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Republicans Are Pushing For A "Brief" Default As China Warns US Is "Playing With Fire"

Tyler Durden's picture




 

Yesterday Reuters reported that a troubling, yet potentially inevitable development may be imminent: the default of the US, granted, a short-lived one (though we are not sure just how the world's "reserve" currency will be backed by a national that is technically insolvent). Luckily for the US, everyone else (except China) is just as bankrupt. Yet if there is one thing pushing Lehman into competitive bankruptcy just so that Goldman would have a monopoly in the US fixed income sales and trading market, it is that any such action will have massive downstream consequences, and in the pyramid of "unpredictable downstream effects", the insolvency of the US is at the very top. And just to make it clear, now that a default is becoming a palpable option, China announced that the United States is "playing with fire" if it opts to briefly default on its debt, which could undermine the dollar, Li Daokui, an adviser to China's central bank said on Wednesday. Yet the statement could very well backfire after Li, speaking on the sidelines of a forum, said China needs to dissuade the United States from defaulting on its debt, but he believed China may hang on to its investment in U.S. Treasuries in any case. This is precisely the case made by Stanley Druckenmiller: in fact, should there be a technical default, US bonds will become a true safe haven investment as America will for the first time take a step to indicate that it believes the relentless abuse of its fiscal situation is coming to an end.

In the meantime, here is why the soap opera in DC may take a big turn for the worse:

An increasing number of Republicans do not believe the Obama administration's dire predictions of economic "catastrophe" if the debt limit is not increased. They argue a period of technical default can be managed without plunging markets into chaos.

Establishment Republicans including Tim Pawlenty, the former Minnesota governor who announced his presidential candidacy last month, are backing a short-term default if it leads to deep, immediate spending cuts.

Jeff Sessions and Paul Ryan, the top Republicans on the Senate and House Budget Committees, have also said failure to raise the debt limit would not trigger immediate catastrophe.

Republican Senator Pat Toomey has even introduced legislation directing the Treasury to prioritize debt service over other payments if the debt limit is not raised. It has 22 Republican co-sponsors in the Senate and 98 in the House of Representatives, although no members of the Republican leadership have backed it.

David Frum, a former speechwriter for President George W. Bush and a Republican advocate for raising the debt limit, said he holds regular question-and-answer sessions with Republican congressman over a beer.

"I have yet to meet one Republican who actually says a failure to raise the debt limit scares them," Frum said. "It is deeply, deeply troubling the number of Republicans I now talk to -- and I include the mainstream -- who think a technical default is manageable.

Many on Wall Street disagree. They fear even the briefest default would cause a steep climb in interest rates worldwide and a tumbling dollar, which would tip a fragile economy back into recession and cause financial market upheaval on a scale not seen since the collapse of Lehman Bros.

Fueling skepticism over this outcome is an argument made last month by legendary investor Stan Druckenmiller, a one-time ally of George Soros, who said he would favor a short-term default if in exchange lawmakers in Washington struck a deal for massive spending cuts and a medium-term plan to tackle the $1.4 trillion deficit.

"That had a lot of impact on Republicans," said Vin Weber, a veteran Republican strategist and party moderate. He said the idea that a short-term default would not be a problem "is definitely becoming a mainstream belief."

That this is happening despite Geithner's constant cries of "wolf" is no longer surprising. At this point the only credibility redeeming move for the tax avoider is to resign. Which is why it is not surprising that the SecTres now needs the support of "strategists" from Bank of America, who alas have demonstrated about the same amount of correct predictive ability.


Treasury Secretary Timothy Geithner says failure to increase the debt limit by August 2 will lead to a crisis in the markets that could plunge the back into recession.

Priya Misra, head of rates research at Bank of America-Merrill Lynch, said $25.6 billion in Treasury interest payments due on August 15 could be in jeopardy if the August 2 deadline is not met.

If the United States defaults, money market mutual funds that invest in short-term government bills, considered one of the most secure investments, could "break the buck" by falling below $1 a share, Misra said.

The resulting losses could spark a bank run of the sort seen when Lehman Brothers collapsed in 2008.

The summer, traditionally a time when bond traders would leave for the Hamptons around 10 am each Friday, is about to see far less traffic on the LIE, as everyone remains glued to their terminals late into Friday in anticipation of US insolvency news.

 

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Wed, 06/08/2011 - 07:36 | 1350039 bob_dabolina
bob_dabolina's picture

I have been saying this for months. 

