The folly of raising the debt limit. (bankruptcy, insurance, collection)

[jimhcom]

There are a lot of people lobbying hard now for raising the debt limit. I am against that course for the following reasons.
The main argument that I have heard is that if we continue on our present course, with our current growth rate, that by 2014 we will begin to see recovery.
First, it does not address the real root cause of our economic trouble, which is the loss of jobs and the negative real earnings of the working class.
Second, it ignores the fact that the so-called improvement in the economy was financed by the government, and is now a liability that has to be serviced. It has had no real permanent value, and will decline when government stimulus is removed.
No matter how much the truth is twisted to make a trap for the fools, the fact remains that like everything else in the universe, in the financial world, every action induces an equal and opposite re-action.
The path to real sustainable financial recovery goes through austerity, which will lay the foundation to a health economy and sound business practices.
The path to financial ruin goes trough ever increasing debt.
We are playing a fools game where only the wealthy who can manipulate the laws and lawmakers will benefit. We are seeing our future happening now in Greece with the selling off the people’s assets to the same people who caused their financial disaster in the first place.

[Philip T]

Good opening on a discussion that the grown-ups of the country should be having -- but appear to not be. Instead we are seeing cry-baby-hand-wringers on one side and no-taxes-just-gimme on the other. Not a grown-up in sight.

Originally Posted by jimhcom

There are a lot of people lobbying hard now for raising the debt limit. I am against that course for the following reasons.

The main argument that I have heard is that if we continue on our present course, with our current growth rate, that by 2014 we will begin to see recovery.

Agreed that "Is Gunna Do This, Is Gunna Do That" is not a clear basis for any action (or inaction). At this point we are dealing with Risk Avoidance. We are still on a Major Downhill Runaway. As noted on another thread, even the Sane, Non-Doomer types are saying another 20% downside ahead on Real Estate.

To lock the brakes right now will likely put US in such a skid that a total crash is a Real Risk.

First, it does not address the real root cause of our economic trouble, which is the loss of jobs and the negative real earnings of the working class.

Would challenge your Root Cause Analysis on that. The loss of jobs and negative earnings are more likely a symptom -- Not a Root Cause. Totally agree that is a Huge Element, but as a symptom, it cannot cure a cause unless it the cause.

Looking back I see US sliding downward into debt since the 1970s. .gov, personal, corporate, on and on. Same time Oil started biting US and we became net importers. Since the Oil is the basis backing the Dollar (Petro-Dollar model), the worse Oil gets, the worse the US gets.

When Oil has gone down over the past few decades -- the economy appears to improve or do well, Oil goes up and we are laying hard into Recessions. That looks more like a valid Root Cause Analysis relationship rather the various symptoms that it all plays out with.

But in all of that we never pay down the debt during Good Times, so the debts just pile up hard during Bad Times -- such as now.

Second, it ignores the fact that the so-called improvement in the economy was financed by the government, and is now a liability that has to be serviced. It has had no real permanent value, and will decline when government stimulus is removed.

Only does any real harm when there is "interest" involved for the purchase and/or creation of non-productive items. Do the Japan model of setting the interest to Zero, and build productive assets and we could march right out of this. But we have to choose to become productive -- actual producers -- rather than the "Consumer" nation.

No matter how much the truth is twisted to make a trap for the fools, the fact remains that like everything else in the universe, in the financial world, every action induces an equal and opposite re-action.

The path to real sustainable financial recovery goes through austerity, which will lay the foundation to a health economy and sound business practices.

Path to any recovery is not usually burning down the house. It is more along the lines of figuring out:

1. Things That Suck -- and stop doing those, and,
2. Things That Are Good -- and start doing those.

Even a child can make such a list

Here is a sample that most Americans can all agree upon.

Things that Suck -- Importing Oil, Bleeding Jobs, Trade Deficit, Endless Wars, Excessive spread between the Top and Bottom -- All those things have harmed US. Stop doing those, and use .gov to help stop them.

Things that Bring Good -- Generate our own energy, maintain local jobs by local economics (cut back or end globalism), force balance of trade, stop the endless wars. Tax the top end, narrow the spread and provide quality education for the bottom end.

That builds a Solid From-the-Bottom-Up US.

The various austerity paths do not lay down an actual foundation of anything.

The path to financial ruin goes trough ever increasing debt.

Agreed on that. We need to tax The Things That Suck, and reward The Things that Bring Good.

