7 doomsday default scenarios

[hangover]

Faced with some Republicans shrugging their shoulders at the thought of the U.S. defaulting on its debt obligations for the first time ever, notable economists are warning that the consequences would be the economic equivalent of a swarm of frogs and a plague of locusts.

The worst of the doomsday scenarios painted by economists involve an outright depression, as the effects of missing a debt interest payment cascade through the economy, financial markets and ultimately to Main Street.

While many analysts agree that a default still remains unlikely, warnings are beginning to intensify that Washington is skating too close to a perilous line.

"The devastation to the United States would be so severe that it would take decades to recover from the Depression caused by a default and the attendant dumping of trillions of dollars of U.S. Treasury securities on the global financial markets," banking analyst Dick Bove, at Rafferty Capital Markets, said in a report for clients.

Here are seven of the most immediate and severe side-effects if lawmakers fail to raise the debt ceiling in time to avoid default:
1. Depression and unemployment
2. Dollar down, prices and rates up
3. Down go your investments
4. Social Security payments halt
5. Banking operations freeze up
6. Money market funds break
7. Global markets walloped

7 doomsday default scenarios

Like I said, this is going to hurt the rich a lot more than the rest of us, because they can't deal with being poor. I already know how to be a dumpster diver, and I ain't too proud.

 

[hangover]

Living in denial is easier than facing reality, huh cons.

 

[BillyV]

This is the same Dick Bove who recommended buying bank stocks in 2008 about a month before Lehman went bankrupt?

[ame=http://www.youtube.com/watch?v=PutLemgaOXw&feature=player_embedded]Richard Bove: Bank Losses Slowing, Time to Buy - YouTube[/ame]

 

[Vox]

at least 3 of those are the exact scenarios if we do not cut our debt at least to be 50% of GDP not 110% as it is now.

 

[R.C. Christian]

The fiat money system can't last. Fuck it. If economic ruin is what it takes then so be it because the only logical outcome.

 

[KissMy]

The United States defaulted on some Treasury bills in April 1979 we paid a steep price for stiffing bondholders, because the interest rates doubled. They went from 8% to 16% & it took 8 long years before rates came back down to 8%. This would destroy the US economy if it happened today. Yet we now are intentionally going to default. Bondholders will certainly be more pissed about that than they were for the mistake in 1979.

Treasury blamed it on the failure of Congress to act in a timely fashion on the debt ceiling legislation in April 1979. The bond holders had to join a class action lawsuit & sue the Federal Government to get the rest of their money.

 

[hangover]

The fiat money system can't last. Fuck it. If economic ruin is what it takes then so be it because the only logical outcome.

at least 3 of those are the exact scenarios if we do not cut our debt at least to be 50% of GDP not 110% as it is now.

Just think, if the cons would have been whining like this when they had all three branches of government during Shrubs time in office, the national debt would be less than half of what it is today.

Cons doubled the national debt in Shrubs eight years, and trashed the economy. Economic ruin is exactly the plan of the cons.

Treasury blamed it on the failure of Congress to act in a timely fashion on the debt ceiling legislation in April 1979.

In 1979 the national debt was less than one trillion dollars. After Ronnie Raygun's eight years, the national debt was over $2.5 trillion. Raygun almost tripled the national debt.

 

[martybegan]

Living in denial is easier than facing reality, huh cons.

Giving only 30 minutes or so for a response before crowing "no one can counter me, neener neener" is poor form on a message board.

Also, most people consider you a troll hack, unworthy of response, so you have that as well.

 

[hangover]

Also, most people consider you a troll hack, unworthy of response, so you have that as well.

Na, only moron cons say that, and they're in the minority. Not even a nice try.

 

[ScreamingEagle]

The fiat money system can't last. Fuck it. If economic ruin is what it takes then so be it because the only logical outcome.

at least 3 of those are the exact scenarios if we do not cut our debt at least to be 50% of GDP not 110% as it is now.

Just think, if the cons would have been whining like this when they had all three branches of government during Shrubs time in office, the national debt would be less than half of what it is today.

Cons doubled the national debt in Shrubs eight years, and trashed the economy. Economic ruin is exactly the plan of the cons.

Treasury blamed it on the failure of Congress to act in a timely fashion on the debt ceiling legislation in April 1979.

In 1979 the national debt was less than one trillion dollars. After Ronnie Raygun's eight years, the national debt was over $2.5 trillion. Raygun almost tripled the national debt.

just think.....by blaming Reagan and Bush you can just ignore the present and future....you and Obama can just keep on spending and printing money until we become another Greece....

 

[martybegan]

Also, most people consider you a troll hack, unworthy of response, so you have that as well.

Na, only moron cons say that, and they're in the minority. Not even a nice try.

Lol.

 

[BullKurtz]

First off, the overwhelming majority of our debt is owed to.......Americans. Hell, the Fed is holding more debt than China and Japan combined. The $17T, half of which the Kenyan has run up, is small potatoes compared to the $90T in unfunded liabilites facing us. The SS trust fund was looted years ago and is only "solvent" because it holds Rat IOUs that everybody knows aren't worth the paper they're written on. So, it's obvious we are broke when the debt is 107% of a year's GDP. It's obvious the Rat party has no grasp of the seriousness of the situation and couldn't really care less if they did. So WHEN do we declare bankruptcy and default is the question. I maintain we should go ahead and do it while we still have the Military capacity to shoot the wolf nearest the sled. All the talk of "collapse" is just that....talk. Who's got better credit than an entity fresh out of bankruptcy? Or should at least in a world void of vindictive bankers who punish the welcher for a minimum of ten years. A fresh start is in order....and a Constitutional amendment clearly stating no budget in the future can exceed it's means of payment.

