View Full Version : Chances of a US default?
gimmethesimplelife
10-8-13, 3:55pm
Nine more days left until the government runs out of money and neither side is budging. Regardless of what side of the aisle you occupy, it is true that neither side is yielding. I didn't think it was going to go this far but....I guess it's a fair question at this point to ask - what do you think the chances of a default are? Do you think a last minute compromise to fund the government for at least a few months will be reached and then an American-style governmental telenovela as we have been having?
And if we do default, what do you think the consequences will be? Basically another Argentina but without the European flair of Buenos Aires, but lots of hunger and poverty to go around?
I am personally hoping that there will be something passed to at least avoid a default. But honestly, having lived in this country for 44 of my 46 years, I wouldn't be totally surprised if we did default.....we're talking about the egos of very wealthy politicians in Washington and I don't believe they "get it", what things are like for the average person now.
Rob PS I'm off to the Hispanic market down the street later today to stock up on rice and beans.....getting big bags of each, several of them. Maybe totally un needed, but I will sleep better if I do this.....
I think there's zero chance of a default. I believe we're taking in approx $250B per month and require somewhere around $80B to service the debt.
The modern art of politics revolves around creating a crisis and then stepping in to save us from the results. We shouldn't buy into the scare tactics.
gimmethesimplelife
10-8-13, 4:33pm
Alan, maybe 80 billion to service the debt, but what about Medicaid, Medicare, and Social Security, is that covered by the 80 billion or is the 80 billion just interest? Stop the three listed programs and there will be people in the streets like never before in American history. Rob
I have the feeling we won't know for sure about a default until the final day. My purely guesswork prediction is maybe a 30% chance. From as much as I can tell, I don't think there will a huge problem(s), but the ratings on the security of US debt will certainly go down and interest rates will go up. If we do default, the big question will be...then what...
Rob - what do you think "default" means, in this context?
I'd figure that out before cluttering your house up with rice and beans...
gimmethesimplelife
10-8-13, 5:26pm
Rob - what do you think "default" means, in this context?
I'd figure that out before cluttering your house up with rice and beans...Hmmmm.....I see "default" as the government not having the money to pays its bills on a timely basis.
About the rice and beans - when you don't have much faith in the system to begin with, stocking up, whether or not it is practical or necessary, can help calm down nerves a little - it can give you a feeling of doing what little you can against variables that are completely beyond your control.
And I have a pantry, lol, they will not be clutter by any means. Rob
ApatheticNoMore
10-8-13, 5:31pm
I think the chances are pretty much zero. The ratings on the debt may go down but I'm not sure interest rates will go up much, because for one thing they've been managing to keep down the long term rate for awhile right? Social Security and Medicare are partly self-funding.
The chances of an actual technical default may be extremely small, but that doesn't mean we will not get close enough to wreak havoc in the financial markets -- with substantial collateral damage to the real economy.
I think the only thing that might save us is if the markets actually do freak out sharply enough and early enough to dispel the myth that it would be no big deal.
A thousand point drop in the Dow, for example, would bring clarity. Then the ceiling will be raised and we will move on to the next crisis.
The gradual damage to our role in the world might already be permanent.
iris lilies
10-8-13, 9:46pm
The chances of an actual technical default may be extremely small, but that doesn't mean we will not get close enough to wreak havoc in the financial markets -- with substantial collateral damage to the real economy.
I think the only thing that might save us is if the markets actually do freak out sharply enough and early enough to dispel the myth that it would be no big deal.
A thousand point drop in the Dow, for example, would bring clarity. Then the ceiling will be raised and we will move on to the next crisis.
The gradual damage to our role in the world might already be permanent.
A thousand point drop in the Dow leaves it still very high. Not saying I want that to happen.
A thousand point drop in the Dow leaves it still very high. Not saying I want that to happen.
Look at the Dow over the past month...
