If the US defaults on its debts on August 2

[Royan]

Lucky are the countries that did not buy american bonds in large numbers!!

 

[Chinese-Dragon]

I personally think that the Republicans are bluffing.

The problem is, Obama is dead set on raising taxes, to avoid cutting too much into social programmes.

It's like a game of "chicken" where two cars are accelerating towards each other, both expecting the other one to swerve out of the way.

Which means there is a good chance of a collision, since neither side seems willing to budge.

 

[Awesome]

I think, It needs the congress and senate go ahead to breach its debt ceiling, which it has hit already

But why call it a breach? They can all vote and increase it? The debt-ceiling is self-imposed... They increase it like every now and then right?

Money is all a big joke if you think about it, this merry go round is going on till its going on.

 

[mahabharath]

I think he mentioned its a scary scenario. Not even America's top foe - China, wants the US to default. The US won't go down alone, it will take everyone down, since everything is tied to it. So lets not get personal or try to garner empathy by being more Christian than the pope.

Well....it is not about one person..but it is about abnormal, anti-national and dangerous thought process in certain people..I am 100% sure, you certainly don't want such people in your neighborhood..because you never know what they are going to do to your life as their loyalty lies somewhere else..to me..that is THE scary scenario..

anyway..you guys continue on your dissection..that may help healing someone's wounds

 

[53fd]

I think, It needs the congress and senate go ahead to breach its debt ceiling, which it has hit already

Correct! However, the Tea Party Republicans elected into the Congress are becoming a pain in the butt, & want the Obama government to default. To prevent default, in case the debt ceiling is not raised, there would need to be huge drawbacks & cuts, as well as much much higher tax hikes, something the Tea Party Republicans don't want to do. They want to cut down national expenditures (as opposed to raising taxes which Obama wants to do), & are willing to let the current government default. The 2010 elections were a disaster for the Democrats, the Republicans gained the majority in the House of Representatives, & made significant gains in the Senate; & now the Democrats are paying for it.

 

[Awesome]

August 2nd default would be a default to the general public, they'll get over it if the checks reach them even a month later. So it won't be catastrophic. So I guess whoever is hell bent on not getting the debt ceiling increased and generate other sources of revenue then, they have the right idea.

Obama is back-tracking on his own promises if he wants to simply borrow more. He is portraying that the SSC delay would be everybody else's fault, but he should have raised revenue for them already from other sources.

Its probably a good thing for America if it defaults here and there is a large kick in the butt to get up and do the right thing.

 

[Markus]

What may exactly happen if the debt ceiling is reached ?

Will the US govt. tighten its domestic rules and ppl will not get debt ?

I am not sure as to how will this move result in ppl loosing their jobs ?

How will corporate America be affected if domestic loan payment/repayment rules meant for individuals are modified?

 

[Al Bhatti]

Sunday, 24 July 2011

Will the United States default on its debt? Will Asian and Middle East markets be spooked Monday morning? President Obama, lawmakers scramble to salvage US debt deal

Scolded by President Barack Obama, Congress scrambled on Saturday to produce a deficit plan within 48 hours that keeps the United States from a catastrophic debt default now days away.

A day after talks collapsed in finger-pointing acrimony, President Obama held an emergency meeting with congressional leaders at the White House and told them to find areas of agreement in the bitter dispute over budget spending cuts and taxes.

A Republican leadership aide said lawmakers are working on a plan for $3 trillion to $4 trillion in savings over 10 years, but another high-ranking Republican official said no numbers had been settled. Republican leaders want “to show progress” by 4 p.m. EDT (2000 GMT) on Sunday, the aide said.

It was unclear whether Republicans would include steps to raise tax revenue to reduce the deficit, as President Obama demands.

Underscoring the threat facing America’s credit rating and standing in the financial markets, House of Representatives Speaker John Boehner told fellow House Republicans that leaders hope to show signs of progress by Sunday afternoon, to avoid spooking Asian financial markets opening at that time.