 

[Comunitee]

Living in denial is easier than facing reality, huh cons.

Living is easy with eyes closed, misunderstanding all you see. -- John Lennon (or Ivan Lenin, as the cons might call him)

 

[ScreamingEagle]

First off, the overwhelming majority of our debt is owed to.......Americans. Hell, the Fed is holding more debt than China and Japan combined. The $17T, half of which the Kenyan has run up, is small potatoes compared to the $90T in unfunded liabilites facing us. The SS trust fund was looted years ago and is only "solvent" because it holds Rat IOUs that everybody knows aren't worth the paper they're written on. So, it's obvious we are broke when the debt is 107% of a year's GDP. It's obvious the Rat party has no grasp of the seriousness of the situation and couldn't really care less if they did. So WHEN do we declare bankruptcy and default is the question. I maintain we should go ahead and do it while we still have the Military capacity to shoot the wolf nearest the sled. All the talk of "collapse" is just that....talk. Who's got better credit than an entity fresh out of bankruptcy? Or should at least in a world void of vindictive bankers who punish the welcher for a minimum of ten years. A fresh start is in order....and a Constitutional amendment clearly stating no budget in the future can exceed it's means of payment.

excellent amendment but it first must require a balanced budget even be done....since the Rat party likes to refuse doing them so much....which is why they love just raising the debt limit...

 

[Katzndogz]

If it is true that the United States cannot pay any of its bills without first borrowing the money, the catastrophe has already happened. We are just staving off the inevitable.

This isn't true because we have something north of 230 billion dollars a month income and only 25 billion a month in bills.

IF we have to default on the debt and cannot pay creditors with that kind of cash flow, we have absolutely THE WORST fiscal stewards that has ever existed at any time in history. They can all be replaced by a trailer trash housewife who does a better job every month managing her welfare check.

 

[g5000]

The people who buy US Treasuries are already demanding higher interest payments as a result of the mere threat of a default.

Should the October 17 deadline come and go without a resolution to the crisis, yields will rise even higher.

Tens of trillions of interest rate swaps will be affected. And that means businesses and municipalities and pension funds will suddenly be thrust into bankruptcy.

And there is a risk of the bond bubble bursting in catastrophic fashion since higher rates means the street value of every existing bond will plummet. Bondholders will start flooding the market trying to sell their trash, and there will be a shortage of buyers.

That's what we are looking at.

 

[BullKurtz]

First off, the overwhelming majority of our debt is owed to.......Americans. Hell, the Fed is holding more debt than China and Japan combined. The $17T, half of which the Kenyan has run up, is small potatoes compared to the $90T in unfunded liabilites facing us. The SS trust fund was looted years ago and is only "solvent" because it holds Rat IOUs that everybody knows aren't worth the paper they're written on. So, it's obvious we are broke when the debt is 107% of a year's GDP. It's obvious the Rat party has no grasp of the seriousness of the situation and couldn't really care less if they did. So WHEN do we declare bankruptcy and default is the question. I maintain we should go ahead and do it while we still have the Military capacity to shoot the wolf nearest the sled. All the talk of "collapse" is just that....talk. Who's got better credit than an entity fresh out of bankruptcy? Or should at least in a world void of vindictive bankers who punish the welcher for a minimum of ten years. A fresh start is in order....and a Constitutional amendment clearly stating no budget in the future can exceed it's means of payment.

excellent amendment but it first must require a balanced budget even be done....since the Rat party likes to refuse doing them so much....which is why they love just raising the debt limit...

Yep, most of the state constitutions demand a balanced budget. And an Amendment could easily pass the 2/3rds plateau of the 50 states. It would need real teeth; so clearly stated the Supremes couldn't tinker with it. Tear apart the federal government, root and branch. Eliminate the income tax altogether by funding the new one solely with trade tariffs and user-fees. That brings our industry sprinting back to American soil with the millions of jobs they off-shored. We have everything we need as a nation. Oil, cotton, steel, computer chips, agriculture, coal, NG, gold, timber, fresh water.....all we need import are bananas and coffee....we got everything else we use right here at home.

Let's ROLL!

 

[hangover]

MSNBC said yesterday that the Koch Bros have 500 employees buying up all the stocks that have been sold on the DOW in the last three weeks. What a strategy! Scare investors into selling, and then buy America. The Koch's probably have 500 propaganda employees on these forums spewing their Nazi style philosophy. They're on all the forums.

 

[g5000]

MSNBC said yesterday that the Koch Bros have 500 employees buying up all the stocks that have been sold on the DOW in the last three weeks. What a strategy! Scare investors into selling, and then buy America. The Koch's probably have 500 propaganda employees on these forums spewing their Nazi style philosophy. They're on all the forums.

The people on internet forums don't own enough stock to matter.

 

[martybegan]

MSNBC said yesterday that the Koch Bros have 500 employees buying up all the stocks that have been sold on the DOW in the last three weeks. What a strategy! Scare investors into selling, and then buy America. The Koch's probably have 500 propaganda employees on these forums spewing their Nazi style philosophy. They're on all the forums.

Hangover hanging out with his best friend.