Wanna bet against me?

[luzribeiro.livejournal.com]

What are the odds that the Democrats and Republicans will turn out so insanely crazy as to plunge the world into another financial chaos*, this time generated in the US Congress rather than Wall Street? Wanna bet against me? There is just a day and a few hours remaining after all, and I'm betting on a "sudden" change of mind and a "glorious" compromise and - oh, surprise! - a deal being reached.

Wanna play?

* why I'm saying this. Not to sound overly sensationalist and apocalyptic, nah. But most analyses indicate that a US default would trigger a domino effect which would ultimately bring a crisis on the markets that would make the 2008/2010 crisis look like a minor kindergarten squabble, which is making some people quite nervous around the world. Just when you thought the US is no more able to send further ripples across the global lake...

(This post may need some update later. Tomorrow maybe. I have no intention to watch the grass grow on CSPAN).

[edit] So here's the update. Surprise-surprise! (Not!) Obama caved in and got the deal the GOP offered. Wow, I'm so shocked! Aren't you? ;)

Comments

[gunslnger.livejournal.com]

Not increasing the debt ceiling won't trigger a default.

[underlankers.livejournal.com]

Yes, it will.

[gunslnger.livejournal.com]

I see you believe the lie.

[underlankers.livejournal.com]

I see you as usual show basic incomprehension of the real world.

[soliloquy76.livejournal.com]

Depends on what you consider a default.

On August 2nd, we exhaust our borrowing authority. That means we can't pay around 40 to 45% of our obligations, including principal and interest on debt to creditors, entitlement programs, government payroll, military, etc. In order to pay everyone, we would need to issue more bonds which cannot be done without an increase in the debt ceiling. There isn't really a term for it, so everyone keeps using "default". Whatever you want to call it, it's bad for everyone involved, including the Tea Party.

[a-new-machine.livejournal.com]

Most people mean "default on bond and other debt obligations." Yes, we'd default on our obligations to recipients of checks to Medicare, SocSec, the military, government workers, and a dozen other recipients of government money, but we would likely be able to pay our foreign creditors.

[soliloquy76.livejournal.com]

Well, apparently the deal is done so we don't have to worry about that for another year or so. Too bad this idiotic political game has already done some pretty heavy damage in the process.

[a-new-machine.livejournal.com]

Yeah, reading about it now. We'll see how far this gets in the House, though. Boehner's had a hard time bringing the Tea Partiers in line so far. I'm hoping that they'll compromise their principles in the name of sane governance, but they've shown no signs of such an inclination in the debate so far.

[gunslnger.livejournal.com]

A default means being unable to pay your debts and thus having to declare bankruptcy. I don't know of any other common meaning for the term. If the politicians want to create a new definition in order to confuse people, that's a different problem.

[underlankers.livejournal.com]

That is what happens when we cannot raise the debt ceiling and run out of money. I realize that's a foreign concept to you because it implies the government existing means something, but alas.

[gunslnger.livejournal.com]

Not all government money, despite appearances, comes from borrowing. Thus, stopping the borrowing does not immediately result in a default.

[soliloquy76.livejournal.com]

Not necessarily. A default can mean failing to pay something required by law. It was termed "selective default" or "prioritized payments" depending on who you ask. There was concern that we might not be able to pay interest and principal payments for bondholders, which is why Geithner even mentioned it, but it was a little more complicated than that. By then, of course, it was too late. The media already ran with it.

Republicans were dismissing default, but also dismissed seniors not getting their SS check or doctors not getting their Medicare payments for services already rendered. Either way, someone wasn't going to get paid.

[gunslnger.livejournal.com]

It's either some don't get paid now, or everyone doesn't get paid later.