Sept 18th - ~15700. Close today: ~14775. So there's 1000 points right there.
A thousand points here and a thousand points there, credit markets freezing up, etc. etc.
It will attract attention.
The consequences will not be good. How not good? Nobody knows because this has never happened before in the US. I think at best it would erode foreign trust and cause interest rates to rise. Not sure on chances of a default, but my gut is that they are higher than zero. I think some of the extremes in the House would prefer to bring about the end of the government. Warning them that a default could cause damage to the government is telling them "this is how you damage the government". They are a reflection of those they represent, many of whom secretly or not-so-secretly think Doomsday in the form of economic collapse would be kind of fun. So with that element there I would say the chances are not zero. On the other hand, the majority of both Houses of Congress know that it wouldn't be a good thing. We are in a tepid recovery which would likely end, causing us to fall into a recession or maybe worse. Again the extreme elements would revel in that, so they could blame "the Government" and especially Obama to gain political points.
As for stocking up on food and such-may as well while currency is worth something. It may not come to much unless you're buying a house or highly exposed to short term stock market and bond market movements, but it could be Depression II. Nobody knows, but I don't think this sort of thing has gone well for other countries in this position, so my inclination is to think on the worse side. If the government shutdown cancels our volunteer plans for this weekend then I suppose I will stock up on wood pellets for winter. The freezer is already full of beef and tomatoes, so just hoping electricity remains intact.
try2bfrugal
10-9-13, 2:32am
On the bright side, it will might be an excellent time to buy stocks and treasury bonds, following J. Paul Getty's advice to "buy when everyone else is selling".
Warren Buffet says it would be an economic calamity worse that the Lehman Brothers fiasco and the subsequent financial collapse. I've always thought he is a pretty sharp guy, but I don't think anyone really knows: http://www.bloomberg.com/news/2013-10-07/a-u-s-default-seen-as-catastrophe-dwarfing-lehman-s-fall.html
Recently one of our conservative republican representatives came out saying it is time to pass a "clean" budget without demands for cuts to the ACA, and that he would be encouraging his colleagues to follow suit. Apparently there are enough votes now for that to pass, but Boehner refuses to put it to a vote. My feeling is that he is just waiting to the last minute to get as much publicity as possible out of it.
Recently one of our conservative republican representatives came out saying it is time to pass a "clean" budget without demands for cuts to the ACA, and that he would be encouraging his colleagues to follow suit. Apparently there are enough votes now for that to pass, but Boehner refuses to put it to a vote. My feeling is that he is just waiting to the last minute to get as much publicity as possible out of it.
If you count democrats there have probably been enough votes for it to pass for a while. However, Boehner's job security would be essentially zero if he were to go that route. The tea party part of his party would be beyond livid.
We definitely need some sort of a huge jolt to see the evil of our ways.......in terms of how we're living and spending and consuming.
I would LOVE to hear someone address that (in the government)......... but its a slave to its own capitalism and values.
We've created a monster.
.....We're created a monster.
I've long held that belief and wondered why so many are determined to continue feeding it. I realize that there will always be those who will gladly give up their autonomy in return for whatever they might receive in return, especially if their gifts are the result of the work of others. That is the reason the monster has been allowed to grow larger than its cage IMHO.
ApatheticNoMore
10-9-13, 11:53am
The main concern with wishing for collapse should be the obvious one: that it will hurt those least able to deal with it and frankly even least guilty. Ok yes I'm thinking of those without much financial resources, the poor mostly, but you can include the middle class if you like I guess (if you are middle class and scared haha - I both think default is too unlikely and I'm too tired to deal with the fear - I long ago decided that their was a good chance the economic system was likely a castle built on sand - that none of it was real, 401k - yes if derivatives don't' collapse, Social Security - yes if they don't steal it, etc.. And furthermore that there was very little I was willing to do about it as all measures were extreme and I have tried to do all non-extreme things already). Least guilty: uh it's not their fault we have an empire that spys on and bombs the world, and while they are part and parcel of over-consumption as well, they aren't running the economic system or even deciding on it's rules. So collapse meh, there's little in this system worth saving, but if you want to dismantle the system I'd prioritize having a safety net, plus just economic collapses have some record of leading to even worse things than the status quo. I mean it's not like it can't get worse, until we're seeing Golden Dawn campaigning in our towns and that's bottom up, top down we've still got the Stasi and the police state that will react who knows how to economic collapse. That U.S. economic and political power is waning is a good thing for the world, now if we could find a way to GENTLY accept it rather than complete internal collapse, that might be nice.