We are playing a fools game where only the wealthy who can manipulate the laws and lawmakers will benefit. We are seeing our future happening now in Greece with the selling off the people’s assets to the same people who caused their financial disaster in the first place.

Sure.

We have to get out from under the Bank -- it seeks to become master of all.

[CaptainNJ]

i believe obama is using a 4% growth rate for his future budget projections. the guy is a con artist.

eliminate the EPA, department of education, department of energy, state department, leave iraq, afghanistan and libya immediately, eliminate all foreign bases, cut all federal employee salaries by 20%, change over all public pensions to 401k style and dont contribute anything, no retirement health benefits for public employees, thats a start.

[jimhcom]

Originally Posted by Philip T

Agreed that "Is Gunna Do This, Is Gunna Do That" is not a clear basis for any action (or inaction). At this point we are dealing with Risk Avoidance. We are still on a Major Downhill Runaway. As noted on another thread, even the Sane, Non-Doomer types are saying another 20% downside ahead on Real Estate.

To lock the brakes right now will likely put US in such a skid that a total crash is a Real Risk.

Would challenge your Root Cause Analysis on that. The loss of jobs and negative earnings are more likely a symptom -- Not a Root Cause. Totally agree that is a Huge Element, but as a symptom, it cannot cure a cause unless it the cause.

Looking back I see US sliding downward into debt since the 1970s. .gov, personal, corporate, on and on. Same time Oil started biting US and we became net importers. Since the Oil is the basis backing the Dollar (Petro-Dollar model), the worse Oil gets, the worse the US gets.When Oil has gone down over the past few decades -- the economy appears to improve or do well, Oil goes up and we are laying hard into Recessions. That looks more like a valid Root Cause Analysis relationship rather the various symptoms that it all plays out with.

But in all of that we never pay down the debt during Good Times, so the debts just pile up hard during Bad Times -- such as now.

I am in agreement with most of your post, but I do not believe putting an end to the raising of the debt limit would crash the economy.

While wage stagnation began in the 70's due to inflation from oil prices, the increase in debt actually started in 1980, before that it was falling as a percentage of GDP.
In 1980, we began massive deficit spending while at the same time cutting taxes, especially for the rich. We also began the process of globalization and off shoring production of goods.
The impact of oil prices would have been temporary, as we know they went down to $10 a barrel in response to less demand when the marketplace went from 12mpg cars of the 70's to 25mpg cars of the 80's.
What did not stop was the march of globalization, trade agreements, off shoring, and the destruction of the American jobs.
The jobs base was replaced with service sector jobs that were dependent on an inflated economy and public and private debt.
This ongoing ponzie scheme made people believe the destruction of the jobs base was not doing any harm.
At least not until 2006 when even, the perpetrators of the ponzie scheme lost confidence in their ability to keep this charade going.

[Mircea]

Originally Posted by jimhcom

There are a lot of people lobbying hard now for raising the debt limit.

Yes, that is because failure to raise the debt limit results in immediate recession. Immediate in Economic Time is about 90 days.

Originally Posted by jimhcom

I am against that course for the following reasons. The main argument that I have heard is that if we continue on our present course, with our current growth rate, that by 2014 we will begin to see recovery.

You are already in recovery and have been for nearly 2 years. This is it. This is as good as it gets.

The numbers don't lie.

The government has spent, what, $12 TRILLION in the last 3 years and your GDP has risen only $500 Billion.

That's a ratio of what? 24:1 right?

Not exactly cost-effective or cost-efficient. I can flush the toilet and do better than that.

Originally Posted by jimhcom

First, it does not address the real root cause of our economic trouble, which is the loss of jobs and the negative real earnings of the working class.

Why would it address that?

The "root cause of our economic trouble" is very bad foreign policy for the last 100 years. Unfortunately, it will take you 3 generations or about 120 years to undo the satanic evil you have done.

http://ferox.haxial.net/miscimages/3monkeys/planetoftheapes.jpg (broken link)

That's America while it's government went round and looted the resources of countries, stole their wealth, imprisoned, tortured and murdered the people, and oppressed the people: See No Evil, Hear No Evil, Speak No Evil, especially since you benefited from that $38/hour union job that was really only worth $8/hour.

You let your government create an un-level playing field tilted to your advantage, and now BRIC is running around leveling that playing field, forcing you to compete fairly, and you're crying like a sissy.

150 years you have controlled Guatemala, Nicaragua and Honduras, and after 150 years those people still don't have running water, electricity, sewage or roads. You couldn't find the money or time to develop those countries, but strange how you found the time and money to illegally overthrow the government of Honduras 14 freaking times (the last time being just recently during the Obama Administration).

