7 doomsday default scenarios

[BullKurtz]

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.

It's all been an illusion since the 1970s....fiat currency based on our past wealth. When we finally devolved into a housing economy, the end was clearly in sight. Before WW2 a home was considered a liabiltiy that continually needed new paint and shingles. After Y2K, suddenly a home was appreciating by 25% a year in many areas. Then along came the bogus CRA loans thanks to Clinton that the banks had to write or be accused and sued for "racist red-lining". The bankers decided to turn the tables by bundling the crap with the crystal and damn near crashed the whole world's financial house of cards.

Even if Barry had wanted to restore the good times, he couldn't. Not enough taxpaying jobs out there to furnish the Treasury with black ink. So instead of pulling in the tentacles and causing his voters some pain, he chickened out and kept borrowing. The old GOP watched and bitched a little, then went quiet. Thank God for the Tea Party. We're in a mess. We can try to patch and bandage it but we're bleeding to death. Only way out is to pull the plug and let the chips fall where they may. It's gonna hurt like a bitch but then, pain is only weakness leaving the body. We can rip out the termite-riddled foundation and do it right this time. Take away the money and the Feds answer to US again, like the Founders intended.

 

[ScreamingEagle]

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.

right...we have plenty of money to pay the debt (principle + interest) that is owed.....why would Obama threaten to not pay China.....?

 

[ScreamingEagle]

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.

why aren't such bills just paid automatically.....? ...or is the payment system is as bad as the Obamacare system....?

of course the Demrats have already rejected a Republican plan to pay the core bills first.....the Demrats would rather scream bloody murder about a default.....their hypocrisy knows no bounds.....

 

[52ndStreet]

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.

Moreover, this could all be the beginning of a global depression, that could cause
social unrest, riots, and even some kind of world war.
This whole situation is giving the global Al Quida terrorist a boost to their anti American
rhetoric, and affecting the global balance of power in the world.
Americas reputation is also being damaged by this government shutdown.
The American dollars reserve currency status is being damaged, and inflation
will most definitely rise.

 

[BullKurtz]

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.

Moreover, this could all be the beginning of a global depression, that could cause
social unrest, riots, and even some kind of world war.
This whole situation is giving the global Al Quida terrorist a boost to their anti American
rhetoric, and affecting the global balance of power in the world.
Americas reputation is also being damaged by this government shutdown.
The American dollars reserve currency status is being damaged, and inflation
will most definitely rise.

Seen the news lately....everything you mention has been going on for almost 2 years. America's reputation is being damaged by the weakling asswipe in the White House. Do you seriously think foreign lenders wish us well? The sooner we pull the plug on OPEC, the sooner al-Qaida will suck wind for funding. That's the answer for both of our problems....domestic oil production for domestic use and cutting off US dollars to ME terrorists. Why don't we? Because the weakling asswipe in the White House has no clue how to run a country so he stays in campaign-mode and only speaks to the freaks who paid for his campaigns. And of course he's a muslim who isn't natural-born and therefore not qualified to even be president.

BTW, the only reason inflation is on the way is because Hussein's Fed has been buying Treasuries (on credit) for the past 5 years....when that ends as it must, we'll see interest rates double....why would anybody buy a T-Bill for less than a 5% return from this joke government? And when that rate doubles to 10%, financing the debt will require the entire budget. Capiche? That's the mess we're in.

 

[KissMy]

Nationwide Welfare EBT System Shutdown Today

Were out of money. Starving people will have to rob, steal or glean the fields.

 

[TooTall]

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.

In dollars, how much of the $17 trillion national debt is Obama's and how much is Bush's?

 

[Trajan]

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.

that simply cannot be, there was a democratic house senate and president...

anyway, form what I understand, it was due to not signing a deal on time but a series of glitches...(?)

but your lesson is well taken

 

[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.

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.

In dollars, how much of the $17 trillion national debt is Obama's and how much is Bush's?

The amount Obama has added is the cost of Shrub's crashing the economy in 2007.

 

[LordBrownTrout]

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.

O has racked up 6 trillion in 4.5 years. W racked up that much in 8 years. Your tune is playing to deaf ears.

 

[BullKurtz]

The amount Obama has added is the cost of Shrub's crashing the economy in 2007.

You're either an idiot or a liar....2007 is the year Pelousy and Reid took over Congress and prevented a look at Fanny/Freddie CRAs by screaming "RACISM"....this lit the fuse to the mortgage-based derivities bombs the bank boys bundled up and dumped on the world. In an economy the Fortune 500 had outsourced/offshored thanks to NAFTA and the WTO, the result was inevitable...housing collapsed and took us down with it. Maybe you're both an idiot and a liar....at least now you know what happened which may help on the idiot front. Continuing to blame 2007-8 on "Shrub" is simply a lie.