Consequences of a US default

[Conan71]

Deficit spending!

Thank you, I knew I was missing something.

[guido911]

The world will come to end if we do not raise the debt ceiling. But Obama has time to crack a joke.

Or not.

[nathanm]

1. Incentivize business by lowering taxes
2. Increase depreciation on capital goods
3. Decrease energy costs (fastest direct influence on industry)
4. Relax regulation on lending

Do you have bucking amnesia or something? Did you already forget how relaxed regulation on lending led to an enormous housing bubble, which directly precipitated our present economic situation? Even if you are of the mind to blame it on the borrowers, clearly the banks need to be protected from being morons with our money. The problem isn't a lack of regulation, it's a lack of incentive. The banks can make more money investing than they can lending, so they don't do much lending these days. (at the large end, anyway)

Every one of those things but the third has already been done. I'd really love to see #3 tackled, but the reason energy prices are so high is the amount of money that's been dumped into commodities recently. I don't think we have the political will to go back to keeping everybody but the bona fide hedgers out of the commodities market. Too many people enjoy getting screwed by the ETFs, and too many others enjoy screwing the ETFs. (easy to do since they roll their contracts on a predictable schedule and therefore are vulnerable to front-runners)

[we vs us]

Since the name of the thread is "consequences of a US default," I thought I might post more predictions, this time by Simon Johnson, former chief economist at the IMF.  I think you'll agree, nothing but the finest awfulness awaits us.

"The Republicans are right about one thing: a default would cause government spending to contract in real terms. But which would fall more, government spending or the size of the private sector? The answer is almost certainly the private sector, given its dependence on credit to purchase inputs. Indeed, take the contraction that followed the near-collapse of the financial system in 2008 and multiply it by ten."

http://www.project-syndicate.org/commentary/johnson22/English

[Teatownclown]

Since the name of the thread is "consequences of a US default," I thought I might post more predictions, this time by Simon Johnson, former chief economist at the IMF.  I think you'll agree, nothing but the finest awfulness awaits us.

http://www.project-syndicate.org/commentary/johnson22/English

Just what the GOP/TEAhackers want

[Conan71]

Just what the GOP/TEAhackers want

It's nothing more than cheap political theater.  The ceiling will be raised by Aug. 2.

As usual the Repugs want to make the Dims look like spendthrifts and the Dims want old people to believe they will be living on the street eating Alpo courtesy of Boehner and Co.

[Teatownclown]

It's nothing more than cheap political theater.  The ceiling will be raised by Aug. 2.

As usual the Repugs want to make the Dims look like spendthrifts and the Dims want old people to believe they will be living on the street eating Alpo courtesy of Boehner and Co.

And the republicans want to create fear over running a deficit ignoring the investments in infrastructure and make the country default so they can make Obama look bad. Let's quit rehashing....

I will throw my support to Tom Coburn's plan until I see what it does to public education. Yes, I'd throw my support to Senator Tom's latest proposal. 

[Conan71]

And the republicans want to create fear over running a deficit ignoring the investments in infrastructure and make the country default so they can make Obama look bad. Let's quit rehashing....

I will throw my support to Tom Coburn's plan until I see what it does to public education. Yes, I'd throw my support to Senator Tom's latest proposal. 

If it makes sense, why would anyone NOT support it?  Have you started reading any of the text of it or a credible summary yet?  I'd picked up the story this afternoon that he had a big reduction plan written, but no specifics.  I'm anxious to hear the details.

Again, I still think line-item budget cutting is never going to work in this day and age.  The only way to remove politics and insert common sense is to simply tell every department they are all taking an equal percent funding cut.

[nathanm]

Again, I still think line-item budget cutting is never going to work in this day and age.  The only way to remove politics and insert common sense is to simply tell every department they are all taking an equal percent funding cut.

Yes, what we need is more people not spending money to fix the problem of people not spending money.

[Teatownclown]

Again, I still think line-item budget cutting is never going to work in this day and age.  The only way to remove politics and insert common sense is to simply tell every department they are all taking an equal percent funding cut.

No way. Military is still on a 1958 design. A drone needs to focus on waste there and Coburn's plan trims 1 trillion in that area...but over how many years? 10?  

The wars need to end and if we must fight then do it with precise technologies and specialty forces. Much lower costs through efficiency. But hands off education and environment and transportation percentile equivalent cutting. When it comes to our children lower costs will not lead to efficiency.

Just raise the SS age to 70 for kids under 40 and restrict BigPharma from gouging Medicare funds and we will be back in balance in no time.