Wed, 06/08/2011 - 08:01 | 1350099 oh_bama
oh_bama's picture

Why no one here trusts the GOVERNMENT AND THE FED???

Can they FIX IT? YES WE CAN!!

Wed, 06/08/2011 - 08:34 | 1350198 trav7777
trav7777's picture

that default will make us an even safer haven?  ROTFL

Wed, 06/08/2011 - 09:16 | 1350322 bob_dabolina
bob_dabolina's picture

What makes us a safe haven right now? 

A u6 unemployment rate of 17% with a national debt of 15 trillion (not even counting GSE debt) and 60 trillion in unfunded liabilities? 

Every American owes over $500,000 (not including GSE debt) and that makes us a safe haven? 

This doesn't even account for the debt problems at the municipal level, which is a quagmire in it's own right.

We need to raise taxes across the board and massively cut spending, or, we need to default.

Our situation is untenable.

Wed, 06/08/2011 - 09:36 | 1350453 FWM
FWM's picture

"We need to raise taxes across the board and massively cut spending, or, we need to default."

 

Agreed, in theory; however, the current FedGov, as constituted in the 20th and 21th Century, has abolutely proven itself untrustworthy and unreliable in following through.  Tax increases will be promptly followed with spending increases.

The FedGov needs to be deposed.

Wed, 06/08/2011 - 10:20 | 1350659 Arthor Bearing
Arthor Bearing's picture

Taleb has explained how our reliance on debt has increased the fragility of our economic edifice. Default would send the whole thing tumbling downward, which I would consider a good thing. May the rain wash all of the dumb fucks away, and maybe we'll do it better the next time around the ol' 5000 year cycle

Wed, 06/08/2011 - 10:59 | 1350846 tmosley
tmosley's picture

The fact that we have not defaulted in hundreds of years.

That is IT.

Yes, our situation is untenable, but a default puts into action a series of events that ends with the destruction of US living standards via a mechanism of US Dollar hyperinflation, likely accompanied by hyperinflation in several other major currencies.

But you keep holding those dollars.  You deserve each other.

Wed, 06/08/2011 - 12:33 | 1351305 Thisson
Thisson's picture

Not necessarily.  If a default causes us as a nation to have an adult conversation and to determine that we will no longer spend beyond our means, than a default would be deflationary and result in stability rather than hyperinflation.  I don't expect that to happen.  I expect the bond market to impose fiscal discipline at some point. 

Wed, 06/08/2011 - 12:22 | 1351256 mudduck
mudduck's picture

What's $1.4 trillion a year between friends? Just a dollar every business day from every human on the planet, not including roll-over refinancing. Sounds like one of those 'you can stop this child from starving today' commercials, oh wait, never mind.

Wed, 06/08/2011 - 16:38 | 1352322 Djirk
Djirk's picture

agreed, I do not have my PHD in economics, but I fail to see how a default of any sort will create a safe haven.Maybe longer term but there would be some serious short term pain and buyers of debt would disappear. Reserve currency status would be gone forever.

 

Seems possible to have cuts in spending and meet debt obligations. CUT military quick.

Wed, 06/08/2011 - 08:39 | 1350204 CPL
CPL's picture

Yup...

 

<sigh> this isn't going to end well in any direction selected it's just simply too late.  the time to have let it crash and burn was after dot.com (bomb).  With all the other annoyances going on, congress is just saying to it's US investors that they are ready to bounce checks on them and jack up interest rates to double digits again.  Because this is exactly what is going to happen to curb the borrowing the only way to stop it is to jack up rates.

 

Double digit interest rates on 14.5 Trillion in debt becomes nearly exponential, even at 7% interest while adding another 2 trillion a year.  In 5 years the US will end up with around 32-33 trillion in outstanding debt.

 

In someways congress knows what it's doing.  Althought it should have been doing it 12 years ago during the Clinton timeframe.

Wed, 06/08/2011 - 09:33 | 1350435 SYantiss
SYantiss's picture

"Double digit interest rates on 14.5 Trillion in debt"

And you're not even counting State debt or the debt coming due with SS and Medicare.

We'll have default after default, unlimited confett where it becomes cheaper to us bills for wall paper rather than wallpaperi, or war... Maybe all three...

Wed, 06/08/2011 - 09:37 | 1350460 CPL
CPL's picture

Like a string of firecrackers, default after default.

Wed, 06/08/2011 - 11:31 | 1351027 JLee2027
JLee2027's picture

+ 1

Wed, 06/08/2011 - 07:40 | 1350040 HamyWanger
HamyWanger's picture

The problem with the debt limit is a regulatory problem, not an economic problem. 

