If the US defaults on its debts on August 2

[Awesome]

Obama cites 3-ring congressional circus - Taiwan News Online

President Barack Obama described the long political fight over raising the limit on U.S. borrowing and avoiding default on the American debt as a "partisan three-ring circus" and blamed the crisis on a group of House Republicans in a Monday night speech to the nation.
The president said the U.S. was dangerously close to default, and warned of a "reckless and irresponsible" outcome without a compromise solution in the next few days.

House Speaker John Boehner, who leads the Republican-dominated House of Representatives, offered a nationally televised rebuttal minutes after Obama's speech, accusing the president of seeking "a blank check today" and declaring, "this is just not going to happen."

Obama and Boehner spoke as the political stalemate over raising the debt limit deepened despite the introduction of new plans by both Boehner's House Republicans and the Democratic-controlled Senate under the leadership of Sen. Harry Reid.

Decrying a "partisan three-ring circus" in the nation's capital, Obama assailed the newly minted Republican plan to raise the nation's debt limit as an invitation to another crisis in six months' time. He said congressional leaders must produce a compromise that can reach his desk before the deadline.

Without signed legislation by day's end on Aug. 2, the Treasury will be unable to pay all its bills, possibly triggering an unprecedented default that officials warn could badly harm a national economy still struggling to recover from the worst recession in decades.

Despite warnings to the contrary, U.S. financial markets have appeared to take the political maneuvering in stride _ so far. Wall Street posted losses Monday but with no indication of panic among investors.

Republicans insist on deep cuts in spending in return for their votes to raise the borrowing limit. The Republicans, under the powerful sway of the small-government, low-tax tea party movement, have consistently refused Obama's request for a balanced approach to deficit reduction that includes both spending cuts and tax increases for the wealthy.

The big hang-up now is the Republican demand that any increase in the debt ceiling be large enough only to carry the country through early next year. That would force the borrowing limit back onto the national agenda in the middle of the 2012 presidential and congressional election campaign.

Obama said such a move was not likely to prevent a downgrading of America's triple-A credit standing as threatened by big credit rating organizations. He wants the current $14.3 trillion debt ceiling raised by at least $2.4 trillion in one vote.

Obama's White House on Monday backed the new Senate Democratic plan even though it omitted Obama's requirement of increased tax revenue. It calls for raising the debt limit sufficiently to carry the country into 2013, beyond the next election. It also calls for significant spending cuts but assumes a large part of that would come from savings from the withdrawal of U.S. troops from Iraq and the drawdown in American forces from Afghanistan.

Echoing the disgust he voiced on Friday when Boehner walked away from talks with Obama, the president said: "The American people may have voted for divided government, but they didn't vote for a dysfunctional government."

He returned to his call for "a balanced approach" to ending the standoff over reducing the federal deficit and urged Americans to contact their lawmakers to demand compromise.

Obama quoted Ronald Reagan _ a hero to many conservatives _ who also spoke of a balanced plan and stressed a need for compromise.

Obama had only just walked away from the podium in the White House East Room when Boehner appeared on national television screens from the Capitol.

"The president has often said we need a `balanced' approach, which in Washington means we spend more, you pay more," Boehner said.

"The sad truth is that the president wanted a blank check six months ago, and he wants a blank check today. That is just not going to happen."

Directly challenging the president, Boehner said there "is no stalemate in Congress."

He said the Republicans' latest plan would clear the House, could clear the Senate and then would be sent to Obama for his signature.

The back-to-back televised speeches did little to suggest that a compromise was in the offing, and the next steps appeared to be votes in the House and Senate on the rival plans by midweek.

There were concessions from both sides embedded in the competing legislation, but they were largely obscured by the partisan rhetoric of the day.

Senate Republican leader Mitch McConnell urged Obama to shift his position rather than "veto the country into default."

And Reid slammed tea party-backed Republicans who make up a significant portion of the House Republican rank and file. He warned against allowing "these extremists" to dictate the country's course."

