncharted waters. ...

All this is the "good" scenario. I say good because it assumes that the government can continue to borrow. Can we be sure that the government can avoid default on its Treasury debt while defaulting on nearly all of its other obligations? If not, the result is catastrophe. Treasury's modest cash reserves will evaporate overnight. By mid-November, if the Treasury can't refinance the principal due on its bonds, the government will be behind by an additional $3.3 trillion. By Dec. 31, it will be behind $5.5 trillion.

A Treasury debt payment failure will also trigger defaults in the massive credit default swap and derivatives markets that nearly brought the country to its knees in 2008. Many of these are written on Treasurys or otherwise are tied to them. The financial system could melt.

Half of all the U.S. debt is owned by non-Americans. If foreign owners of U.S. debt, including foreign governments, grow wary of rolling over the maturing debt they own, U.S. Treasury financing will fail. Maybe foreign powers in the Middle East and Asia will be kind to us—but at what long-term costs and obligations? After all, beggars can't be choosers. ...

Mr. James is president and chief operating officer of Blackstone.

Tony James: A Federal Default Invites Catastrophe - WSJ.com

Catastrophe... that like the end of the world or something?

It won't happen, can't happen, we have tons of money to pay interest on the debt. A default could only happen by order from the president. However, it would be an order that is not implemented. The president would be removed from office if he ever gave such an order.

 

[Flopper]

But it's not just spending. It's tax revenues also. Germany has higher spending AND higher taxes and a higher bond rating than the US.

That doesn't mean we have to raise taxes. That's a question of what type of society we want. But as it pertains to our financial soundness, conservatives NEVER focus on raising taxes, which would help with the deficit. (Like, in fairness, liberals never focus on cutting spending.)

The US bond rating downgrade was a sham. Here's the problem. If the US truly defaulted, meaning we financially weren't able to meet our obligations, not just our politicians do it because they can't get along, that would be a truly cataclysmic worldwide event, including to Germany. And it would greatly affect their ability to meet their obligations, and they are so top heavy they might not be able to meet them. It's hard to see anyone rated above the US government because the US government going down would take them down too. It's like having an an impenetrable safe ... riding on the Titanic. The Titanic goes down, the safe goes with it.

I don't really bring that up because I like highlighting how irresponsible our politicians are. But when people try to say countries like Germany are rated higher, I have to chuckle because it's really hard to take seriously.

It is not a matter of being able to meet our obligations but whether we choose to do so.

 

[Toro]

But it's not just spending. It's tax revenues also. Germany has higher spending AND higher taxes and a higher bond rating than the US.

That doesn't mean we have to raise taxes. That's a question of what type of society we want. But as it pertains to our financial soundness, conservatives NEVER focus on raising taxes, which would help with the deficit. (Like, in fairness, liberals never focus on cutting spending.)

The US bond rating downgrade was a sham. Here's the problem. If the US truly defaulted, meaning we financially weren't able to meet our obligations, not just our politicians do it because they can't get along, that would be a truly cataclysmic worldwide event, including to Germany. And it would greatly affect their ability to meet their obligations, and they are so top heavy they might not be able to meet them. It's hard to see anyone rated above the US government because the US government going down would take them down too. It's like having an an impenetrable safe ... riding on the Titanic. The Titanic goes down, the safe goes with it.

I don't really bring that up because I like highlighting how irresponsible our politicians are. But when people try to say countries like Germany are rated higher, I have to chuckle because it's really hard to take seriously.

It is not a matter of being able to meet our obligations but whether we choose to do so.

Bingo.

Orange County defaulted and declared bankruptcy not because they couldn't pay but because they chose not to.

It's all about political will.

 

[kaz]

But it's not just spending. It's tax revenues also. Germany has higher spending AND higher taxes and a higher bond rating than the US.

That doesn't mean we have to raise taxes. That's a question of what type of society we want. But as it pertains to our financial soundness, conservatives NEVER focus on raising taxes, which would help with the deficit. (Like, in fairness, liberals never focus on cutting spending.)

The US bond rating downgrade was a sham. Here's the problem. If the US truly defaulted, meaning we financially weren't able to meet our obligations, not just our politicians do it because they can't get along, that would be a truly cataclysmic worldwide event, including to Germany. And it would greatly affect their ability to meet their obligations, and they are so top heavy they might not be able to meet them. It's hard to see anyone rated above the US government because the US government going down would take them down too. It's like having an an impenetrable safe ... riding on the Titanic. The Titanic goes down, the safe goes with it.

I don't really bring that up because I like highlighting how irresponsible our politicians are. But when people try to say countries like Germany are rated higher, I have to chuckle because it's really hard to take seriously.

It is not a matter of being able to meet our obligations but whether we choose to do so.

First, that isn't consistent with what they said when they downgraded us. The primary points were our deficits and debt as a percent of GDP.

Second, there's no discussion of not paying the interest on our debt. We have $2T a year in tax money coming in, more than ample to service our debt, and by the 14th amendment we have to pay it first. The debate is that democrats are arguing that not sending welfare checks out is a "default."