As I've said, the world is ruled by men, not holy words. Thus the debt ceiling will be hiked. If it is not done by the Congress, it will be done by an Obama Executive Order exploiting some forgotten loophole in the Presidential powers, in case of an "imminent peril", stuff like that. 

Wed, 06/08/2011 - 07:49 | 1350073 spanish inquisition
spanish inquisition's picture

Those words confuse me coming from you.....I will junk you, not because I disagree, but because I never did junk Harry.

Wed, 06/08/2011 - 08:17 | 1350147 Cynthia
Cynthia's picture

It wouldn't surprised me in the least if Obama uses the Patriot Act to extend the debt ceiling. I'd look at it as being just another fascistic act by Adolf Obama.

Wed, 06/08/2011 - 09:58 | 1350546 Rick Masters
Rick Masters's picture

Where were you when Bush raised it ten times, practically every year and sometimes twice a year. And I seem to recall not being in a dire siutation then where the gov't had to spend record amounts to keep the food stamps coming so people dont starve. I know, I know: They should eat cake. But seriously anyne who didnt say a peep about debt in the 00s should shut up now since that crushes their credibility and exposes them as partisian. If the tables were turned, and GWB was still Pres and needed to raise the roof, half the naysayers would be crying about Dems putting troops in danger. The hypocrisy is astounding. This doesnt apply to everyone but it sure does apply to a lot of the hacks on this board...I remember when ZH was all about economics and business; those were the days. Now we've been invaded by infidels who only care about politics and division and hate.

Wed, 06/08/2011 - 11:32 | 1351031 1911A1
1911A1's picture

The debt limit can be raised continuously as long the rate of increase doesn't exceed GDP growth.

That is clearly no longer the case, especially when only "real" GDP is considered by subtracting government deficit spending.

 

Wed, 06/08/2011 - 12:36 | 1351328 Thisson
Thisson's picture

There is no GDP growth once once you back the debt back out.

GDP = C+I+G+X.  Borrowing money to increase G (government spending) has increased the GDP.  GDP has not increased from consumption, investment or net exports in real terms over the past 30-ish years.

 

Wed, 06/08/2011 - 17:22 | 1351778 1911A1
1911A1's picture

Rob Arnott disagrees with you: http://www.johnmauldin.com/frontlinethoughts/muddle-through-or-crisis/

GDP minus government debt has been growing up until about 2008.

GDP minus all debt has been negative for 30+ years; however, it is not necessarily the case that that an increase in "all debt" is counted in GDP.  In fact, there are a lot of examples where an increase in non-government debt is NOT included in GDP.  So simply subtracting these two values does not provide a reflection on the "real" (non-government driven) economy.

As an example, mortgaging a paid-off property increases non-governement debt but does not add to GDP, so subtracting this debt from GDP doesn't indicate anything about the real economy.

 

Wed, 06/08/2011 - 11:37 | 1351038 JLee2027
JLee2027's picture

The President cannot raise the debt ceiling by Executive Order or any other magical invented method.

Wed, 06/08/2011 - 12:30 | 1351281 BloodPigOnFeces
BloodPigOnFeces's picture

But he can send troops without congressional approval. the office of the president becomes more dictatorship-like with each successive administration.

Wed, 06/08/2011 - 10:43 | 1350771 DosZap
DosZap's picture

That would be a GREAT reason to do away with the ACT altogether.

I am all for it.If Adolph Jr uses his imaginary powers.

Wed, 06/08/2011 - 08:49 | 1350253 Watts_D_Matter
Watts_D_Matter's picture

I squish your head Hamy....

Wed, 06/08/2011 - 09:18 | 1350363 Long-John-Silver
Long-John-Silver's picture

I agree with your premise simply because Obama has become a de facto dictator. Congress has no power at all now. They can do nothing but make noise.

Wed, 06/08/2011 - 10:01 | 1350563 Rick Masters
Rick Masters's picture

Could you please list his dictaorial powers? I mean I just want to double check cause of that Obama sniper that killed that kid and then tortured him. Oh wait, that was Syria, which is just like here, a police state. Hell I can't leave my house without passing a column of tanks and piles of dead bodies, aka the tea party dissenters that Obama killed in South Carolina with his thugs. remeber that?

Wed, 06/08/2011 - 07:38 | 1350044 bad craziness
bad craziness's picture

In gold we trust

Wed, 06/08/2011 - 08:37 | 1350196 Taint Boil
Taint Boil's picture

In stainless steel we trust:

http://www.mlive.com/news/detroit/index.ssf/2011/04/detroit_library_spen...