The measure Boehner and the Republican leadership drafted in the House, in addition to spending cuts and an increase in the debt limit to tide the Treasury over until sometime next year, called for a second increase in borrowing authority sometime next year that would hinge on approval of additional spending cuts sometime during the election year.

The Reid legislation in the Senate drew praise not only from Obama but also from House Democratic leader Nancy Pelosi _ and criticism from Republicans.

Some concessions have been made by each side, obscured by the political rhetoric.

With their revised plan, House Republicans backed off an earlier insistence on $6 trillion in spending cuts to raise the debt limit.

Obama did not repeat his vow to veto the revised House measure, as he had with an earlier version calling for deep cuts, a cap on spending and passage by both houses of a constitutional amendment requiring the federal government to operate only under a balanced budget.

White House communications director Dan Pfeiffer called the new House proposal "not a serious attempt to avert default because it has no chance of passing the Senate."

Not all Republicans were happy with their leadership's decision to scale back legislation that had cleared the House last week, only to die in the Senate.

Among House conservatives who have provided the political muscle for the Republican drive to cut spending, the revised legislation was a disappointment. "I cannot support the plan," said Rep. Jim Jordan, one of the leading advocates of the so-called "Cut, Cap and Balance" plan that cleared the House last week and died in the Senate.

But others among rank-and-file Republicans said their constituents were voicing concerns other than the rising federal debt _ worries about Social Security pension payments to retirees and Medicare insurance coverage for the elderly, both Republican targets for deep spending cuts.

What a mess

 

[Awesome]

They have a week left to make this call. They should leave this to a referendum and let the people decide.

 

[Al Bhatti]

Let us hope they default, it will be a somewhat a big hit to the US which may lead to troop withdrawals from overseas and defense cuts.

But at the same time will it increase the pressure on internal security as soon as the troops start returning.

 

[IND151]

Yeah, I'm not too impressed with the idea of raising taxes in a consumption-driven economy.

And spending needs to be cut sooner or later. For the long-term health of the American economic system.

that's correct. problem is who will make realize this to Americans? they earn 1 $ and spend 2 $.

even then america must cut spending needs.

i guess spending on health will face reduction first.

 

[fd24]

They have a week left to make this call. They should leave this to a referendum and let the people decide.

I know sometimes the americans are quick but i dont think a referendum could be organized in 1 week!!!

 

[Awesome]

Let us hope they default, it will be a somewhat a big hit to the US which may lead to troop withdrawals from overseas and defense cuts.

But at the same time will it increase the pressure on internal security as soon as the troops start returning.

There is no immediate benefit to the world if the US defaults.

The US will not collapse, but decline.

Pakistan will still need to fix all its issues for any benefit.

 

[Al Bhatti]

July 27, 2011

Debt crisis risks Gulf billions

US Congress deeply divided as lawmakers grapple for a deal to avert a devastating default

Gulf investment entities have an estimated $1 trillion (Dh3.67 trillion) invested in US Treasury notes and bonds — with hundreds of millions of worth threatened by a credit downgrade if US lawmakers fail to reach an agreement on federal debt levels by next Tuesday.

And any failure by Democrats and Republicans to reach a deal will make Gulf Cooperation Council (GCC) nations rethink pegging their currencies’ to the sinking dollar.

“If the lawmakers in the US don’t find a solution to this brinkmanship, the effect on the Gulf will be very significant,” John Sfakianakis, chief economist at Banque Saudi Franci told Gulf News on Tuesday night from Riyadh.

Sfakianakis’ warning was echoed by Giyas Gokkent, group chief economist at the National Bank of Abu Dhabi, who said that the Saudi central bank alone holds $497 billion in US notes.

“The fallout for the Gulf will force officials to rethink their strategy of buying US notes,” Gokkent told Gulf News. “Every textbook says buy US notes as a conservative investment, but we will have to tear up those text books.”

The US Congress remained deeply divided yesterday as lawmakers grappled for a debt deal. As the dollar slid to new lows and stock markets wobbled, the White House sought to allay global fears that the US could default on its massive debt obligations for the first time in its history. “We remain confident,” White House spokesman Jay Carney said. “In the end we believe that Congress will behave appropriately.”