I'm more worried this is all a gimmick to cut Social Security or something, now that would be bad.
I realize that there will always be those who will gladly give up their autonomy in return for whatever they might receive in return
yea most people are willing to take jobs and work for others, a darn pity yes, but so it is ...
It sure seems like 3rd party candidates that were not connected at the hip to big money and made half a lick of good sense could bowl over the next election. Problem I see is that no one with those qualifications would want the jobs.
It sure seems like 3rd party candidates that were not connected at the hip to big money and made half a lick of good sense could bowl over the next election. Problem I see is that no one with those qualifications would want the jobs.
Rogar, you have a lot more faith in the intelligence (and long-term memory) of the American people than I do.
Rob, I have some wonderful recipes for rice and beans from my food stamp challenge month -- happy to share :D It's time for my annual stock-up on bulks anyway: rice, black beans, pinto beans, oats, flours, dried fruit, nuts. I can eat for a long time on that.....that's not what I'm most worried about. I have older relatives heavily invested in the stock market who would probably have a coronary if it crashed again, and friends who are simple-livers but live very close to the line.
I'm another one betting on a protracted period of shrill bickering, followed by a last minute reprieve. If not, well, come for gallo pinto (http://www.food.com/recipe/gallo-pinto-costa-rican-rice-and-beans-78747) at Chez Pug, y'all!
I think we are very much in a small minority here of people who want LESS here in this country, as far as materialist things. More, More, More is the mantra I'm hearing from just about everyone.
I don't have faith in the intelligence and values of a large portion of the American public. Everybody wants things to be better, but nobody cares what the cost is to it all. We're like a huge black hole. How do you ever change peoples' minds, when they've been raised to think we all deserve everything we ever want, and we have the right to have it?
I think we will be sent over the cliff - and the House will come back with the same offer of only funding the parts of government they want to fund. Kind of like budget cutting only from the other end.
One thing I find interesting is how the concerns of business and the wealthy are (at least for now) falling on deaf ears. Maybe we've hit the point where the tail is going to start wagging the dog?
gimmethesimplelife
10-9-13, 5:25pm
Rogar, you have a lot more faith in the intelligence (and long-term memory) of the American people than I do.
Rob, I have some wonderful recipes for rice and beans from my food stamp challenge month -- happy to share :D It's time for my annual stock-up on bulks anyway: rice, black beans, pinto beans, oats, flours, dried fruit, nuts. I can eat for a long time on that.....that's not what I'm most worried about. I have older relatives heavily invested in the stock market who would probably have a coronary if it crashed again, and friends who are simple-livers but live very close to the line.
I'm another one betting on a protracted period of shrill bickering, followed by a last minute reprieve. If not, well, come for gallo pinto (http://www.food.com/recipe/gallo-pinto-costa-rican-rice-and-beans-78747) at Chez Pug, y'all!I'd love to see some of your recipes Puglogic.....I clicked on the one for Costa Rican rice and beans and mmmm.....that does sound good. Those spices sound so good mixed together and they sound able to elevate rice and beans to something special! Rob
I think one area we'll see effect us all will be when the govmint subsides on things like fuel, food, transportantion, etc..dry up. That will create higher prices for many people when they have to begin paying the real costs for everything.