$1000 trash cans for the Detroit library! We gots lots a money!

Wed, 06/08/2011 - 10:11 | 1350612 Smokey1
Smokey1's picture

Obama is president. We gets whatever we aks for.

Wed, 06/08/2011 - 07:37 | 1350049 Alcoholic Nativ...
Alcoholic Native American's picture

If we default will we have to bring the mercs....I mean troops home?

Wouldn't that just increase the unemployment rate?

We have always been at war with unemployment.

 

Wed, 06/08/2011 - 07:45 | 1350064 Sandy15
Sandy15's picture

Why would it increase unemployment?  These people have contracts for years promised to serve.  We could put them on our boarders both for protection and to build a fence.  That would keep them busy for a while.

Wed, 06/08/2011 - 09:36 | 1350456 SYantiss
SYantiss's picture

They'll be needed to grow food wham we can't afford gas... And to keep order when interest rate driven hoarding of $$ begins.

Wed, 06/08/2011 - 10:17 | 1350582 Rick Masters
Rick Masters's picture

Uh, hey, I bet you hate Obama given your border talk even though nobody said anythinng about that excuse for a fence Pres. Bush erected. I apologize if Im wrong. In any event, there is a law called Possee Comitatus and US troops can not act that way and start enforcing laws: that's the Guard and the states problem.

Wed, 06/08/2011 - 10:47 | 1350801 DosZap
DosZap's picture

Hell, if DOE has the power to order out a SWAT team for a non paying Student loan recipient,(fking UNREAL,can any of you really believe that shit?,I am sorry, I cannot)we could use them for collection of non payment of traffic fines...........hell yeah.

Wed, 06/08/2011 - 11:30 | 1351019 Rick Masters
Rick Masters's picture

Are you serious? They can do that? Have they done it. If so, nevermind a previous comment, that is unreal and flat out tyrannical. What's next: debotr's prisons? Oh wait, it's called being a wage slave now, though iPods make it bearable lol I'm no wage slave; i love my job. But I feel for the people who have shit jobs that make them miserable. I understand they should have done more, but still a living wage would level out the animosity sweeping our country like black clouds creepping overhead in the sky. I know the gov't can't set wage levels as it would kill business, but it would be nice if some of the more profitable companies, yes I'm looking at you Wal-Mart, paid employees more and for that matter hired a better cass of workers. You know, ones that actually work and when you ask a question don't just pit you to Aisle D5, subset 6B. Wherever the hell that is.

Wed, 06/08/2011 - 11:42 | 1351046 1911A1
1911A1's picture

Yes they just did in CA:

http://www.news10.net/news/article/141072/2/Dept-of-Education-breaks-down-Stockton-mans-door

BTW, isn't the express purpose of a for-profit company to produce profit for its shareholders?  Thus keeping employee wages low is part of achieving that purpose.  If there is another company that can produce equivalent profits while paying employees more, wouldn't said Walmart employees go work for the other company?

Wed, 06/08/2011 - 13:25 | 1351513 trav7777
trav7777's picture

for-profit companies are run to produce profits for management and executives now.

Wed, 06/08/2011 - 14:39 | 1351817 1911A1
1911A1's picture

Not disaggreeing, but it depends on the company.  The shareholders of companies that do not distribute part of the profits are being duped.

There are also non-publicly traded companies...

 

Wed, 06/08/2011 - 08:40 | 1350209 GeneMarchbanks
GeneMarchbanks's picture

Not if we continue the war at home. The troops are constantly at war on the road, I've heard they're undefeated. Lets bring'em back and continue the war at home. Get up, eat breakfast, drive to war. Problem solved. Full employment.

You're Welcome.

Wed, 06/08/2011 - 09:27 | 1350390 Long-John-Silver
Long-John-Silver's picture

Who's side would military personal take? Before commenting read this article.

 

Red-State Army?

http://www.washingtonpost.com/wp-dyn/content/article/2008/12/14/AR200812...

Wed, 06/08/2011 - 10:59 | 1350872 DosZap
DosZap's picture

Remember, we have a Volunteer military now.

Wed, 06/08/2011 - 12:53 | 1351374 GeneMarchbanks
GeneMarchbanks's picture

Whoever pays 'em. Probably Lloyd Blankfein.