In a solemn address to the nation late on Monday, President Barack Obama warned of a “deep economic crisis” if the US fails to raise its debt limit and urged Americans to pressure Republican lawmakers to compromise to avert a default. He called the weeks-long debt talks stalemate “a dangerous game” that the country “cannot afford to play.” Failure to compromise, he said in his speech, “would risk sparking a deep economic crisis — one caused almost entirely by Washington.”

He rejected a Republican proposal for a temporary increase in the debt limit, arguing it would leave the underlying problem unresolved and lead to a repeat of the current crisis in just six months’ time.

gulfnews : Debt crisis risks Gulf billions

 

[pmukherjee]

It’s Not Default Of Obama: Jail GOP Deadbeats For Debt Crisis – OpEd
Written by: Greg Palast

Charles Dickens’ Oliver Twist gave debtors’ prison a bad rap. Too bad. I’d say that locking away GOP Majority Leader Eric Cantor in a penitentiary for deadbeats seems like a darn good idea. Let’s talk about how we ended up in this pickle, bucking up against the “debt ceiling.” From 2001 to 2008, a Republican President took an annual surplus of $86 billion left for him by Bill Clinton and ran up the budget deficit to over half a trillion a year ($642 billion in 2008). Altogether, George W. Bush blew up the national debt by over $3 TRILLION–then left the bills to Barack Obama.
For eight years, Bush spent like a drunk monkey. The world was the GOP’s Bergdorf’s and they had our credit card. If there was a shiny new war on the shelf, they just had to have it: Iraq, Afghanistan, and let’s not forget the Fantasy Wars, the half a trillion dollars a year on fancy-*** weapons for a war that won’t happen. (Example: the Virginia Class submarine. The V-class was designed to attack Soviet subs. There are no more Soviet subs, but Bush ordered three dozen anyway–at $1.8 billion each.)
And tax cuts? Don’t get me started!
The Bush Administration acted just like Sarah Palin when she was set loose in that Neiman Marcus in Minneapolis–grabbing whatever she could carry because Sarah could put it on someone else’s account.
The GOP’s fattened frat boys feasted–but when the waiter arrived with the bill, the belching rich kids looked around, pointed at some poor schmuck sweeping the floor, Mr. John Q. Veteran, and said, “THAT GUY will pay.”
By the way: Congressman Cantor, the guy leading the Republicans’ refusal to lift the debt ceiling, voted for the V-class sub as well as Bush’s bogus scavenger hunt for weapons of mass destruction in Iraq. But now Cantor doesn’t want to pay the bill.
Y’know, Congressman, maybe you think my parents were fools because they taught me: If you buy it, you pay for it.
Apparently, that’s not the rule at Cantor’s country club.
The sick assumption of this entire debt ceiling debate, as we hear from talking heads whether on Fox or PBS, is that this is our deficit; as if you and I got a tax break or Amazon delivered that submarine to our door.
And the flapping lips on TV also assume that there must be some kind of “compromise” in which the spending spree by the rich must be paid for by the working class. The Washington elite agree we must pay for tax holidays for hedge funds by closing health clinics.
Of course, the GOP is right abut one thing. President Tiger Wuss will do just that: make the poorest among us pay the debts of the richest. Here we have a bunch of economic terrorists–”Agree to all our demands or the economy gets it!”–and Obama’s idea of leadership is to offer the berserkers three-quarters of what they demand.
Thank the Lord and Michele Bachmann that 75% isn’t enough for these greedsters.
Solution: Don’t pay the banksters
There’s another wrong assumption controlling this debate over debt, that the banks, the debt holders, must be paid. When the bankers and the Chinese and the Saudis lent Bush three trillion dollars for his wild-*** buying party, they were betting, like any investor, on the good faith of the borrower to pay it back.
So, let Hu Jintao and King Abdullah stick a collection agency on Cantor and the other Republican shirkers. Repossess their limousines or send The Boys around to remind Cantor what happens when you don’t pay what you owe.
The President should say to Hu, the Sheik and Goldman-Sachs:
“I have identified $3 trillion in Treasury notes issued between 2001 and 2008 which were lent to fund President Bush’s expenditures. Unfortunately, those who borrowed your money don’t want to pay it back. You made a bad investment — but that’s how the free market works. Therefore, I am suspending payments on these Treasury notes until we can round up the deadbeats and make them live up to their commitments.
“As President, I have the Constitutional duty to pay the bills of the Veterans Administration, the Social Security fund and other vital services already voted and appropriated by Congress. Military pay before banker pay. Get used to it.”
Will the bankers have heart attacks? I hope so. (Maybe if bankers are ill, the GOP will vote for universal health care.) Will China refuse to buy more US debt? Not a chance: The Chinese cannot afford a devaluation of the $2-3 trillion in US Treasury notes they have in their pokey, a devaluation which would surely follow their abandoning the US treasuries.
Note: Argentina defaulted and thrived. We can tango too. But that’s all detail for me to argue out with other economists in some effete what-if seminar.
Ultimately, “default” is not the issue. “Default,” dear Brutus, is not in our stars but in that age-old battle between Them and Us. They spent the money and now they want Us to pay.
Default lies with the Republican spendthrifts, Mr. President. So I suggest you issue an executive order creating a new wing at Guantanamo: a debtors’ prison for trillion-dollar deadbeats.
(Don’t you think Eric Cantor would look good in orange?)
President Obama Speaks To The Nation - Transcript
It's Not Default Of Obama: Jail GOP Deadbeats For Debt Crisis - OpEd

