[Kerrigan]

Why do democrats keep going on about a default on 2 August? The U.S. government has a huge amount of monthly revenue which they can use to pay interest on bonds, military paychecks, social security checks, etc etc.

The government would then find relatively unimportant government expenditures and put them on hiatus--Amtrak, Nasa, rubbish NIH studies, Medicaid-funded mobile phones, foreign aid; any one of these programs could get cutbacks in order to save money for bond payments.

This is purely a scare tactic. The only scary thing is knowing that Obama might willingly withhold bond payments and social security checks to try and score a political victory.

[turtle777]

The only people affected on Aug 2 if the debt ceiling isn't extended are those of Obama's choosing.

If there are no Social Security checks, it's because Obama want's to f*ck over those people and blame it on Republicans. He is the epitome of a dishonest politician. It's disgusting.

-t

[Dork.]

Have you been paying attention to what the folks at S&P are saying? They don't just look at whether the US Treasury has the cash to make its bond payments, they look at the big picture. And even if the US does not default on its bond payments, if the ceiling is not raised and some US payees get IOU's, the US credit rating will take a hit.

(And BTW, the S&P thinks that even if a technical default can be avoided on Aug. 2, then absent a deal it will have to come on Aug. 15th.)

The American Debt: S&P Paints a (Grotesque) Picture - The Note

Hey, turtle, you're an expert -- can you tell us what would happen to the economy if the US's credit rating gets lowered, even just a bit?

[Kerrigan]

Interest rates go up slightly from their current historic lows.

[turtle777]

Originally Posted by Dork. 

Hey, turtle, you're an expert -- can you tell us what would happen to the economy if the US's credit rating gets lowered, even just a bit?

It's not IF, it's WHEN.

The US credit rating will deteriorate sooner or later, there is no way around it.
What happens is that interest rates will go up. And that will push bond prices, along with other things down (like housing prices). The stock market's reaction will be hard to gauge, because you have two conflicting things happening: on the one hand inflation and more money printing, which will push equities up. On the other hand, the uncertain economic outlook and a sure next recession will push equities down due to earnings drops.

The US gov't will have to spend much more money on interest payments, which will exaserbate the debt problem. The value of the USD will go down compared to hard currencies.

Gold and Silver will continue their rise.

All this WILL HAPPEN FOR SURE, sooner or later.

Check out http://www.chrismartenson.com/, and his free Crash Course.

-t

[imitchellg5]

Originally Posted by Kerrigan 

Why do democrats keep going on about a default on 2 August?

If it's a Democrat thing, why are Republicans happy to play along?

[OAW]

^^^^^

Exactly. This is all about the US bond ratings which WILL take a hit if the government starts missing payments it is LEGALLY OBLIGATED to pay. Whether those are bond interest or otherwise. If the AAA rating is downgraded then the US will have to pay more in interest which only WORSENS the deficit problem. That then spreads throughout the rest of the economy. So when your credit card payment goes up because interest rates have risen don't blame President Obama. If it costs you more to take out a mortgage or auto loan then you can thank these Tea Party knuckleheads for that. Furthermore, there is still a CASH FLOW issue at play. Without a rise in the debt ceiling the government can only make payments based on the cash it has on hand. As money comes in then money can be paid out. Which is not necessarily when it's due.

For 200+ years this country has never even come close to default. Successive governments from both sides of the aisle knew better than to play around with the US credit rating. Now all of a sudden we are supposed to believe a bunch of Tea Party fools know better? These same idiots who were swearing on a stack of bibles that the President wasn't even a citizen?

OAW

[Kerrigan]

So it's advantageous for an entity's credit rating to borrow money to pay debt, than to pay with money it actually has?

Jesus H. Christ. I don't know which is worse: that this might be true, or that people actually believe it is true.

[Kerrigan]

Originally Posted by OAW 

For 200+ years this country has never even come close to default. Successive governments from both sides of the aisle knew better than to play around with the US credit rating. Now all of a sudden we are supposed to believe a bunch of Tea Party fools know better? These same idiots who were swearing on a stack of bibles that the President wasn't even a citizen?

OAW

OAW, did you even read the original post? There is a massive amount of revenue that comes in every month. Even if the debt limit isn't raised, all Uncle Sam has to do is take a small portion of that revenue and put it towards bond payments. Please read before replying.

The only person playing around with the credit rating of the US is the president, who, along with the democrat congress, borrowed this much money to begin with!

The president is like a teenager with a credit card, and the taxpayer is like the parents. When the idiot teenager maxes out his credit card, don't blame the parents when they force him to give up some of his junk in exchange for payments on the debt.

