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talkpoliticsFrankly, I haven't stopped watching this counter for a few minutes. It's mesmerizing:
U.S. National Debt Clock: Real Time
Alright. Now thatall most of the hubbub surrounding the shenanigans on Capitol Hill has subsided somewhat, time to get back on topic, i.e. "Speculative Scenarios". And the topic I'm gonna occupy you with, is again... the debt ceiling! :)
Anyone know for sure what would've happened if Thursday came and went and Congress was still stuck at an impasse without being able to raise the debt ceiling? It's not like the US won't arrive at exactly the same point next year, right? Sure, we already know that, simplistically put, not raising the debt ceiling would mean the government would no longer have the authority to borrow money to pay its bills. Sounds bad at a first reading, that's for sure.
But what next? What would be the longer-term consequences? Could someone more well-versed in the financial matters spell it out to me, step by step? 'Cause, from what I've been able to gather from the various talking-heads on the media, it all sounds like a nightmare scenario. The government no longer being able to pay the interest on the debt, financial markets sinking, social security checks being delayed, and ultimately, another recession? Am I on the right track?
What exactly is the idea behind a borrowing limit? What's the rationale behind it? For a time it seemed to me-the-layperson that the US had deliberately put a system of obstacles and traps in its own path, relying that it'd never even consider stepping into them (deliberately) - only to realize that yes, yes it's perfectly possible to step into your own traps (as seen in the recent days). Or shoot yourself in the leg. Or stick a muddy rug inside your own throat. Etc.
And, since the national debt limit had already been reached once in May this year, isn't any subsequent measure that's been taken by the Treasury only an effort to postpone the inevitable, and treat cocaine addiction with increased cocaine intake? (Or as the PC term is, "extraordinary measures"). It's all starting to look more and more like an inflating balloon which can't go on pumping up forever.
Just one more thing I may not be competent enough to grasp. Couldn't the president just, you know, ignore the borrowing limit? From the 14th Amendment: "The validity of the public debt of the United States, authorized by law ... shall not be questioned". So does he or does he not have the authority to do that? Is "authorized by law" = "sanctioned by Congress"? And even if not so, would any investor buy bonds issued without congressional approval?
And while we're about the markets, ultimately, how would investors meet the news that the government of the world's presumed economic superpower has been compelled to prioritize among its payments, giving precedence of some of its obligations but falling behind on others? And all that said, in these circumstances why should anyone be surprised that governments around the world are already seriously considering shifting away from the US dollar as a reserve currency? How many more countries would have to be threatened of being bombed after having done that step, before a critical threshold is reached where national treasuries worldwide would start abandoning the increasingly worthless main US export (namely: green papers), regardless of the potential repercussions for such a bold/crazy action?
I know. These are probably too many questions. But, see, we furrinners have been compelled to listen to this stuff over and over for many many days now, so, methinks you guys do owe us at least some small explanation, even if it comes in the form of funny macros. I'm all ears/eyes!
U.S. National Debt Clock: Real Time
Alright. Now that
Anyone know for sure what would've happened if Thursday came and went and Congress was still stuck at an impasse without being able to raise the debt ceiling? It's not like the US won't arrive at exactly the same point next year, right? Sure, we already know that, simplistically put, not raising the debt ceiling would mean the government would no longer have the authority to borrow money to pay its bills. Sounds bad at a first reading, that's for sure.
But what next? What would be the longer-term consequences? Could someone more well-versed in the financial matters spell it out to me, step by step? 'Cause, from what I've been able to gather from the various talking-heads on the media, it all sounds like a nightmare scenario. The government no longer being able to pay the interest on the debt, financial markets sinking, social security checks being delayed, and ultimately, another recession? Am I on the right track?
What exactly is the idea behind a borrowing limit? What's the rationale behind it? For a time it seemed to me-the-layperson that the US had deliberately put a system of obstacles and traps in its own path, relying that it'd never even consider stepping into them (deliberately) - only to realize that yes, yes it's perfectly possible to step into your own traps (as seen in the recent days). Or shoot yourself in the leg. Or stick a muddy rug inside your own throat. Etc.
And, since the national debt limit had already been reached once in May this year, isn't any subsequent measure that's been taken by the Treasury only an effort to postpone the inevitable, and treat cocaine addiction with increased cocaine intake? (Or as the PC term is, "extraordinary measures"). It's all starting to look more and more like an inflating balloon which can't go on pumping up forever.
Just one more thing I may not be competent enough to grasp. Couldn't the president just, you know, ignore the borrowing limit? From the 14th Amendment: "The validity of the public debt of the United States, authorized by law ... shall not be questioned". So does he or does he not have the authority to do that? Is "authorized by law" = "sanctioned by Congress"? And even if not so, would any investor buy bonds issued without congressional approval?
And while we're about the markets, ultimately, how would investors meet the news that the government of the world's presumed economic superpower has been compelled to prioritize among its payments, giving precedence of some of its obligations but falling behind on others? And all that said, in these circumstances why should anyone be surprised that governments around the world are already seriously considering shifting away from the US dollar as a reserve currency? How many more countries would have to be threatened of being bombed after having done that step, before a critical threshold is reached where national treasuries worldwide would start abandoning the increasingly worthless main US export (namely: green papers), regardless of the potential repercussions for such a bold/crazy action?
I know. These are probably too many questions. But, see, we furrinners have been compelled to listen to this stuff over and over for many many days now, so, methinks you guys do owe us at least some small explanation, even if it comes in the form of funny macros. I'm all ears/eyes!
(no subject)
Date: 17/10/13 18:40 (UTC)18 republican senators and 144 congressmen voted against avoiding the default.
Flirting with defaulting caused ripples worldwide causing actual harm.
(no subject)
Date: 17/10/13 18:43 (UTC)There was zero chance that the bill wasn't going to pass if they didn't support it, and the danger to those representatives was greater had they voted yes. Votes are often political.
(no subject)
Date: 17/10/13 18:53 (UTC)"The danger" to the ones who voted yes implies that we have some seriously suicidal constituency they are appealing towards. That cannot bode well for the health of this nation.
(no subject)
Date: 17/10/13 20:38 (UTC)Is there possibly one or two people who might have been okay with default under the assumption that it wouldn't be so bad? Sure. But I think the whole idea that default was actually a threat is being overblown, and probably for political reasons. Even Obama tried to get Wall Street worked up about it and they didn't bite.
(no subject)
Date: 19/10/13 16:20 (UTC)(no subject)
Date: 19/10/13 18:27 (UTC)(no subject)
Date: 19/10/13 20:27 (UTC)(no subject)
Date: 19/10/13 20:28 (UTC)(no subject)
Date: 19/10/13 21:16 (UTC)(no subject)
Date: 19/10/13 21:24 (UTC)(no subject)
Date: 17/10/13 18:47 (UTC)This granting of the benefit of the doubt only works if we were dealing with rational actors. Too many among the tea party constituency have shown themselves not to be, and too many among the Republican leadership have shown themselves willing to follow these people off of a cliff in return for their votes, regardless of the long-term harm it might cause to this country.
(no subject)
Date: 17/10/13 20:55 (UTC)(no subject)
Date: 17/10/13 21:11 (UTC)sharperduller bloodier swords this christmas. Sigh.(no subject)
Date: 17/10/13 21:16 (UTC)(no subject)
Date: 17/10/13 21:19 (UTC)