That really is the bottom line, whether to achieve the deficit reduction targets by removing tax cuts enjoyed by the super rich American individuals and corporations or by killing much needed welfare projects which affect nearly 98% Americans.

 

[jeypore]

I've talked about the structural flaws in the socioeconomic system: entitlements, & stuff like Medicare, Medicaid, social security, unemployment, food stamps, retirement, student loans, housing loans; then there are bodies such as the EPA, FDA that are bring huge costs for the government as well. And then the Fed & Wall Street. Until these structural problems are resolved, the US will not revive. I'm not even talking about foreign policy here. America is serving the interests of the big corporate businesses right now, & not the people. Tax hikes on regular citizens (& tax cuts for the country's elites, which Obama hasn't changed) alone will not be good enough to bring this country back to the greatness it once had.

I love your rant!!! It cleraly showed your process of liberalism without a cause..... Anyways, Can you prove that there was any "Tax hikes on the regular Citizens" based on this economic crises??

I would love it with a great credible Link!!!!!!!!!!!!!!!


Thanks!!!!!

 

[jeypore]

Asim Aquil
What a mess

Yes!!!!! Especially with this quote from the source:

Obama said such a move was not likely to prevent a downgrading of America's triple-A credit standing as threatened by big credit rating organizations. He wants the current $14.3 trillion debt ceiling raised by at least $2.4 trillion in one vote.

Who are these Organizations???????

There are all Americans, where are the European and the Asian Orgainzation saying the same things............... It relates to the Bond trading market, If US Defaults by 8/4 then the Bond traders downgrade The US Gov't............

Regarding the other issue of raising the debt to 2.5 trillion, My personal opinion is based on the Japaniese Module... Today or even for last decade Japan has had higher debt raito to GDP, interms of Economic belief if this is reached, it would lend to more stagnation or even defletion scenarios, but that did not happen. What really happened in Japan's case was a slow growth but not a recession or depression. My personal opinion is, USes stupid politicians looked at this and thought that this is the great reason to spend more for our useless PORK barrel spending (and ofcourse that equates to more votes). Infact, to prove my point Obama's first economic recovery plan was largely based on the Porkbarrels.........

Eitherway anyone looks at this, it is a showbagiiiiiiiiiii!!!!!!!!

 

[jbond197]

Cost of Bush policies versus Obama policies in this Debt crisis

 

[Riseup]

Analysis: No winners in Washington debt ceiling mess

By Toby HarndenUS politicsLast updated: July 29th, 2011

After virtually every event, including the deaths of leaders and terrorist atrocities, it takes mere minutes for political operatives to start calculating who among them might benefit and who might suffer.