Wed, 06/08/2011 - 07:41 | 1350050 Gamblor
Gamblor's picture

It's funny to me that you use the term "big turn for the worst" when in fact it appears that the adults might finally be taking charge.  The GOP calling this bluff is surprising, given the lack of testicular fortitude they have on so many other issues.  I wish them well and godspeed.

Wed, 06/08/2011 - 07:44 | 1350063 Cdad
Cdad's picture

+1

Wed, 06/08/2011 - 08:10 | 1350128 docj
docj's picture

Indeed. Now we're (finally) talking.

Fingers crossed.

Wed, 06/08/2011 - 09:22 | 1350382 topcallingtroll
topcallingtroll's picture

pray for default.  Pray that we have the morality to refuse to put further debt on our children.

Wed, 06/08/2011 - 08:24 | 1350167 Carbon Penguin
Carbon Penguin's picture

I'm not so sure it's a bluff - its more his aversion to the bitter medicine the warfare/welfare state is going to have to swallow if it is to survive at all. Don't think for a minute it won't be ugly, though...

Wed, 06/08/2011 - 08:35 | 1350200 Saxxon
Saxxon's picture

+1 Gamblor.

Wed, 06/08/2011 - 10:02 | 1350572 sschu
sschu's picture

it appears that the adults might finally be taking charge.

You may be right.  I fear insufficient adults, time or fortitude.

The politics of the budget are the key issues moving forward, all this other stuff is incidental until this is resolved. 

Either way it is going to be seriously ugly.

sschu

Wed, 06/08/2011 - 07:40 | 1350055 Cdad
Cdad's picture

"Republican Senator Pat Toomey has even introduced legislation directing the Treasury to prioritize debt service over other payments if the debt limit is not raised."

http://www.reuters.com/article/2011/06/08/us-usa-debt-skepticism-idUSTRE75700720110608

There...Geithner crisis averted.  Gee, that was hard.  

Of course, the idea of an interruption in debt payments is probably mostly a catastrophe for fractional reserve banks more so than it is catastrophic for actual humanoids.

As for fallout from such things...well...ummm...of course there is fallout from things like spending trillions of dollars that we never had to spend.  Would any and all members of Congress that have served more than two terms please just go home?  Thank you.  Oh, and would the surviving parents of these resigning members please chastize their children, before a greatful nation, for having no control over their wants.  Thank you again.


Wed, 06/08/2011 - 08:55 | 1350261 augie
augie's picture

massive downstream consequences

 

Like when i try and pee with the light off.

Wed, 06/08/2011 - 09:20 | 1350371 RKDS
RKDS's picture

PA voters were warned over and over and over that he was in the pocket of the banksters and globalists.  Hey if he keeps hiding in the shadows like he has since election day, we might just be stupid enough to re-elect him too.

Wed, 06/08/2011 - 09:38 | 1350443 Antipodeus
Antipodeus's picture

Yes, that's something that just occurred to me (well, it's occurred to me before, of course, but it's just done it again) ... how come the POTUS can only serve for a maximum of 2 terms (can you imagine a prez today going 4 terms like F.D.R.?) but a Senator can serve until he drops, like the Pope?  Doesn't seem fair, somehow(or wise).

Wed, 06/08/2011 - 09:56 | 1350541 SYantiss
SYantiss's picture

Because of the 17 th amendment which took the control of half the congress away from the states and gave it to the masses.

No other Amendment or law has been so destructive to the intent of the Federal system as the 17th.

Wed, 06/08/2011 - 12:21 | 1351237 Rick Masters
Rick Masters's picture

I compltely agree. The Senate was modeled to be this type of body that was full of staesmn that put country above politics and, as such, didn't worry about elections and campaigns. ˜ow it's like we have to houses and no senate. The Senate is just a glorified HOR (house of representatives...aka HOR lol)

Wed, 06/08/2011 - 12:19 | 1351244 Rick Masters
Rick Masters's picture

I compltely agree. The Senate was modeled to be this type of body that was full of statesmn that put country above politics and, as such, didn't worry about elections and campaigns. now it's like we have two houses voted in my a largley ignorant poulace (D or R doesnt matter; most in both parties are ignorant and unwilling to see another side) and so, the 17th killed the senate. The Senate is just a glorified HOR (house of representatives...aka HOR lol)

Wed, 06/08/2011 - 07:48 | 1350056 swissinv
swissinv's picture

Who believes this bullshit... Do you really think that the US can default (sorry I mean a quick partial default) when the EU is already scared with a Greece restructuring? This would lead to world wide collateral calls and a total crash in derivative markets. Do not expect to see any operating bank when this happens. Of course Moody's would still maintain AAA rating with negative outlook to be best friends with Basel II.