That's a crime against humanity. If you had spent just a little money to develop those countries, you might actually have some trading partners to trade your manufacturing output and you wouldn't have to fear losing jobs to them.

I sure hope you build democracy in Iraq and Afghanistan a helluva lot faster than you built democracy in Iran, because after 60 years you weren't even close to getting it right, but that's probably because you were too busy stealing Iran's oil, natural gas, minerals and wealth, and imprisoning, torturing and murdering "dissenters." If you had made even minimal effort to develop the country, you'd have a good trading partner there too.

It's time to pay the piper, and there's nothing you can do about it, not in your life-time anyway.

The simple fact is my plants in Ghana, Romania and Kuwait will out-produce the snot of your plants and at lower costs giving me higher margins. I'll sell my widgets of equality to yours for $29 each, and you, well, go ahead and try to sell your union-made widgets for $49 each on the world market.

I'll stomp your guts out. I'll have 10 times the global market share you'll have in no time, even in the US. People will buy my $29 widgets before they even think about buying your $49 widgets.

And when I get enough money, I just buy up all the shares of stock in your company and when I get 51%, I'll have controlling interest and your company, and then I'll close the doors and shut down all your facilities and fire all of your workers.

And then what are you going to do? Maybe your government can spend $4 TRILLION trying to create jobs to make micro-widgets.

Fine. I'll just have my plants in Mauritania make micro-widgets of equality and sell them globally for half of what you sell them for. The story ends the same. I buy you out, shut down your plants, and fire your employees.

It's a Global World, a Global Economy, and a Global Market Place. The key to success is a coherent Global Strategy, and that strategy is concentrated on obtaining Global Market Shares.

US companies cannot sell their $49 widgets globally if competitors are selling theirs for $15-$29 each. It would only be a matter of months or years before the US Global Market Share is exactly ZERO PERCENT.

As a US company, the only way I can compete, is to cut wages or off-shore jobs. If I off-shore jobs, then I need only to reduce my US workforce, and then I can subsidize their wages (and outrageous benefits) using profits from my off-shore facilities.

There is one other option.

You could out-law corporations and close the stock markets in the US.

If I can't buy stock in your company, then I can't gain controlling interest and shut your company down.

Still, the only way LLCs or LLPs and GP's could succeed is to off-shore jobs.

It's all about Global Market Share.

Originally Posted by jimhcom

Second, it ignores the fact that the so-called improvement in the economy was financed by the government, and is now a liability that has to be serviced.

Raising the debt ceiling will only ensure that you will have difficulty servicing the debt in the future.

The only way to service the debt is to cut spending.

Originally Posted by jimhcom

We are playing a fools game where only the wealthy who can manipulate the laws and lawmakers will benefit.

That's your fault, because the only thing you have ever done is this:

http://ferox.haxial.net/miscimages/3monkeys/planetoftheapes.jpg (broken link)

When you grow up, you can start a grass-roots movement, gather signatures on a petition, and enact a city ordinance that says that if you are not eligible to vote in an election, then you cannot contribute money to election campaigns or ballot issues.

You might have to reduce the number of hours you spend watching TV to do that, but it would be well worth it, since you have severely reduced the ability of the 60-odd Big Tyme Olde Money Power Families to control your governments at all levels.

You can do the same thing at the county and State level, gather signatures on a petition and put the issue before the voters of the State.

You can also file a Writ of Mandamus in any State court and compel your governor to uphold and comply with the 9th and 10th Amendments of the US Constitution.

State = Country

Just as countries are sovereign, so are US States, and it says so in the US Constitution. The only difference between a State and a US State, is that US States have voluntarily forfeited the right to coin money, regulate interstate commerce, provide for the common defense, and enact treaties.

A PAC, Special Interest Group, Union, Think-Tank, Foreign Corporation or Non-Resident in another State cannot legally contribute money to election campaigns or ballot issue in your State, because it is a violation of your State's sovereignty, and an exercise of undo influence.

That also applies to political parties. It is illegal for the Democrat or Republican parties of Iowa to give money to the Democrat or Republican parties in Florida. That is a violation of Florida's sovereignty.

Eventually you can amend the US Constitution to state the same thing, if you are not eligible to vote in an election, then you cannot contribute to the election or ballot campaign.

So, you can put an end to the wealthy manipulating your laws any time you so desire to do so. You just have to want to do so, and apparently, no one wants to do so.

