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Only in the US would you even be having such a bizarre debate.
Whether you like the idea or not you MUST raise your debt limit. By not paying your bills {foreign or domestic} you are telling the planet that you are essentially declaring bankruptcy. You will have made it known worldwide that you are no longer able or willing to meet your national obligations and the result will be a massive loss of confidence in both your economic and political system. That means people don't trust you to ever pay back anything and people sell their US dollars en mass.
By defaulting your currency would crash overnight and it would take drastic action by your Federal Reserve to bring the dollar back..........................that means a huge rate increase in interest rates to use as a toll to make the US dollar worth investing in again. That will put your economy back into recession and will result in a skyrocketing of your government debt costs.
For those who are stupid enough to believe that a very low dollar is good for your economy becuase it makes your exports more competitive I have one word for you....................hyperinflation.
If your dollar lost say 30% that means everything you import has just gone up by MORE than 30% due to your dollar buying less and higher transportation costs. A 30% decline in your dollar means a more than 30% increase in your massive oil imports and oil effects the costs of EVERYTHING......................overnight!
Also imagine the chaos by the US not paying out the 80 million social security cheques, government workers, contracts, debt payments, defense,..............all of a sudden no one is buying cars, houses, paying rent, their bills, nothing. That would not only be an economic calamity but result in massive social unrest. Hunger and evictions have a way of getting people riled up.
Even if you are just one day the damage will be minimal immediately but would still devalue the dollar and create enough uncertainty in your political and economic institutions that consumer and business confidence would plunge.
Remember Economics is not a business but a social science where feelings and fear are more relevant than pure logic. Logic is for mathematicians ............go yell fire in a stadium and even though logically everyone knows it's best to be calm and exit in an orderly fashion the reality is that people rush to the doors kicking and screaming even though it does much more harm than good.
In the first place, no one has offered any proof that not raising the debt ceiling would cause default. There are always options. In addition, as I said before, no one is impressed with the US financial condition; we are just the lesser of all evils. The Chinese are already extremely upset about how much money they have lost investing in US debt due to the devaluation of the dollar, yet they keep investing.
Interest payments on the debt amount to less than 10% of the National Budget. Why would that be the first thing to be cut?
The very fact that so much hand wringing is going on about our inability to pay our bills without borrowing shows exactly why we need to address this situation before it gets worse.
In this article Obama puts Medicare, Social Security cuts on the table - Yahoo! News they are already discussing the very types of cuts I said were the most likely result of not raising the debt limit, only on much too small a scale.
The fact is the largest benefactors of deficit spending are the same corporate pigs that have created this problem to begin with.
The Banks, Defense contractors, Wall St., Corporate multi million acre farms being paid not to grow crops, Chemical and Oil interests, and the scores of other industries who through their dealing with the Federal Government have been making trillions in profits at the expense of the tax payers.
Recessions and depressions are simply the result of money redistribution.
Too much money flowing to the rich, and not enough left over for the average people to keep the economy flowing.
Interrupting the flow of money from the average people to the mega corporate wealthy will not damage the economy, it will improve it.
Whether you like the idea not you MUST raise your debt limit. By not paying your bills {foreign or domestic} you are telling the planet that you are essentially declaring bankruptcy.
without taking on additional debt, we will still have about $2.4 trillion to pay bills. so which bills wont get paid? i bet the bondholders will be paid.
but there is no real debate, just politics being played. the debt limit will be raised and we will get zero cuts.
I'm not one for doom and gloom but I am seriously losing hope for this country. My god... the ignorance... the pettiness... the insanity.
Like the non-American said, slamming the breaks will cause chaos, we'll spin out and crash.
Let's pump the brakes. Once we get a good grip... then we can put our foot down.
But in all honesty I don't think our politicians want to solve this, It's obvious we've been needing to cut spending for decades. I remember they were calling for he collapse of the Economy in '92 as well. They predicted it would happen around 95-2000. I'm almost convinced they're sacrificing the country for their own well being. Like someone said they are World Citizens now... they could give a care less about America. It's just a tool to them.
EDIT: Basically I see it just as Mircea described. Now I'm wondering what I should do for my family... I've lost total confidence in my homeland's leadership.
we are going to be greece but without anyone to bail us out. there is no avoiding it because government wont cut spending unless it has no choice. politicians dont buy votes and support by taking money out of people's hands.
right now there are basically only 2 groups in the political world that benefits politically by cutting spending: the tea party and libertarians. the entrenched republicans are bought, the democrats are all bought. they will support the status quo. the negotiation now is a total joke, neither side is really negotiating for any real cuts. $2-3 trillion in cuts over 10 years is negative cuts if you are factoring a growth rate of 4% in our economy (which obama's budgets factor in).
1. of those institutions you mentioned only for-profit corporations are of any value and im guessing their economists operate a lot differently than non-profit ones. besides, they may no soooooo much but they also dont all agree, so a lot of them are wrong.
2. you can not reduce spending over a matter of years. that isnt how this is going to play out. sooner or later, we are going to have to cut spending drastically and quickly.
3. the democrats arent proposing cuts. if they are cutting anything, im sure its a republican priority and they would offset the cut with some additional spending. we have no hope of seeing cuts until the tea party has the white house, congress and senate. even when that happens in 2013, i will not be holding my breath for the cuts.
1. While disagreement may exist as to the appropriate size and scope of these institutions, serious people know that universities and institutions like the Federal Reserve, SEC, IMF, etc. are not without any value. They do play important roles in society. Also, the for-profit economists are trained at the same institutions as the not-for-profit ones: Stanford, Harvard, MIT, U of Chicago, etc. I've never claimed economists "no" everything or that it is a perfect profession by any means - just that it is an important body of knowledge that yields real insights that you and I probably do not have.
2. Recognize that there is a difference between when you agree to make cuts and when those cuts become effective. Everything that is being debated today is with regard to cuts and revenue increases that would be effective over a number of years. It's not like you agree on the cuts and the money magically shows up in the bank. So of course you can agree to reduce spending over a matter of years, and you can do so substantially. But what you can't do is actually reduce it in twenty or so days before the debt ceiling is reached on Aug. 2. That is why rational people know that the debt ceiling will have to be raised in the short term even as more substantial cuts are worked out that will come into effect over the coming next few years.
3. What else can I tell you? The last credibly-sourced article I posted clearly indicated that you are wrong and that Democrats are proposing cuts - not at the same mix and magnitude as Republicans, but clearly greater than zero. And I could show you many more (or you could Google it). We should at least be able to agree on this, but I guess you just really enjoy being wrong and not researching and basing your opinions on any factual information. So...I guess there is nothing else to discuss here. If you want to actually discuss matters that are of a factual basis, let me know.
I love how people say they are neither for the Dems. or Reps. then go on to exclusive bash one side and subtly compliment the other. (and this is not directed at one poster so please do not get defensive, this is our entire country.)
I love how people say they are neither for the Dems. or Reps. then go on to exclusive bash one side and subtly compliment the other. (and this is not directed at one poster so please do not get defensive, this is our entire country.)
philip is a hardcore liberal that will never support a republican but he is in denial and likes to consider himself an "indepentent."
tell me that obama's proposed 2011 budget is less than his 2010 budget. then tell me that his proposed 2012 budget will be less than his 2011 budget.
obama doesnt want to be "nickled and dimed on the budget!!!!"
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