In Washington today there is certainly no shortage of analysis about how the tactical landscape might have shifted after Speaker John Boehner’s initial failure to secure enough votes to pass his debt ceiling bill. But there is also wide recognition that in the big picture everyone is worse off.

Overarchingly, this includes the United States, its citizens and even people around the globe who will be affected by continued economic uncertainty, the possible loss of America’s AAA credit rating and perhaps, by Tuesday, a default on repaying its debts.

Based on the old Pottery Barn rule – “you break it, you own it” – the biggest political downside is probably for President Barack Obama, who prompted this harsh evaluation by the moderate Republican columnist Peggy Noonan today: “He is a loser. And this is America, where nobody loves a loser.”

That may be an overstatement. And Republicans who remember the 1995 and 1996 government shutdowns are all too aware that they stand to get a disproportionate share of the short-tern blame.

Tactically, Obama is in a slightly stronger position because the Boehner bill’s provision of a shorter-term debt limit increase and another vote on the issue in December – which the White House strenuously objects to – is all the less likely to be part of a final bill from Congress.

Republicans charge that Democrats dislike this because they don’t want the debt issue to be raised again before the 2012 election. There may be something in that but after this current debacle few sane Americans want a repeat this Christmas.

But Obama has lost the big argument about how the American economy should work. His expansionist vision of government and spending was rejected at the polls in last November’s mid-terms and his prospects of re-election look ever more perilous.

Behind closed doors on Capitol Hill many Democrats are increasingly critical of Obama, who they view as having been Missing in Action for much of the time and unhelpful on the few occasions he has intervened.

During the weeks of debt ceiling debates, Obama has never presented his own plan for an increase package. The White House has viewed requests for a written plan as impertinent and mocked suggestions that Obama might have visited Capitol Hill to break the impasse.

“You’re talking about a President Bartlett moment?” asked Jay Carney, White House press secretary, on Wednesday. “Should he walk up Pennsylvania Avenue and go to Congress himself?”

Of course, Washington does not work like “The West Wing”, where brutish Republicans crumble after the heroic liberal president delivers a fine speech. But Obama (as a candidate, the epitome of the president a “West Wing” aficionado might wish for) is currently the unBartlett – inspid, passive and on the sidelines.

That’s not to say that Boehner has come out of any of this well. His first bill had to be re-written because the saving it envisaged were illusory. Then he failed to persuade and cajole his own caucus into backing him, losing (as of Thursday night) about 24 of the 59 conservatives in the Tea Party caucus.

The Tea Party – always an amorphous, disparate movement – is split almost down the middle. And Democratic Senate Majority Leader Harry Reid’s rival debt ceiling plan has no more chance of becoming law than Boehner’s.

Ultimately, the two sides are so close that a deal still seems more likely than not. But it has been a messy, ugly and largely unnecessary process that has further harmed the fragile US economy and done nothing to lift the reputation of Washington’s politicians, already less popular than ever before.

Analysis: No winners in Washington debt ceiling mess – Telegraph Blogs

 

[Riseup]

self deleted... due to double post

 

[RockyX]

I don't think US will default but surely it will have negative impact and it will decline.

Also, If US default then world recession on card and China will be hurt badly financially and economically. China will have worst impact followed by Europe, East Asian countries like Japan,Asean and Middle-East countries will have same kind of Impact. India GDP has some 7% relation with US, so no major Impact but in short run, It would have impact psychologically. 100's Bn $ Aid will too be stopped to various countries.

US economy needs not to default, Not good for world. US Economy reflects 50% World Economy, Unfortunately.

 

[Oldman1]

Let us hope they default, it will be a somewhat a big hit to the US which may lead to troop withdrawals from overseas and defense cuts.

But at the same time will it increase the pressure on internal security as soon as the troops start returning.

I hope the U.S. defaults. Remember what happened during the Great Depression? It was beautiful. The world knew peace and the other economies grew strong. Nazi Germany was the first to grow strong and benefited the down U.S. economy. Good times.