Originally Posted by jimhcom

We are seeing our future happening now in Greece with the selling off the people’s assets to the same people who caused their financial disaster in the first place.

The Greeks did that to themselves.

That's what happens when you want everyone but you to finance your outrageous life-style and party like it's 1999 24/7.

I guess you're going to ignore the fact that Greece was a US-puppet dictatorship until the US got tired of it and enlisted the aid of army colonels to illegally overthrow the government and set up another US-puppet dictatorship.

If the US had not interfered in the political, social and economic development in Greece, it wouldn't be in a mess today.

Originally Posted by jimhcom

I am in agreement with most of your post, but I do not believe putting an end to the raising of the debt limit would crash the economy.

Then you need to study Economics.

The current 2011 Budget Deficit is $1.5 TRILLION.

If the debt ceiling is not raised, then the US cannot sell that debt as securities in the form of treasury bills, bonds or notes.

If the US cannot sell $1.5 TRILLION in treasury bills, bonds, or notes, then the US will have a cash short-fall of $1.5 TRILLION.

That means recession within 90 days.

Why?

Go to FedSource. Go to gsa.gov or fbo.gov and look at the contracts that have been awarded by the federal government, it's departments, offices and agencies.

There are thousands and thousands of contracts awarded for all manner of things like roofing on some federal court house, or plumbing, lights, dry wall, painting, flooring, carpeting in some federal building.

HUD, DoED, DOD, HHS etc etc have contracted companies to perform a variety of work.

You're a contractor and you've purchased supplies and materials, and paid your workers. You've already billed the government in three installments for the work you have performed and the materials and supplies you have purchased.

You have 3 more installment billings in accordance with the contract each worth $1.7 Million.

So where is the government going to get that $1.7 Million to pay you for each of the 3 future installments?

The government ain't got it.

The government ain't go not cash. It spent all that it had, and because the debt ceiling wasn't raised, it could not sell treasury bills, bonds and notes to get more cash.

What do you do?

You file Chapter 7 Bankruptcy, close your doors and fire all of your employees.

Why? Because you're out of money, and you can't pay your employees for future work on that government contract.

You can't even pay the bills you owe to creditors who are hounding you 24/7, have turned the accounts over to collection agencies and have denied you any further credit.

You can't even finish the other contracts you have with non-government private business and persons.

Thousands and thousands of people will be unemployed, and hundreds and hundreds of businesses will be filing Chapter 7 Bankruptcy, or Chapter 11 Reorganization or Chapter 13 Refinance to avoid going out of business and to seek protection from creditors in an attempt to salvage their businesses. The small businesses, especially the veteran, minority and women-owned businesses who get lots of government contracts will be trashed, because Haliburton, Martin, Hughes and others, well, they'll get theirs come hell or high-water, and they have deep pockets anyway. It's the medium and small business that will go under.

And that's just the tip of the iceberg.

All those earmarks crammed in legislation by the idiot politicians you keep re-electing over and over, and all the money handed over by the federal government to the States, and to the counties and cities in the form of block grants or whatever, that's all gone.

So here's a city who rather stupidly accepted block grants from the federal government for law enforcement. And it wasn't stupid enough for the city to do that, they had to get even more stupid and start cutting the police budget in the amount of the block grant to pay for other garbage and useless social services that a city has no business providing in the first place.

And now, the federal government doesn't cough up the last installment(s) of that block grant, what happens?

The city is in a tizzy because their only option is to lay off police, or cut services and programs to get the money to replace what they didn't get from the federal government.

Naturally the cities, counties and States have all manner of interstate and highway improvement projects going on, funded in whole or in part by federal tax dollars and now there is no cash to finish those projects.

Work is halted, the employees laid off, and the interstate crapped down from 4 lanes to 1 lane of traffic is going to sit like that until next year, or perhaps for the next several years.

Won't that be a joy for drivers?

You have a lot of learning to do about how your government(s) operate.

Originally Posted by jimhcom

While wage stagnation began in the 70's due to inflation from oil prices, the increase in debt actually started in 1980, before that it was falling as a percentage of GDP.

Wrong.

There was no "wage stagnation."

Wages were flying through the freaking roof so fast that rising wages started causing prices to rise through the roof.

That is called Wage Inflation, when wages rise too fast and cause prices to rise.

Nixon enacted a Wage & Price Freeze to stop wages from rising, which in turn would stop prices from rising.