 

[kaz]

The US bond rating downgrade was a sham. Here's the problem. If the US truly defaulted, meaning we financially weren't able to meet our obligations, not just our politicians do it because they can't get along, that would be a truly cataclysmic worldwide event, including to Germany. And it would greatly affect their ability to meet their obligations, and they are so top heavy they might not be able to meet them. It's hard to see anyone rated above the US government because the US government going down would take them down too. It's like having an an impenetrable safe ... riding on the Titanic. The Titanic goes down, the safe goes with it.

I don't really bring that up because I like highlighting how irresponsible our politicians are. But when people try to say countries like Germany are rated higher, I have to chuckle because it's really hard to take seriously.

It is not a matter of being able to meet our obligations but whether we choose to do so.

Bingo.

Orange County defaulted and declared bankruptcy not because they couldn't pay but because they chose not to.

It's all about political will.

You've got a nice game of tennis going on there. You are saying we wouldn't pay interest on the debt, but you're not, but you are, but you're not...

 

[KissMy]

Catastrophe... that like the end of the world or something?

It won't happen, can't happen, we have tons of money to pay interest on the debt. A default could only happen by order from the president. However, it would be an order that is not implemented. The president would be removed from office if he ever gave such an order.

Selective default is against the law. Treasurer is liable & can be fired or jailed. Treasury will follow the law & allocate the funds accordingly. There will be a default on market debt instruments without a new law passed by congress & signed by the president reallocating funds.

ARTICLE VI. TERMINATION FOR CAUSE AND OTHER REMEDIES

Section 6.1 General Events of Default.

In the event that either:
(a) any representation, warranty, certification, assurance or any other statement of fact contained in this Agreement or the Application of the Participating State including, but not limited to, the Assurances (Non-Construction) contained as part of the Application, or any representation or warranty set forth in any document, report, certificate, financial statement or instrument now or hereafter delivered to Treasury in connection with this Agreement, is found to be inaccurate, false, incomplete or misleading when
made, in any material respect;
or
(b) the Participating State materially fails to observe, comply with, meet or perform any term, covenant, agreement or other provision contained in this Agreement including, but not limited to, the Participating State’s failure to submit complete and timely quarterly reports or annual reports, or the Participating State ceases to use the Allocated Funds to undertake the activities authorized in Annex 1 attached hereto;

Treasury, in its sole discretion, may find the Participating State to be in default.

Section 6.2 Discretionary Remedies.

If Treasury finds the Participating State to be in default under Section 6.1 of this Agreement, Treasury may, in its sole discretion, take any one or more of the following actions, subject to Section 6.6 of this Agreement:

(a) withhold Disbursements pending the Participating State’s correction of the default;
or
(b) wholly or partly reduce, suspend, or terminate the commitment of Treasury to make Disbursements to the Participating State under this Agreement, whereupon the commitment of Treasury to make Disbursements to the Participating State under this Agreement will be reduced, suspended, or terminated, as the case may be.

Section 6.3 Specific Events of Default

In the event of a Treasury Inspector General audit finding of either:
(a) intentional or reckless misuse of Allocated Funds by the Participating State;
or
(b) the Participating State having intentionally made misstatements in any report issued to Treasury under the Act; Treasury shall find the Participating State to be in default.

Section 6.4 Mandatory Remedies.

If Treasury finds the Participating State to be in default under Section 6.3 of this Agreement, Treasury shall take the following actions:
(a) in the case of an event of default under Section 6.3(a), recoup any misused Allocated Funds that have been disbursed to the Participating State;
or
(b) in the case of an event of default under Section 6.3(b), terminate the commitment of Treasury to make Disbursements to the Participating State under this Agreement, and find the State ineligible to receive any additional funds under the Act, whereupon the commitment of Treasury to make Disbursements to the Participating State under this Agreement will be terminated and the State will be ineligible to receive any additional funds under the Act.

 

[RandallFlagg]

I would like it noted that there are psychopaths within the GOP who are now saying that letting the October 17th deadline pass without raising the debt ceiling won't be a big deal.

So if and when that happens, the GOP will have full ownership of that insanity.

Remember that when they roll out more cancer kids affected by their dick move. Rembember that when buyers of US Treasuries push up the interest rate on our debt.

Insanity??

What EXACTLY will happen if we default? Don't give me hyperbole - tell me EXACTLY what will happen.

I continually hear these fear mongers (code for liberals) screaming at the top of the collective helmet wearing, soccer playing lungs that "The world will fall into chaos!!!"

This coming from the same limp wrists that claimed that the country would fall apart if we enacted a sequester bill.

Even with this BS shutdown, the only affect it has had is on the people Obama wanted to punish to make a point. Nothing more. The world is still turning, people are still looking for work, the DOW is still limping along, Obama still has a private golf course, BO, the White House Dog still flies on his own helicopter with his $100,000 per year "dog handler"

So - What will happen?