[OAW]

It's advantageous not to go run up the credit card and then all of a sudden decide that you want to go from a full time job that was more than covering your bills to a part time job that doesn't. And then go run up the card even more after that. So if you need to borrow some money from your brother in law to protect your credit score until such time as you can get your fiscal house in order then that's what hell you do.

Alternatively, you can just blow off some of the financial obligations you made because you are too freaking lazy to work a full time job.

OAW

[OAW]

Kerrigan,

Indeed I did read the OP. The problem with your argument is that it's rooted in a FLAWED PREMISE. The credit rating of the US is not based solely on its ability to make bond payments.

OAW

[Dork.]

So, if the debt limit is not extended, S&P has already stated that they will lower the US's credit rating, even if there is not a technical default on August 2. And no less an authority than turtle777 has confirmed that when the US's credit rating is lowered, bad sh!t happens.

Therefore, there are real consequences to the debt limit not being raised in time, to real people. turtle777 is technically correct that the only people who get the shaft are the ones that Obama chooses, but that's just because it's his job to decide which bills get paid and which wouldn't. In the event that the debt limit does not get raised, it's his job to choose.

Say what you want about Obama, but he's not the guy who's not doing his job in all this.



On a side note, can you name the person who said this? I'll give you a hint: he's dead (and probably spinning in his grave right now.)

Congress consistently brings the government to the edge of default before facing its responsibility. This brinkmanship threatens the holders of government bonds and those who rely on Social Security and veterans benefits. Interest rates would skyrocket, instability would occur in financial markets, and the federal deficit would soar. The United States has a special responsibility to itself and the world to meet its obligations.

[turtle777]

Originally Posted by Kerrigan 

So it's advantageous for an entity's credit rating to borrow money to pay debt, than to pay with money it actually has?

Jesus H. Christ. I don't know which is worse: that this might be true, or that people actually believe it is true.

No, you're looking at it from the wrong perspective.

What this whole charade shows is that there NO chance in hell that the US is really going to cut any Spendings. It's all smoke and mirrors. Therefore, the debt of the US will continue to rise, Uncle Ben is going to run the printing presses and helicopters like there's no tomorrow. Because there is none.

We're in a debt spiral that's completely out of control.

Basically, the debt rating agencies said: Aug 2 is your last chance to show that this country is not going down the drain. Well, we are. What happens on Aug 2 is secondary, what's telling is that we got there w/o finding any way to stop it. This country is paralyzed, f*cking politicians and entitles citizens brought it to its collapse.

See also here: And Now The Truth: "Spending Reductions = LIES" in [Market-Ticker]

-t

[Kerrigan]

To OAW:

Right. I guess?

But, common sense dictates that when you can no longer afford your standard of living, you make cuts, not borrow more. Why would you ask your brother-in-law to give you money so you can make a payment on your jet ski? Why not just sell the damn thing (metaphor for unnecessary expenditures)? Then again, perhaps I'm wrong.

One way or another, there will not be a default on 2 August. There may be a serious government shutdown, and perhaps even closures of some worthless government agencies--this is the worst case scenario. The only way a default would occur would be if Obama decided, all by himself, not to use existing revenue to pay bond interest payments.

[turtle777]

Well, there will only be a default if the US choses to default. Default would mean not paying bonds coming due, and not paying the bond interest. At this point, the US could cut other things, and still pay the bonds.

IMO, what's going to happen is a ULTRA-GIGA-sized QE3. The US is going to print its way to the moon, and beyond. The advantage: you don't have to cut spendings, everyone gets affected by proportion of their wealth / income.
Never mind that it will kill the poor and lower class. That's just the way it is.
It also takes care of entitlements. Fudge the CPI, and your Social Security will buy you a hamburger in 20 years,

Gold and Silver FTW.

-t

[Kerrigan]

That's been the response thus far. It's an idiotic response, given that the Chinese are hard at work earning money to buy our bonds, and they deserve to profit from it, not to have it devalued by Ben.

I still can't figure out why it's so damn hard to cut spending in Washington. Even with the Tea Party in congress, the spending just keeps going up.

[Dork.]

Originally Posted by Kerrigan 

I still can't figure out why it's so damn hard to cut spending in Washington. Even with the Tea Party in congress, the spending just keeps going up.

That's an easy one: nobody ever lost their gig in Congress by spending too much money. They buy votes.

[turtle777]

Originally Posted by Kerrigan 

I still can't figure out why it's so damn hard to cut spending in Washington. Even with the Tea Party in congress, the spending just keeps going up.