The last time there was Wage Inflation was, as incredible as it might sound, during the Great Depression. FDR also enacted a Wage & Price Freeze. Because employers could not give pay raises to workers, and because employers had no means of hiring new talent or luring away talent from competitors because wages were frozen, employers started offering catastrophic health care coverage as a benefit in lieu of wages. That's how employers got ensnared in your health care fiasco.

Who on this forum would like to know why wages were suddenly rising so fast?

US manufacturing was changing from a mechanical world to an electronic world.

No, I'm not talking about producing or manufacturing electronics (although that was certainly happening), rather I'm talking about a chemical plant switching from mechanical valves to electronic valves, a milling company switching from mechanical lathes to electronic lathes, from mechanical grinders to electronic grinders, etc etc. Plus there was a plethora of new technology stemming from the NASA Apollo Program and the US nuclear weapons development. That required workers with advanced training or re-training. Better workers, higher wages. And yes, it was at this point that a cornucopia of medical diagnostic technology was introduced which did two things, require better paid workers and technicians, and which also drove your hospitals into bankruptcy leading to the crisis that resulted in the explosion of "health insurance" companies from 11 national and 5 regional to more than 800 "health insurance" companies in just a few years.

Originally Posted by jimhcom

In 1980, we began massive deficit spending while at the same time cutting taxes, especially for the rich.

Carter was president in 1980 and the Democrats had veto-control over both the House and Senate, so I hope you aren't trying to blame that on the Republicans.

Originally Posted by jimhcom

We also began the process of globalization and off shoring production of goods.

The impact of oil prices would have been temporary, as we know they went down to $10 a barrel in response to less demand when the marketplace went from 12mpg cars of the 70's to 25mpg cars of the 80's.
What did not stop was the march of globalization, trade agreements, off shoring, and the destruction of the American jobs.

That was inevitable, and there is nothing you could do to stop it.

If you wanted to stop it, then you'd have to go back to 1898 and alter your foreign policy and start acting like a "Christian Nation" or at the very least, start acting like a nation that doesn't give lip service to "self-determination," "democracy" and "freedom."

Originally Posted by jimhcom

The jobs base was replaced with service sector jobs that were dependent on an inflated economy and public and private debt.

This ongoing ponzie scheme made people believe the destruction of the jobs base was not doing any harm.

At least not until 2006 when even, the perpetrators of the ponzie scheme lost confidence in their ability to keep this charade going.

There is nothing wrong with public or private debt. Both are good, just like beer, when in moderation.

The problem is you don't have a clue what "moderation" is.

Why do you buy a house? Because it's an investment.

Wrong answer.

You buy a house to fix your costs and expenses. That is the only reason you buy a house.

My parents bought their home in 1965 with a $79/month mortgage. An apartment in Clifton was $50/month. In 1980, I was a sound engineer at WBTI (my first real job after high school) making $5/hour (a little more than twice minimum wage) and my first apartment in Clifton was $150/month, but my parents were still paying $79/month.

I left the US, came back 10 years later, and a 1-bedroom apartment in Clifton was $350/month, but my parents were still paying $79/month for their 3 bedroom home.

Not too many years after that, an apartment was $450/month, but my parents were paying nothing for their 3-bedroom home.

Does anyone NOT see the advantage of fixing expenses?

For someone who rents, their disposable income never increases. It stays static or actually decreases because rents continually rise. For those who purchase homes, their disposable income continually increases, because their mortgage is fixed.

What you all have perverted that into is you want to pay $125,000 for a home then 15 years later sell it for $9 Million so that you effectively paid nothing for rent/mortgage, gas, electric, insurance, maintenance or taxes the whole 15 years you lived there and make a handsome profit on top of that, and when it doesn't happen you throw a hissy fit and start demanding that the wealthy be soaked to pay for the mortgage, insurance, maintenance, taxes and utilities the whole 15 years you lived there.

There is no law that says housing values must rise. Housing values will exactly what the market dictates, but there is no way to foresee the future and know what the market will dictate 15, 20 or 30 years from now. Yes, it is possible that the Uranus Corporation will build their plant to manufacture stinky Brown-25 near your house and cause its value to plummet, or that the State will build an interstate near your home to cause it's value to plummet or that your neighborhood will be invaded by an army of illegal aliens who will instantly engage in the drug trade and fencing operations and drive housing values down.

And since there is no way to know, the intelligent thing to do is to treat your home for exactly what it is, a means of fixing your expenses against your income, and in that way, you never lose.