 

[thanatos144]

We wont default unless someone does something unconstitutional.....If we dont raise the debt ceiling we will have to cut spending and not make NEW SPENDING....that the real rub that irritates progressives.

 

[Flopper]

The US bond rating downgrade was a sham. Here's the problem. If the US truly defaulted, meaning we financially weren't able to meet our obligations, not just our politicians do it because they can't get along, that would be a truly cataclysmic worldwide event, including to Germany. And it would greatly affect their ability to meet their obligations, and they are so top heavy they might not be able to meet them. It's hard to see anyone rated above the US government because the US government going down would take them down too. It's like having an an impenetrable safe ... riding on the Titanic. The Titanic goes down, the safe goes with it.

I don't really bring that up because I like highlighting how irresponsible our politicians are. But when people try to say countries like Germany are rated higher, I have to chuckle because it's really hard to take seriously.

It is not a matter of being able to meet our obligations but whether we choose to do so.

First, that isn't consistent with what they said when they downgraded us. The primary points were our deficits and debt as a percent of GDP.

Second, there's no discussion of not paying the interest on our debt. We have $2T a year in tax money coming in, more than ample to service our debt, and by the 14th amendment we have to pay it first. The debate is that democrats are arguing that not sending welfare checks out is a "default."

S&P made it pretty clear that one of the reason for downgrade was the ineffectiveness of American political parties.

"More broadly, the downgrade reflects our view that the effectiveness,
stability, and predictability of American policymaking and political
institutions have weakened at a time of ongoing fiscal and economic
challenges to a degree more than we envisioned when we assigned a
negative outlook to the rating on April 18, 2011."
S&P | United States of America Long-Term Rating Lowered To 'AA+' Due To Political Risks, Rising Debt Burden; Outlook Negative | Americas

Yes, we do have the revenue to service our debt. However, servicing debt is not the only obligation the government has. Laws passed by congress has obligated the government to provide a multitude of services. When the congress doesn't act on either the budget or the debt ceiling, then the administration must decide which obligations are to be met and which aren't. Congress by lack of action chooses to let the administration make the decisions and the administration chooses what obligations are to be met.

 

[RandallFlagg]

We wont default unless someone does something unconstitutional.....If we dont raise the debt ceiling we will have to cut spending and not make NEW SPENDING....that the real rub that irritates progressives.

But see, that's my point. We haven't worked within a BUDGET for the last 5 years. We are STILL operating under George Bush's final budget (on a continuing resolution) because Obama issued orders to Harry Reid to NOT allow a budget to come to the floor of the Senate for a vote - which he hasn't. The House has sent a budget (without fail - because it's their JOBS) and again, Harry Reid will NOT vote on any of them.

Now, we have reached (yet again) the ceiling of the 5 year old budget and in order to continue spending OUR money, they need more.

That's why my question goes unanswered: What EXACTLY happens IF we default?

My take on it is that ABSOLUTELY NOTHING happens. The "fear" from those in "gubmit" is that we - the American people - will FINALLY figure out that these fools in DC are ROYALLY SCREWING US and have been for years and years.....

 

[KissMy]

We wont default unless someone does something unconstitutional.....If we dont raise the debt ceiling we will have to cut spending and not make NEW SPENDING....that the real rub that irritates progressives.

You mean break the law taking the money congress & president allocated to one entity & pay it to another by having treasury instead of congress pick winners & losers.

 

[Spoonman]

It is not a matter of being able to meet our obligations but whether we choose to do so.

First, that isn't consistent with what they said when they downgraded us. The primary points were our deficits and debt as a percent of GDP.

Second, there's no discussion of not paying the interest on our debt. We have $2T a year in tax money coming in, more than ample to service our debt, and by the 14th amendment we have to pay it first. The debate is that democrats are arguing that not sending welfare checks out is a "default."

S&P made it pretty clear that one of the reason for downgrade was the ineffectiveness of American political parties.

"More broadly, the downgrade reflects our view that the effectiveness,
stability, and predictability of American policymaking and political
institutions have weakened at a time of ongoing fiscal and economic
challenges to a degree more than we envisioned when we assigned a
negative outlook to the rating on April 18, 2011."
S&P | United States of America Long-Term Rating Lowered To 'AA+' Due To Political Risks, Rising Debt Burden; Outlook Negative | Americas

Yes, we do have the revenue to service our debt. However, servicing debt is not the only obligation the government has. Laws passed by congress has obligated the government to provide a multitude of services. When the congress doesn't act on either the budget or the debt ceiling, then the administration must decide which obligations are to be met and which aren't. Congress by lack of action chooses to let the administration make the decisions and the administration chooses what obligations are to be met.

yep, parties. not just republicans

 

[Spoonman]

so we default. what's going to happen? China will stop sending us cheap stuff? isn't that what you libs claim to want anyway? look at the bright side. we'll have to bring jobs back onshore. the nwatch how fast the libs say they were responsible for the shutdown