I think there are two reasons:

a) cutting always affects some politician's constituents, so you will never find anything that everyone agrees on.

2) every $1 cut from government is $1 less in GDP.
If you cut the current deficit to zero and get to a balanced Budget, the GDP will take a $1.7T hit.
That's 10% !!! Nobody wants to go into instant recession. They rather inflate their way out of it.

-t

[OAW]

@ Kerrigan

Agreed. But again you are talking about "technical" default on bond payments. If the government starts missing payments there will be consequences and repercussions. What happens when PRIVATE CONTRACTORS dont get paid? What impact does that have for the private economy? What happens when businesses start laying off employees because Uncle Sam stiffed them? What happens to consumer demand in the economy as a whole when private and public employees start to lose their jobs? What happens to the mortgage mess then? What happens to the millions of unemployed if unemployment insurance checks stop coming?

I think too many people think of this in the abstract. So much anti-government sentiment in the Tea Party crowd that they've convinced themselves that only the "out of control government" would be affected. As opposed to the population in general. Mark my word. If the stock market plunges several hundred points and people's 401Ks take a major hit … like when Congress first voted down TARP ... you can best believe that the Tea Party crowd will be changing its tune.

OAW

[turtle777]

Originally Posted by OAW 

I think too many people think of this in the abstract. So much anti-government sentiment in the Tea Party crowd that they've convinced themselves that only the "out of control government" would be affected. As opposed to the population in general. Mark my word. If the stock market plunges several hundred points and people's 401Ks take a major hit … like when Congress first voted down TARP ... you can best believe that the Tea Party crowd will be changing its tune.

The tea party is full of idiots, just like the Democratic party.

All the things you say above are inevitable. We're gonna see a huge deflationary bust, followed by huge inflation.

There's no avoiding it. Keep Spending like crazy: you get the bust.
Stop Spending: you get the bust.

The US went beyond the point of no return a long time ago.

-t

[hyteckit]

Damn stupid Republicans in Congress. Making it harder for me to run a business.

Everyone is going to suffer because of these stupid Republicans.

[lpkmckenna]

There will be no default because the Republicans will blink.

They were stupid to take this tack in the first place, given that they voted to raise the debt ceiling several times in recent history. The only reason they are trying to use it as a bargaining chip this time is because the current crop of Republicans is both stupider and more arrogant than usual.

[Kerrigan]

Wrong, McKenna. The Republicans in congress have always affirmed that there will be a debt ceiling increase, one way or another.

It is the Democrats that are using an imaginary default date as a bargaining chip to raise taxes.

[imitchellg5]

Originally Posted by Kerrigan 

Wrong, McKenna. The Republicans in congress have always affirmed that there will be a debt ceiling increase, one way or another.

It is the Democrats that are using an imaginary default date as a bargaining chip to raise taxes.

There HAS to be a debt ceiling increase for the US to operate, unfortunately. Since day one of this nation, the US has operated on borrowed money. Back then though, the US had more than just material wealth, it had resources that Europe needed to keep up their extravagant lifestyle; now it's switched. We're dependent on Asia for both material and financial survival.

[turtle777]

Originally Posted by imitchellg5 

Since day one of this nation, the US has operated on borrowed money. Back then though, the US had more than just material wealth, it had resources that Europe needed to keep up their extravagant lifestyle;

Also, as long as you're growing faster than your debt, it's not a problem. It's like an internet startup, that needs funds in the beginning, buying "growth".

Unfortunately, the US never realized the point where the debt grew faster than GPD. Blasting right through this important milestone, the debt is now too big to just be paid back.

There IS going to be default, in some sort or another. It can take different forms (reneging debt, devaluation of currency, seizure of private property...), but there's no other way.

-t

[Big Mac]

turtle, why does there have to be a default when our acknowledged debt is $14.5 trillion and we take in $2.2 trillion in tax revenue? Why not just cut out the unconstitutional Entitlements, unnecessary programs, unnecessary bureaucracies and military bloat to run large surpluses and pay it back? Run $300 billion annual surpluses and pay off the debt in 20 years. Why can't we do that?

Oh yeah, we're not an enlightened Constitutional Republic anymore. We're a corrupt, Entitlement-based democracy and an empire in decline.

[turtle777]

I'm not saying it's technically not possible. Like you said, there just is no will power to volunatirly start with a painful process.

Nobody wants to experience any pain as long as possible, which tragically leads to MAXIMUM pain for everybody eventually.

-t

[Wiskedjak]

Originally Posted by Kerrigan 

I still can't figure out why it's so damn hard to cut spending in Washington. Even with the Tea Party in congress, the spending just keeps going up.