“We need to have something posted online by Monday,” a Republican congressional aide said.

Congressional leaders are supposed to give President Obama a progress report by 5 p.m. EDT (2100 GMT) on Saturday, a Democratic aide said.

Saturday’s emergency meeting lasted a bare 50 minutes, a day after President Obama complained that Mr. Boehner had left him at the altar and refused to return his phone calls.

The mood around the table in the White House Cabinet Room appeared strained.

In the talks, President Obama warned lawmakers not to pursue a short-term extension of the $14.3 trillion US debt limit, as some want. He wants an extension that would allow for US borrowing to pay its bills through 2012, when he and most lawmakers are up for re-election.

“Congress should refrain from playing reckless political games with our economy. Instead, it should be responsible and do its job, avoiding default and cutting the deficit,” White House spokesman Jay Carney said after the talks.

A short-term extension of mere months could cause Wall Street credit agencies to strip America of its gold-plated triple-A rating and increase interest rates for American consumers, President Obama told them.

Mr. Boehner, the top US Republican, promised that Congress this weekend “will forge a responsible path forward” and that House and Senate leaders will work to find a bipartisan solution to “significantly reduce Washington spending and preserve the full faith and credit of the United States.”

Senate Republican leader Mitch McConnell said after the meeting that congressional leaders were working on new legislation that will “prevent default while substantially reducing Washington spending.”

A senior Republican aide said a fallback option initially presented by Mr. McConnell would not be the basis of the new bill. New legislation would be aimed at cutting spending, preventing default and not raising taxes, the aide said.

With the world’s biggest economy set to run out of money to pay all of its bills on August 2, the window was closing fast for a “grand bargain” of spending cuts and tax increases in exchange for Congress raising the debt ceiling.

The fits and starts in the negotiations have left both sides fuming. President Obama has said he has agreed to deep spending cuts in social programs that make his own Democrats uneasy but that Republicans must allow some taxes to rise, a prospect they have rejected.

Financial markets are growing more edgy and US banks and businesses are making contingency plans for the possibility of a debt default that would drive up interest rates, sink the dollar and ripple through economies around the world.

Credit rating agencies want spending restraints for the United States to keep its prized Triple-A rating that makes US Treasuries the solid foundation for global investors and lowers borrowing costs for state governments, businesses, homeowners and consumers.

Both Republicans and Democrats chafed at the compromises a far-reaching deal would require before the presidential and congressional elections in November 2012, with each side accusing the other of not doing enough and demanding too much.

Closed-door talks last week between President Obama and Mr. Boehner collapsed Friday largely over how much revenue would be raised through tax reform – with President Obama wanting $1.2 trillion over 10 years and Mr. Boehner putting $800 billion on the table.

Mr. Boehner has to overcome resistance from Tea Party movement conservatives in his own party and could run into problems for having signaled a willingness to give ground on revenue increases in closed-door talks at the White House.

“If not reversed within the next few days through crisis negotiations, this breakdown will be highly detrimental to the already fragile health of both the US and global economies,” Mohamed El-Erian, co-chief investment officer at Pimco, the world’s top bond fund manager, told Reuters.

Will the United States default on its debt? Will Asian and Middle East markets be spooked Monday morning? President Obama, lawmakers scramble to salvage US debt deal

 

[Awesome]

Well....it is not about one person..but it is about abnormal, anti-national and dangerous thought process in certain people..I am 100% sure, you certainly don't want such people in your neighborhood..because you never know what they are going to do to your life as their loyalty lies somewhere else..to me..that is THE scary scenario..

anyway..you guys continue on your dissection..that may help healing someone's wounds

Unfortunately its a very George Bush attitude that you have and its what is wrong with America since 9/11 and that is what has been the real downfall of this great nation - mistaking discontent with disloyalty. They have forgotten that the founding fathers of America were those who were discontent and once labelled as traitors too.