Your idea of what the economy should be is a total fail.

So you want to go back to Ye Olde Dayes of Yore and what, manufacture machine tools? Really?

How many do you plan on buying? You could buy a LeBlond milling machine and stick it in your living room, perhaps you can also buy a Van Gogh to mount on it.

If you aren't going to buy machine tools and valves and lathes for your living room decor then who is?

You gonna sell them to the rest of the world? Thanks to your foreign policy blunders I'm sure the Guatemalans can afford to buy plenty and stick them in their mud huts without electricity, sewage or running water.

Gonna sell them to a country? Really? What moron would pay $750,000 for a lathe when they can buy one of equal quality for $250,000 from another country?

I suppose you could park one of your carrier battle groups and marine amphibious assault groups off the coast and threaten and bully that little country into buying your ridiculously priced machine lathes made by your highly over-paid union chimpanzees.

Of course, that would assume that Congress raises the debt ceiling so that you can sell your 2011 Budget Deficit to get cash to pay for operating the carrier battle group and marine amphibious assault group.

No, you'll just have to face the music and suffer the consequences of your apathy and your total and complete refusal to remain vigilant in the governing of your representative democracy.

This will all end about 70 years from now. At that time, it won't matter if you build your warehouse in White Plains, New Jersey or the in the heart of the Congo, because a warehouse worker in New Jersey, union or not, is gonna get $18/hour and the guy in the Congo is gonna be making $16/hour.

[gwynedd1]

The debt limit will always rise. Its an interest bearing credit based monetary system all based on IOU(although this is magnified through pseudo asset chicanery) . The reason why public debt is going through the roof is because private debt has stalled. To address the national debt in this way may as well come with a free booklet that describes a 101 things you can do with powdered water. How much were we inflation taxed when the Fed expanded its portfolio and did the QEs? Its all bunk. They keep writing things in a book that says "debt" and then they write in another box that says "asset". All it does is print money. In the case of "debt", money is expanded with the asset being government bonds. When the Fed expands its portfolio with utter junk from the commercial banks, its called an asset. Both of them result in one thing, expansion of the money supply from out of nowhere because no one can borrow privately to make money from nowhere privately.

They can expand the money supply with guberment( FYI: the correct pronunciation should come out like you have a sinus infection) promises or dog biscuits, and its still all fit to print. In one case they print money cause the guberment backs it. In the other, there's that dog biscuit. The key term is called "monetizing". For example they can pick your pockets with inflation by monetizing your own nipples as tuppence.

[jimhcom]

Originally Posted by Mircea

Then you need to study Economics.

The current 2011 Budget Deficit is $1.5 TRILLION.

If the debt ceiling is not raised, then the US cannot sell that debt as securities in the form of treasury bills, bonds or notes.

If the US cannot sell $1.5 TRILLION in treasury bills, bonds, or notes, then the US will have a cash short-fall of $1.5 TRILLION.

That means recession within 90 days.

Why?

Go to FedSource. Go to gsa.gov or fbo.gov and look at the contracts that have been awarded by the federal government, it's departments, offices and agencies.

There are thousands and thousands of contracts awarded for all manner of things like roofing on some federal court house, or plumbing, lights, dry wall, painting, flooring, carpeting in some federal building.

HUD, DoED, DOD, HHS etc etc have contracted companies to perform a variety of work.

You're a contractor and you've purchased supplies and materials, and paid your workers. You've already billed the government in three installments for the work you have performed and the materials and supplies you have purchased.

You have 3 more installment billings in accordance with the contract each worth $1.7 Million.

So where is the government going to get that $1.7 Million to pay you for each of the 3 future installments?

The government ain't got it.

The government ain't go not cash. It spent all that it had, and because the debt ceiling wasn't raised, it could not sell treasury bills, bonds and notes to get more cash.

What do you do?

You file Chapter 7 Bankruptcy, close your doors and fire all of your employees.

Why? Because you're out of money, and you can't pay your employees for future work on that government contract.

You can't even pay the bills you owe to creditors who are hounding you 24/7, have turned the accounts over to collection agencies and have denied you any further credit.

You can't even finish the other contracts you have with non-government private business and persons.

Thousands and thousands of people will be unemployed, and hundreds and hundreds of businesses will be filing Chapter 7 Bankruptcy, or Chapter 11 Reorganization or Chapter 13 Refinance to avoid going out of business and to seek protection from creditors in an attempt to salvage their businesses. The small businesses, especially the veteran, minority and women-owned businesses who get lots of government contracts will be trashed, because Haliburton, Martin, Hughes and others, well, they'll get theirs come hell or high-water, and they have deep pockets anyway. It's the medium and small business that will go under.