Because, nobody, not even the Tea Partiers, *really* want to cut spending. You don't get votes by cutting spending. You get votes by *accusing* the other side of *not* cutting spending.

[Wiskedjak]

Originally Posted by turtle777 

The tea party is full of idiots, just like the Democratic party.

All the things you say above are inevitable. We're gonna see a huge deflationary bust, followed by huge inflation.

There's no avoiding it. Keep Spending like crazy: you get the bust.
Stop Spending: you get the bust.

The US went beyond the point of no return a long time ago.

-t

Exactly. The US hasn't had a truly fiscal conservative government in a long time.

Republicans,
Can the radical social conservatism, focus on the fiscal, get elected and fix this.

[Wiskedjak]

Originally Posted by Big Mac 

turtle, why does there have to be a default when our acknowledged debt is $14.5 trillion and we take in $2.2 trillion in tax revenue? Why not just cut out the unconstitutional Entitlements, unnecessary programs, unnecessary bureaucracies and military bloat to run large surpluses and pay it back? Run $300 billion annual surpluses and pay off the debt in 20 years. Why can't we do that?

Oh yeah, we're not an enlightened Constitutional Republic anymore. We're a corrupt, Entitlement-based democracy and an empire in decline.

Originally Posted by turtle777 

I'm not saying it's technically not possible. Like you said, there just is no will power to volunatirly start with a painful process.

Nobody wants to experience any pain as long as possible, which tragically leads to MAXIMUM pain for everybody eventually.

-t

I'm with both of you here.

[turtle777]

Nothing will change until a major portion of the American population realizes that all the entitlement expectations are nothing more than a victim mentality.

People need to pull THEMSELVES together, stop living beyond their means, and stop promoting (by election) the same dysfunctional behavior. American politicians (Dems and Reps) are a magnification of the messed up thinking and citing of most Americans.

-t

[CRASH HARDDRIVE]

Feh.
Debt ceiling politics bores me.

How soon can we get back to whining for this constantly on the brink of bankruptcy bunch of clowns to take over heathcare?

Clearly, only a bunch of retards that can take the largest revenue stream in the history of mankind and turn in into nothing but mountains of debt are the only ones capable of running everyone else's lives.

[hyteckit]

Originally Posted by CRASH HARDDRIVE 

Feh.
Debt ceiling politics bores me.

How soon can we get back to whining for this constantly on the brink of bankruptcy bunch of clowns to take over heathcare?

Clearly, only a bunch of retards that can take the largest revenue stream in the history of mankind and turn in into nothing but mountains of debt are the only ones capable of running everyone else's lives.

If we privatize national defense and have Congress start declaring wars, the private sector for national defense would make a killing (Pun intended).

[hyteckit]

The debt limit is a dangerous game the Republicans are playing. It's much worst than raising taxes on the rich; It's basically raising taxes on all Americans.

How the Debt Ceiling Issue Will Hit Ordinary Americans in the Wallet - DailyFinance

"So, America inches toward its debt limit, and bond rates start going up. The interest rates on our car loans, our mortgage loans, our student loans, and our credit cards, to name a few, are tied to bond rates. So if bond rates increase, the interest rates on our personal debt also goes up."

[imitchellg5]

Originally Posted by Big Mac 

We're a corrupt, Entitlement-based democracy and an empire in decline.

Welcome to capitalism. Though I would argue that America has never been an empire.

[screener]

Originally Posted by turtle777 

Never mind that it will kill the poor and lower class. That's just the way it is.

Lower class?
Really?
And who are the lower class?

Freudian slip methinks.
Explains a lot.

[lpkmckenna]

Originally Posted by imitchellg5 

Welcome to capitalism. Though I would argue that America has never been an empire.

The more than 1000 American military bases around the world say otherwise.

[imitchellg5]

Originally Posted by lpkmckenna 

The more than 1000 American military bases around the world say otherwise.

That has to be one of the most insane inferences I've ever heard here. You're saying that Great Britain, Turkey, Saudi Arabia, Argentina, etc all consider themselves (and pay taxes to) the United States?

[Big Mac]

Originally Posted by Wiskedjak 

Because, nobody, not even the Tea Partiers, *really* want to cut spending. You don't get votes by cutting spending. You get votes by *accusing* the other side of *not* cutting spending.

That's certainly true for a segment of the Tea Party, maybe a large segment. But I'm finding more and more people agreeing with our position. The Tea Party members who lean more on the side of small-government libertarianism are with us, whereas the segment of the Tea Party that's mainly a reactionary force against Barack Obama probably aren't as committed to true spending reform.