Wed, 06/08/2011 - 07:55 | 1350093 JimBowie1958
JimBowie1958's picture

Are there CDS on US treasuries, bills, and other financials out there? If so, how much?

Wed, 06/08/2011 - 08:48 | 1350240 swissinv
swissinv's picture

The point here is that US treasuries are used as first class collateral to cover credit risk. A substantial haircut will trigger a hell of margin calls leading to default of various banking counterparties.

Wed, 06/08/2011 - 09:57 | 1350525 JimBowie1958
JimBowie1958's picture

So the loss of collateral (due to treasuries losing value and trustworthiness) evokes margin calls of which a huge number of investment houses cannot make due to already stretched assets? So the counterparties you refer to would be investment firms and smaller banks? And/or insurance companies that sold CDS?

I appologize, I am obviously no pro at trading, but I am trying to understand this at a deeper level of intuition rather than just repeating everyones conclusions, however reliable they may be.

I appreciate your time and effort explaining this to me.

Wed, 06/08/2011 - 11:26 | 1350991 swissinv
swissinv's picture

Credit Default Swaps on US debt of course will suffer in case of a credit event. CDS are traded OTC and I don't know if reliable figures about outstanding notionals are available.

But to explain the issue with the collateral calls. Assume you have a client who wants to have a (lombard) loan. The client has US treasury securities of 120% of the granted loan amount, which he pledges / posts as collateral. If the client cannot make the loan repayment, the bank just sells the pledged treasuries securities to cover the outstanding loan amount. Under Basel II capital rules, the banks has to put zero capital aside since the credit risk is fully covered by the securities (after considering a haircut). Now let's assume the US defaults and the US treasuries are no eligible collateral anymore. The bank has first to put more regulatory capital aside (8% of loan amount), which it might not have. In addition, the bank has now the full credit exposure against the client and may suffer from substantial credit losses.

The important thing you have to be aware is that such quality securities/collateral are high in demand and the bank may have also engaged in a SLB (security borrowing transaction) with the client to borrow the securities for lending it to another bank which may post the same securities again as collateal for cover another exposure and this goes on and so on... If the collateral is getting worthless or ineligible, a rat-tail of collateral calls will causing for a big mess and credit losses in the whole financial industry.

Wed, 06/08/2011 - 07:41 | 1350057 alexwest
alexwest's picture

just cant get enough of this circus..

lets imagine republicans/democrats will increase debt by 2.5 trln in 2011, it will last most by end of 2012.. what fucking next in 2012 ?

and greatest irony is if Republican candidate will win presidency Congress/Seante will be forced to hike debt by 2 trln again in the end of 2012/start 2013...

budget deficit is not gettting better, revenues are up 10%. but outlays are up 5%, but outlays are so huge, that deficit is same as in 2010..bummer

alx

Wed, 06/08/2011 - 07:42 | 1350058 Broomer
Broomer's picture

So, what will be cut, defense, healthcare, social security or SNAP?

It ain't gonna happen.

Wed, 06/08/2011 - 07:49 | 1350065 cosmictrainwreck
cosmictrainwreck's picture

exactly. vision of a runaway train comes to mind

Wed, 06/08/2011 - 09:30 | 1350405 HungrySeagull
HungrySeagull's picture

Whoops. No VA, No Social Security, No SSdi or SSi, No Checks made, no nothing, zip and nada. And probably no DOD or Military checks.

Anyone with creditors will say "Sowwy, no money and default on bills." Credit Cards are unsecured so they eat it for a start. Utilties are next followed by Revenuers in those States in which taxes are due this year.

 

Need I go on.

Drudge reports that a Man was stormed by SWAT for Student Loan Default from his wife.

Wed, 06/08/2011 - 08:05 | 1350122 Greeny
Greeny's picture

Why cut, when Bernank owns Printing press,

They can print until Dollar hits absolute ZERO,

and pay it back with Zimbabwe valued dollars.

Wed, 06/08/2011 - 07:45 | 1350060 Dr. No
Dr. No's picture

Republican Senator Pat Toomey has even introduced legislation directing the Treasury to prioritize debt service over other payments if the debt limit is not raised.

Just to make sure i understand, Senator Toomey is proposing rather than raise the debt limit, stop spending in other areas but continue to service the debt.  If this is correct, then the term "default" is being used to describe austerity.

 

 

Wed, 06/08/2011 - 08:26 | 1350173 aVian
aVian's picture

yep this is correct.  More debt fearmongering.  You can prioritize your spending while maintaining the debt payments.