And that's just the tip of the iceberg.

All those earmarks crammed in legislation by the idiot politicians you keep re-electing over and over, and all the money handed over by the federal government to the States, and to the counties and cities in the form of block grants or whatever, that's all gone.

So here's a city who rather stupidly accepted block grants from the federal government for law enforcement. And it wasn't stupid enough for the city to do that, they had to get even more stupid and start cutting the police budget in the amount of the block grant to pay for other garbage and useless social services that a city has no business providing in the first place.

And now, the federal government doesn't cough up the last installment(s) of that block grant, what happens?

The city is in a tizzy because their only option is to lay off police, or cut services and programs to get the money to replace what they didn't get from the federal government.

Naturally the cities, counties and States have all manner of interstate and highway improvement projects going on, funded in whole or in part by federal tax dollars and now there is no cash to finish those projects.

Work is halted, the employees laid off, and the interstate crapped down from 4 lanes to 1 lane of traffic is going to sit like that until next year, or perhaps for the next several years.

Won't that be a joy for drivers?

You have a lot of learning to do about how your government(s) operate.



Wrong.

There was no "wage stagnation."

Wages were flying through the freaking roof so fast that rising wages started causing prices to rise through the roof.

That is called Wage Inflation, when wages rise too fast and cause prices to rise.

Nixon enacted a Wage & Price Freeze to stop wages from rising, which in turn would stop prices from rising.

The last time there was Wage Inflation was, as incredible as it might sound, during the Great Depression. FDR also enacted a Wage & Price Freeze. Because employers could not give pay raises to workers, and because employers had no means of hiring new talent or luring away talent from competitors because wages were frozen, employers started offering catastrophic health care coverage as a benefit in lieu of wages. That's how employers got ensnared in your health care fiasco.

Who on this forum would like to know why wages were suddenly rising so fast?

US manufacturing was changing from a mechanical world to an electronic world.

No, I'm not talking about producing or manufacturing electronics (although that was certainly happening), rather I'm talking about a chemical plant switching from mechanical valves to electronic valves, a milling company switching from mechanical lathes to electronic lathes, from mechanical grinders to electronic grinders, etc etc. Plus there was a plethora of new technology stemming from the NASA Apollo Program and the US nuclear weapons development. That required workers with advanced training or re-training. Better workers, higher wages. And yes, it was at this point that a cornucopia of medical diagnostic technology was introduced which did two things, require better paid workers and technicians, and which also drove your hospitals into bankruptcy leading to the crisis that resulted in the explosion of "health insurance" companies from 11 national and 5 regional to more than 800 "health insurance" companies in just a few years.



Carter was president in 1980 and the Democrats had veto-control over both the House and Senate, so I hope you aren't trying to blame that on the Republicans.



That was inevitable, and there is nothing you could do to stop it.

If you wanted to stop it, then you'd have to go back to 1898 and alter your foreign policy and start acting like a "Christian Nation" or at the very least, start acting like a nation that doesn't give lip service to "self-determination," "democracy" and "freedom."



There is nothing wrong with public or private debt. Both are good, just like beer, when in moderation.

The problem is you don't have a clue what "moderation" is.

Why do you buy a house? Because it's an investment.

Wrong answer.

You buy a house to fix your costs and expenses. That is the only reason you buy a house.

My parents bought their home in 1965 with a $79/month mortgage. An apartment in Clifton was $50/month. In 1980, I was a sound engineer at WBTI (my first real job after high school) making $5/hour (a little more than twice minimum wage) and my first apartment in Clifton was $150/month, but my parents were still paying $79/month.

I left the US, came back 10 years later, and a 1-bedroom apartment in Clifton was $350/month, but my parents were still paying $79/month for their 3 bedroom home.

Not too many years after that, an apartment was $450/month, but my parents were paying nothing for their 3-bedroom home.

Does anyone NOT see the advantage of fixing expenses?

For someone who rents, their disposable income never increases. It stays static or actually decreases because rents continually rise. For those who purchase homes, their disposable income continually increases, because their mortgage is fixed.