Rob, I think it is a good idea that you're stocking up on rice and beans. I have been trying to stock up on things in general myself, just simply makes me feel more secure when I have my pantry full. :)
I worry about the possible impending default. So many are already being affected adversely by the govt. shutdown...
Boehner is screwing the GOP.
http://www.gallup.com/poll/165317/republican-party-favorability-sinks-record-low.aspx
It looks like the House may want to raise the debt limit - but hold onto the shutdown. So we would not go over the cliff, but they can continue to demand to "negotiate".
http://news.yahoo.com/new-gop-offer--temporarily-aise-the-debt-limit--then-negotiate-over-shutdown-154918931.html
It looks like the House may want to raise the debt limit - but hold onto the shutdown. So we would not go over the cliff, but they can continue to demand to "negotiate".
Don't worry, Miley Cyrus will release a new video any day now, and soon all this will be past us.
There's a really good post on the Money Mustache blog about the difference between your Circle of Influence and your Circle of Concern.
If you get off on worrying about things you can do nothing about it might be worth a read.
ApatheticNoMore
10-10-13, 3:07pm
"Nothing about" is always overstated, one can always engage in political movements etc.. But almost noone believes they can singlehandedly wave their magic wand and change anything tommorow - because it would be a pretty fantastic belief.
I don't worry about the economy as a whole really, because I did the doomster thinking nearly a decade ago and I'm so done with it - so it all collapses, I may be upset if it happened, but never quite surprised.
I have to wonder how much of this was well planned in advance and this is part of the orchestration or plan B for the tea party. The news used the words, Chained CPI, today. Something I had hoped would fade into obscurity. Maybe it won't sound so bad now relative to a collapse of the economy.
ApatheticNoMore
10-10-13, 8:56pm
Maybe it won't sound so bad now relative to a collapse of the economy.
I'd be way better able to ride out a collapse in economy now than when I'm 75 or something and need the Social Security I'd bet. Granted the world may not be around then but if it is.
I think one area we'll see effect us all will be when the govmint subsides on things like fuel, food, transportantion, etc..dry up. That will create higher prices for many people when they have to begin paying the real costs for everything.
Kind of funny, but from my seat the subsidies for BIG- might be the last thing to fade out. There is just too much money and power involved to let that slip. I totally agree that prices will rise along with the profits of some well-heeled producers, but I think any cuts to subsidies will just be public window dressing without a lot of bite. As interdependent as segments of our economy are now I'm not sure its even possible to calculate the real cost of most things. For myself I just throw a dart and assume everything will cost 5 or 6 times what it does now and then figure out what I just can't live without.
There's a really good post on the Money Mustache blog about the difference between your Circle of Influence and your Circle of Concern.
I found this MMM blog post to be one of the most inspiring things I've read in a long time. I have cut my media watching and listening by 90% and notice a difference in my mood lately.
I have to wonder how much of this was well planned in advance and this is part of the orchestration or plan B for the tea party. . .
Looks like it was planned in advance:
http://www.nytimes.com/2013/10/06/us/a-federal-budget-crisis-months-in-the-planning.html?_r=0
ApatheticNoMore
10-15-13, 12:54am
There's a really good post on the Money Mustache blog about the difference between your Circle of Influence and your Circle of Concern.
I found this MMM blog post to be one of the most inspiring things I've read in a long time. I have cut my media watching and listening by 90% and notice a difference in my mood lately.