America killed its soul with the passing of the Patriot Act.

 

[53fd]

What may exactly happen if the debt ceiling is reached ?

Will the US govt. tighten its domestic rules and ppl will not get debt ?

I am not sure as to how will this move result in ppl loosing their jobs ?

How will corporate America be affected if domestic loan payment/repayment rules meant for individuals are modified?

A private company can default &/or become bankrupt, but if a nation defaults &/or declares bankruptcy, that is a huge problem. It results "in the 'isolation' of that particular country" from the world arena. The US government defaults, the dollar collapses, which increases the likelihood of a global depression. Eventually, the US dollar will have to be replaced by some other international trade currency.

The US will be hit hardest of course. The US has to give reassurances to whoever it's taken its debts from, that it can pay it back. In case the debt ceiling is not raised, the US will most probably dissolve certain bodies, whether that is the FDA, EPA, US Department of Education, the Fed & Wall Street; or finish programs like Social security, medicare, medicaid, unemployment, food stamps etc; as well as reducing costs in its foreign expenditures. All of these things will need to take place so that the US can give assurances that it can return its debts back. No amount of tax hikes proposed by Obama on the American people can stop the inevitable. August 2 can be the death of corporate America, & America as we know as it is. All in all, the US will change significantly from what it has been since its inception. As the US is involved internationally on a large scale as well, just the changes of US foreign policy can have a big impact on other nations.

 

[Markus]

A private company can default &/or become bankrupt, but if a nation defaults, that is a huge problem. It results "in the 'isolation' of that particular country". The US government defaults, the dollar collapses, which increases the likelihood of a global depression.

But the US will be hit hardest of course. The US will have to give reassurances to whoever it's taken its debts from, that it can pay it back. It will most probably dissolve certain bodies, whether that is the FDA, EPA, US Department of Education, the Fed & Wall Street; or finish programs like Social security, medicare, medicaid, unemployment, food stamps etc; as well as reducing costs in its foreign expenditures. All of these things will need to take place so that the US can give assurances that it can return its debts back. All in all, the US will change significantly from what it has been since its inception.

And I believe, defaulting will also affect its rating which will complicate the problem even more.

 

[Tiki Tam Tam]

The downfall of the US is they were living beyond their means and more importantly, they embarked on wars without realising the consequences, thinking that their overwhelming military might would squash the world!

They were surprised!

And the wars are becoming costly causing their getting into deeper debt!!

 

[mahabharath]

Unfortunately its a very George Bush attitude that you have and its what is wrong with America since 9/11 and that is what has been the real downfall of this great nation - mistaking discontent with disloyalty. They have forgotten that the founding fathers of America were those who were discontent and once labelled as traitors too.

America killed its soul with the passing of the Patriot Act.

Well..I really didn't want to prolong the discussion on this but with all due respect on you Mr.AA..I have read your opinions on various topics and admired you on many occasions..so you may be right this time too..

But personally, I don't buy your argument..I have seen certain people just blindly defending certain nations where their loyalty lies but going easy on the nations where they are living..I can copy and paste number of such threads just from this forum..but lets leave it..and hope i am wrong..because that may give me better sleep at least for tonight..

 

[Chinese-Dragon]

And I believe, defaulting will also affect its rating which will complicate the problem even more.

Yes, because the American economy needs to borrow vast sums of money in order to keep it going.

If America's Credit rating falls, then it will become more expensive to take on additional loans. The US is the largest debtor nation in the world, so even a small drop in it's Credit rating will be extremely problematic.

Their currency reserves at the moment, are just barely enough to pay off the interest on their debt. But if their Credit rating is downgraded, well...

 

[Markus]

Yes, because the American economy needs to borrow vast sums of money in order to keep it going.

If America's Credit rating falls, then it will become more expensive to take on additional loans. The US is the largest debtor nation in the world, so even a small drop in it's Credit rating will be extremely problematic.

Hmm....a US default will affect everybody.