[Railroader]

Originally Posted by screener 

Lower class?
Really?
And who are the lower class?

Freudian slip methinks.
Explains a lot.

Does everyone else has this member on ignore? I rarely see anyone respond to his inane trolling.

[lpkmckenna]

Originally Posted by imitchellg5 

That has to be one of the most insane inferences I've ever heard here. You're saying that Great Britain, Turkey, Saudi Arabia, Argentina, etc all consider themselves (and pay taxes to) the United States?

You're confused about the meaning of the word "empire." No one in Egypt or Greece or Judah thought of themselves as Romans, but they knew they were subjects of the Roman Empire.

And the US doesn't need to collect tax, as their economic interests are meet by buying cheap oil and selling military hardware, which is much more lucrative.

[turtle777]

Originally Posted by Railroader 

Does everyone else has this member on ignore? I rarely see anyone respond to his inane trolling.

Yes, I've put screamer on ignore a long time ago. That drivel is a waste of bits.

-t

[turtle777]

Originally Posted by lpkmckenna 

And the US doesn't need to collect tax, as their economic interests are meet by buying cheap oil and selling military hardware, which is much more lucrative.

What cheap oil are you talking about ?

And seriously, you gotta get your facts straight re: selling military hardware

US Defense Budget: $698B (2010)
US Arms export: $ 8.6B (2010). That's 1.2%.

Do you seriously suggest that the US spends $ 100 for securing every $1 in arms exports ?

Arms industry - Wikipedia, the free encyclopedia

-t

[screener]

Originally Posted by Railroader 

Does everyone else has this member on ignore? I rarely see anyone respond to his inane trolling.

turtle believes the US has a lower class and you let it go.
Kudos.

[screener]

Originally Posted by turtle777 

Yes, I've put screamer on ignore a long time ago. That drivel is a waste of bits.

-t

Explain the lower class in the US and who they are, oh yeah, you can't see my posts can you.
I guess you never posted that did you.

[besson3c]

Originally Posted by turtle777 

Nothing will change until a major portion of the American population realizes that all the entitlement expectations are nothing more than a victim mentality.

People need to pull THEMSELVES together, stop living beyond their means, and stop promoting (by election) the same dysfunctional behavior. American politicians (Dems and Reps) are a magnification of the messed up thinking and citing of most Americans.

-t

I think that unaffordable health care is dysfunctional behavior (okay, it isn't "behavior", but I wanted to quote you . Until old people have a fighting chance to afford their health care, I think we need programs like Medicare.

[screener]

Originally Posted by Railroader 

Does everyone else has this member on ignore? I rarely see anyone respond to his inane trolling.

Believing the US has a lower class is alright with you?
If you think that's trolling then you either agree with the turtles post or don't like it when your buddy is called on a dumb statement.
Which is it.

[lpkmckenna]

Oil is cheap. By volume, it's cheaper than any other household product you buy. Even after it's refined into a product you buy, like gasoline, it's still cheaper than any other household product you buy.

Take a look at today's oil price: $99.81 per barrel. That's $2.38 per gallon of oil. How much would a gallon of Pepsi cost? A gallon of toothpaste? A gallon of tomato soup? A lot more than $2.38.

And no, I don't think the US spends $100 on defense just to earn $1 of arms sales, and I never said anything like that; the US spends that money to protect all of its interests, political and economic, exports and imports. My point was the US certainly didn't need to collect taxes from its subjects.

Regardless, the US sells more arms than #3 to #11 combined (as per your reference). And that's probably just the money it earns, likely not including the US taxpayer money given away to countries like Egypt and Israel, which they use to buy US arms.

[turtle777]

Just FYI - I think the US should cut defense spending by 50% and withdraw from all foreign soil.

I know this is not the normal conservative position, but we simply can't afford this stuff anymore, regardless of its merits.

Re: oil cheap

Well, it really depends what your baseline is. Compared to oil 5 years ago, it's expensive today.
I actually think oil is comparatively cheap today compared to what oil is going to be 10 years from now.
However, this has NOTHING to do with the US. If anything, the massive demand of US oil made the price increase in the last 5 year necessary (plus, let's not forget how China is massively ramping up oil consumption.)

-t

[Wiskedjak]

Originally Posted by turtle777 

Just FYI - I think the US should cut defense spending by 50% and withdraw from all foreign soil.

I know this is not the normal conservative position, but we simply can't afford this stuff anymore, regardless of its merits.

and, not because I'm a peacenick (I'm not. I agree with war when it's necessary). When getting spending under control, cuts need to be across the board.