Wed, 06/08/2011 - 09:13 | 1350341 boiltherich
boiltherich's picture

No because even if debts are still being serviced we technically remain in default.  It simply guarantees that crony capitalists will not be affected by it while the taxpayer will. 

To even think of doing this, the mere whisper of it, really is to play with fire because even if the GOP makes it happen for an hour, half a day, it sets a precedent and allows them to use default as a political weapon.

And for what?  Nobody is asking that.  So a few self promoting fat assed dickheads in the American Nazi party can push a trogloditic social agenda they would burn the country down. 

Wed, 06/08/2011 - 09:20 | 1350369 topcallingtroll
topcallingtroll's picture

you are economically illiterate.

If we continue to pay interest on current debt then we are not in default.  All that failing to raise the debt limit will do is eliminate the possibility of adding more debt.

Wed, 06/08/2011 - 10:12 | 1350635 boiltherich
boiltherich's picture

Tis thee who are the one without clue, theGOP can pass all the wish-list prioritizing gobbledygook they want, once the nation is in default the payment system will not function because nobody in any executive branch office will have the spending authority to "manage" a book of S&H Greenstamps.  Any violation of any terms of any indenture equal a technical default no matter if the debt holders eventually are paid or not, all or part of what we owe them.  Just talking about this will trigger downgrades of our credit or have you not been paying attention?  And government authority aside, Wall Street buys up treasury debt, holds it for a nanosecond, and then sells it at a handsome profit to the fed for FRN credits to their accounts, AKA the gravy train, if a few teabaggers upset the apple cart they can just sit down and refuse to play and then default will be real and we all know it. 

Wed, 06/08/2011 - 11:38 | 1351042 boiltherich
boiltherich's picture

Fitch may cut U.S. to "restricted default" in August

NEW YORK, June 8, 2011 (Reuters) — The United States probably wouldn't be able to maintain its prized AAA sovereign ratings status if it suffered even a "technical" default on its debt, Fitch Ratings said on Wednesday.

http://www.newsdaily.com/stories/tre7573im-us-usa-ratings-fitch/

 

Already it begins and this hours after a GOP bonehead floated nothing more than a trial balloon.  It is called Jawboning and it usually applies to the Fed but is not restricted to the Fed.  This is nothing but political extortion on the part of the Fascist Party.  But, the impacts will be real and will hurt us all.

 

 

Wed, 06/08/2011 - 12:32 | 1351301 BloodPigOnFeces
BloodPigOnFeces's picture

which fascist party is that, the'd  republicans or the democrats. we have two parties if you don't believe your own eyes, one if you do.

Wed, 06/08/2011 - 12:48 | 1351368 augie
augie's picture

+1

Astonishing why this even has to be said  now a days.

Wed, 06/08/2011 - 14:43 | 1351801 boiltherich
boiltherich's picture

Ah yes, let's deny the GOP is secretly proto-fascist, and yes, there are a lot of similarities between the two major parties, especially where their failures are concerned, I would love to see a third party created that represented civil and pragmatic thinking people in the middle, but when the shit hits the fan I would much prefer an FDR to a Hoover.  The GOP wants to hold all fiscal and economic responsibility hostage to their morbid preoccupation with what is going on in women's uteruses, and that is what this is about, they will not agree to any set of cuts that does not include their filthy stinking hate filled social agenda priorities like the now utterly impossible desire to restore don't ask don't tell.  They are pathetic crony capitalists that have sucked the nation dry of both capital and humanity.  What is wrong with "conservatives?"  Be what you are, own it out and proud, after all you are everywhere, white pointy hoods and bedsheets, burning crosses and taxpayer support for your "christian" madrasas.  Barefoot and pregnant, or at least not paid the same for the same work!  Why do you deny it?  I have never understood that about fascism.

Wed, 06/08/2011 - 07:44 | 1350061 bad craziness
bad craziness's picture

In gold me trust

Wed, 06/08/2011 - 07:48 | 1350062 AGoldhamster
AGoldhamster's picture

Down we go next 6-8 weeks, on all fronts. Except dollar and treasuries.

My first warnings ("all low hanging fruits are gone now - except for Index shorts") came May 4th after that ominous Legatus event - in my blog. Based on "QE3 is of the table".

Though nobody wants to listen. Some hope for DOW 13K, other hope for silver above 41 - others for the Dollar to plunge or gold 1650. 