[Conan71]

No way. Military is still on a 1958 design. A drone needs to focus on waste there and Coburn's plan trims 1 trillion in that area...but over how many years? 10?  

The wars need to end and if we must fight then do it with precise technologies and specialty forces. Much lower costs through efficiency. But hands off education and environment and transportation percentile equivalent cutting. When it comes to our children lower costs will not lead to efficiency.

Just raise the SS age to 70 for kids under 40 and restrict BigPharma from gouging Medicare funds and we will be back in balance in no time.

Agreed-- in a perfect world.  Problem is, the military said they did not need (crap, I keep referencing this incident, I need to go find the link) one of their whizz-bang toys anymore or at least did not need to order more for x amount of years.  What happened?  The Congresspeople who are on the payroll represent districts of those major defense suppliers raised holy hell and claimed to know better than the military did and demanded those programs not be cut because of the devastating effects for jobs in their districts.  It's not just the military which is overly-dependent on the treasury.  Everyone wants something out of the government these days whether its in the form of full healthcare benefits, safe banking, safe food, safe water, safe cars, or a paved cul-de-sac.

What ever happened to JFK's plea in his inaugural speech?  I think he'd be appalled to see what a welfare state we've turned into (corporate and personal).

You see, you have your sacred cows, Nate the Keynesian has his, and I've got mine.  That's why across the board cuts are the only viable solution because you will have conservatives who will want cuts in Planned Parenthood if military spending is cut.  Someone will want school lunch programs cut if you come after their oil tax credits, etc. ad nauseum.  You will have to take prejudice out of the process for it to be successful, unfortunately.

Really, I do agree with you in a perfect world, but this world ain't close to perfect.  Yes, even education could figure out how to become better and less demanding on $$$.  You'll have to forgive me on that one after reading about the graft that arose out of Skiatook.  It's made me even more cynical toward public schools and how much waste goes on that is never caught.

[heironymouspasparagus]

What ever happened to JFK's plea in his inaugural speech?  I think he'd be appalled to see what a welfare state we've turned into (corporate and personal).

What is the most tragic and by far the biggest cost is not personal welfare, but the corporate welfare.

At one time way back in the 90's...when Newt and Company were performing their "Contract On America", his home county (Cobb County) was the recipient of over $4 billion per year in all the various Federal Funds that flowed.  Home of Martin Marietta - now merged with Lockheed to become Lockheed Martin.

You wanna bet on how much the poor folks of Cobb County got versus how much went to Martin Marietta?

Back then, when the budget was only about a trillion or so, that means if each county got 4 billion, only 250 counties in the entire nation would get money.  Since Georgia has 159 counties, if Oklahoma with 77 got that kind of loot, would put us at 236.  So 1 more state would get money - and only part of that state!

Not bad money if you can get it.  And Speaker of the House gets it.

[Teatownclown]

Conservative Republicans in the House don't have a clue on how to govern. There are times when you drop you ideology and do what has to be done. Whether it was done last December or later this week, it needs to be a clean bill raising the debt limit and letting the world know we pay our bills as the 14th Amendment says.

If Congress won't do it, then I hope Obama will. Obama's using the 14th Amendment, most likely causing a constitutional crisis, probably won't placate the world markets. Hopefully conservative ignorance won't put the American and world economy in the tank for generations.

Just Days To Go, And GOP Lawmakers Still Downplay Consequences Of Default

http://www.thewashingtoncurrent.com/2011/07/just-days-to-go-and-gop-lawmakers-still.html

[Teatownclown]

And the republicans want to create fear over running a deficit ignoring the investments in infrastructure and make the country default so they can make Obama look bad. Let's quit rehashing....

I will throw my support to Tom Coburn's plan until I see what it does to public education. Yes, I'd throw my support to Senator Tom's latest proposal. 

I'm sticking to my earlier comment. Get the damn deal done. Congress is so inept.

[Gaspar]

I'm sticking to my earlier comment. Get the damn deal done. Congress is so inept.

A deal for the sake of making a deal is not a good deal!

Remember the bills that we had to pass first so that we could see what was in them?

this is my stance on raising the debt, do you agree with it?

How can this Congress explain to their constituents that trillions of dollars in new debt is good for our economy? How can they explain that they think it's fair to force our children, our grandchildren, our great grandchildren to finance this debt through higher taxes? That's what it will have to be. Why is it right to increase our nation's dependence on foreign creditors?

They should explain this. Maybe they can convince the public they're right. I doubt it. Because most Americans know that increasing debt is the last thing we should be doing. After all, the Baby Boomers are about to retire. Under the circumstances, any credible economist would tell you we should be reducing debt, not increasing it.  This legislation will weaken our country.