I enjoy hearing about the world (that is politics) in part, though there are times I clearly know I am getting sucked way too deep into it, becoming way to unhealthily obsessed (which doesn't stop me at that point because it's become compulsive - yea when it's unhealthy). Even if you go deep into doomsterism you'll probably come out the other side - with a desire to do what you can where you can - though it won't be exactly where you went in, it can't be. Though there are probably beliefs more psychologically dangerous than dramatic doomsterism (mundane hopelessness perhaps).
http://www.huffingtonpost.com/2013/10/09/barenaked-ladies-odds-are_n_4070637.html
Odds are.....:)
gimmethesimplelife
10-15-13, 12:56pm
I just looked at the calendar and the clock is ticking, things are getting very close. I'm losing yet more faith in the system - even if there is a deal worked out at the last minute, I've still lost more faith in the system. To negatively impact so many people financially and seemingly not to care a damn about it - how could a thinking person have any faith really in the US political system? And not to freak out the conservatives but I'm a little perturbed with Obama. Why doesn't he just let the GOP have some small concession like doing away with the tax on medical devices? Really, to do so would not gut ObamaCare and might get both sides to the table with something getting brokered.
I honestly just don't get it. Rob
It's just political theater, Rob. None of the "sides" care much about the real world, or real people.
In a world where I'm not considered a real person, is it any wonder why some people go for the free cheese?
Tick tock.
In a world where I'm not considered a real person, is it any wonder why some people go for the free cheese?
Tick tock.
I think going for local control, and building sustainable communities is the better approach.
I went to a wonderful presentation last night by this fellow from New Zealand, it was quite inspirational:
Laurence Boomert has a long history in contingency planning, green business development and community up solutions. In the early 1990s he founded the 500-member Environmental Business Network. He currently runs the Bank of Real Solutions, an online database of community can-do success stories. He co-published, and was a writer for, the NZ Edition of Fleeing Vesuvius: Responding to the Effects of Economic and Environmental Collapse, published in 2011. His approach to sustainability is grounded in whole systems thinking and spans a wide range of practical applications, including business, economics, politics, sustainable land management, local food security, media, grassroots initiatives, and neighborhood and community resilience projects. Laurence has been an organic farmer, a television presenter, and founder of a new political party – the New Economics Party. He has been actively involved in the development of Transition Towns initiatives in New Zealand and is one of the country’s foremost proponents of complementary currencies and new trading systems. He is featured in the 2013 book True Wealth: Money and the Making of a New Collaborative Culture. As a speaker, Laurence focuses on the increasing empowerment of the global grass roots and the expansive cultural possibilities it represents. He presents a wide range of working examples of positive and proactive social innovation, emphasizing the potential for networked, yet decentralized, communities to create smarter and kinder systems for meeting human need.
http://www.huffingtonpost.com/2013/10/09/barenaked-ladies-odds-are_n_4070637.html
Odds are.....:)
And in case they aren't:
http://www.huffingtonpost.com/2013/10/14/debt-ceiling-default-survival-guide_n_4098084.html
:D
Boomert is a very, very bright guy. Like his work very much. And I agree.
Kind of funny, but from my seat the subsidies for BIG- might be the last thing to fade out. There is just too much money and power involved to let that slip. I totally agree that prices will rise along with the profits of some well-heeled producers, but I think any cuts to subsidies will just be public window dressing without a lot of bite. As interdependent as segments of our economy are now I'm not sure its even possible to calculate the real cost of most things. For myself I just throw a dart and assume everything will cost 5 or 6 times what it does now and then figure out what I just can't live without. yeah you're probably right. But even if govmint subsidies for the big boys don't dry up, they'll probably use the "potential" probability of that happening to raise prices. Like you, I just assume everything will go up and plan to tighten the belt if needed.
gimmethesimplelife
10-15-13, 5:21pm
This really is not funny, it's less than 48 hours until 10/17 and still no funding agreement.....This is not cool.....I can not begin to say how disgusted and hopeless I feel about this. And if at the last meeting an agreement is reached I still will be disgusted due to all the unnecessary drama. Rob
I guess I look at this as our countries systems of checks and balances working properly. Of course I'm sure the Founding Fathers didn't see that this kind of partisan antics would come to bear though....or did they :-) :-)
Powered by vBulletin® Version 4.2.5 Copyright © 2025 vBulletin Solutions Inc. All rights reserved.