What you all have perverted that into is you want to pay $125,000 for a home then 15 years later sell it for $9 Million so that you effectively paid nothing for rent/mortgage, gas, electric, insurance, maintenance or taxes the whole 15 years you lived there and make a handsome profit on top of that, and when it doesn't happen you throw a hissy fit and start demanding that the wealthy be soaked to pay for the mortgage, insurance, maintenance, taxes and utilities the whole 15 years you lived there.

There is no law that says housing values must rise. Housing values will exactly what the market dictates, but there is no way to foresee the future and know what the market will dictate 15, 20 or 30 years from now. Yes, it is possible that the Uranus Corporation will build their plant to manufacture stinky Brown-25 near your house and cause its value to plummet, or that the State will build an interstate near your home to cause it's value to plummet or that your neighborhood will be invaded by an army of illegal aliens who will instantly engage in the drug trade and fencing operations and drive housing values down.

And since there is no way to know, the intelligent thing to do is to treat your home for exactly what it is, a means of fixing your expenses against your income, and in that way, you never lose.

Your idea of what the economy should be is a total fail.

So you want to go back to Ye Olde Dayes of Yore and what, manufacture machine tools? Really?

How many do you plan on buying? You could buy a LeBlond milling machine and stick it in your living room, perhaps you can also buy a Van Gogh to mount on it.

If you aren't going to buy machine tools and valves and lathes for your living room decor then who is?

You gonna sell them to the rest of the world? Thanks to your foreign policy blunders I'm sure the Guatemalans can afford to buy plenty and stick them in their mud huts without electricity, sewage or running water.

Gonna sell them to a country? Really? What moron would pay $750,000 for a lathe when they can buy one of equal quality for $250,000 from another country?

I suppose you could park one of your carrier battle groups and marine amphibious assault groups off the coast and threaten and bully that little country into buying your ridiculously priced machine lathes made by your highly over-paid union chimpanzees.

Of course, that would assume that Congress raises the debt ceiling so that you can sell your 2011 Budget Deficit to get cash to pay for operating the carrier battle group and marine amphibious assault group.

No, you'll just have to face the music and suffer the consequences of your apathy and your total and complete refusal to remain vigilant in the governing of your representative democracy.

This will all end about 70 years from now. At that time, it won't matter if you build your warehouse in White Plains, New Jersey or the in the heart of the Congo, because a warehouse worker in New Jersey, union or not, is gonna get $18/hour and the guy in the Congo is gonna be making $16/hour.

Wow what a rant! I hope you feel better!

Now, would a failure to raise the debt ceiling cause a crisis? You bet, and that would be the best thing that could happen. For the first time since WWII you would see some serious scrambling going on to do what had to be done.
The government waists more money than you can imagine.
Now I will grant you that money goes into the pockets of people who are getting something for nothing from the government like the middlemen who mark up everything the government purchases so that it costs 10 times what you or I would pay for the same item, but you know what.. screw them.
It would mean we would have to seriously curtail the 6 wars we are currently perusing and bring home a lot of troops from foreign countries, gee that would terrible right?
It would also force the government into a position of aligning its interests with the taxpayers. How does that work you say.. When you cannot borrow the money anymore you have to get it the old fashion way.. from the taxpayers. Gee, let me see... higher employment and wages = more tax revenue.

The US does not need to sell its goods on the world market, what it needs to do is to protect its own market.
The US is the largest consumer market in the world.
The problem is that the people in charge of our country, no longer consider themselves American, they are now World Citizens. They are consumed by their own greed and the belief that they can control and exploit the whole world.
Economic crises are going to come one way or another. The question is do we face the music now while we can still deal with it, or continue to procrastinate and kick the can down the road until the situation becomes unmanageable.
The latter course is what we are on now, and ends with our loss of sovereignty and any hope for future generations.

[lenora]

Whatever. My prediction is that the debt ceiling will be raised. But, IMO, if not raised, the Prez can still order Treasury to pay the debts, as the Constitution requires it. (Y'know, that pesky old document.)

[CaptainNJ]

Originally Posted by lenora

Whatever. My prediction is that the debt ceiling will be raised. But, IMO, if not raised, the Prez can still order Treasury to pay the debts, as the Constitution requires it. (Y'know, that pesky old document.)

we wont default on the debt. that will increase the cost of borrowing and we already cant afford the current cost. we will just have to stop spending in other areas.

[I might]

The US does not need to sell its goods on the world market, what it needs to do is to protect its own market. (WHAT MARKET?)
The US is the largest consumer market in the world.

'Consumer'. This is part of the problem.

This makes absolutely no sense. Did you read and understand anything that Mircea posted or just copy and paste?