None of these targets will be seen in coming months. Instead down next 6-8 weeks. Everything. Except Dollar and Treasuries and Yen which will move north.

Print it out and check back 6-8 weeks later.

Wed, 06/08/2011 - 07:49 | 1350075 Vic Mackey
Vic Mackey's picture

Is your blog members only? getting a prompt for username/password...

Wed, 06/08/2011 - 08:28 | 1350165 AGoldhamster
AGoldhamster's picture

http://www.zerohedge.com/article/goodbye-42#comment-1170689

They junked me then ... because they hate me to say something which is opposite of ... what ... believes.

But silver was close to 42 then. I capitulated on silver around 45, 3 days too early. And on Gold one day too early. Look where these marekts are today. And look where they will be in another couple of weeks.

And I even got it wrong - because many markets topped around April 29 - May 2 - instead of several weeks later. Just Eurusd, Crude and Gold are somewhat able to hold the lines.

BUT - I was pretty sure that the top is in after that Legatus event. Hence also the warnings in my blog.

Anyway long story short - the point is: be VERY careful here with medium term longs except those mentioned.

As all trends are down since April 29 / May 2. And wise traders respect charts. The latecomers Gold, Brent and Eurusd are very soon to follow the pack south.

Yes blog is protected. But I tend to come here when I think it is important to say something.

This was another junked post - and keep in mind the top for most markets just came earlier than anticipated:

http://www.zerohedge.com/article/goldman-moves-underweight-commodities#comment-1171611

Wed, 06/08/2011 - 19:57 | 1352999 Vic Mackey
Vic Mackey's picture

I think most people here agree with you, some people have been shorting their market and getting burnt or otherwise have desperately wanted to short it...and most everyone foresaw the lull between QE2 and 3. So not sure who's junking you.

 

I think most people on here will be shorting with abandon, or have already done a week ago.

 

 

 

Thu, 06/09/2011 - 15:09 | 1355331 AGoldhamster
AGoldhamster's picture

Those that shorted were the late comers - they are getting their lesson now. They are thinking hard. They will again jump on the board today or tomorrow - not to miss this flying train. Look at the DAX as of now - isn't that mega bullish? Yes it is. Of course it is. They need the wide swings, so that the sheep have enough time to think and rethink and finally jump in.

Just to again get screwed next week. They need a lot of time this time to unload - as Indexes will go a lot lower - and for a long time lower. Have a look at the FTSE ... isn't that distribution at it's finest? Banks selling, POMO buying, banks selling, POMO buying, banks selling - until their bag is empty.

Whether some Turdites junk me or not doesn't matter. What matters is to not get fooled and to keep a cool mind and to follow the charts and not someones expectations.

Charts telling we go up, today, tomorrow ... and? And then wait for the reversal and load the boat with Index shorts for the next 1.5 years or so. And for 4-6 weeks with commodity shorts. The reversal highly likely next week to happen as next week is decision point. Some say - short Sunday night. Friday nights charts will tell.

BTW checkout QQQ for 2008 and 2010 and 2011 and compare the May tops. There are a few noteworthy differences.

Then compare with the GDX chart. Again draw your conclusions.

Wed, 06/08/2011 - 07:47 | 1350069 bad craziness
bad craziness's picture

i'm gold me trust

Wed, 06/08/2011 - 07:48 | 1350072 apberusdisvet
apberusdisvet's picture

If the debt ceiling is not raised, and therefore there is less ability for the FED to make its TBTF henchman whole, I would expect to  see  a sacrificial lamb offerred to the GODs;  will it be WF or BAC.  Hmmm.

Wed, 06/08/2011 - 09:49 | 1350502 Urban Redneck
Urban Redneck's picture

Both WF and BAC are members of the G14 so they won't be sacrificed by any US central banker.

Wed, 06/08/2011 - 07:49 | 1350074 bad craziness
bad craziness's picture

i'm gold my trust

Wed, 06/08/2011 - 07:52 | 1350077 bad craziness
bad craziness's picture

i'm gold my crust

Wed, 06/08/2011 - 07:53 | 1350084 Vic Mackey
Vic Mackey's picture

Can someone explain this " in fact, should there be a technical default, US bonds will become a true safe haven investment" 

In the event of a technical default, maybe the people already in will have no choice but to stay in, don't see new investors flocking in...

Wed, 06/08/2011 - 07:56 | 1350094 Quinvarius
Quinvarius's picture

I know.  That was an ignorant thing to say.  That guy is really selling the snake oil.

Wed, 06/08/2011 - 08:10 | 1350129 cosmictrainwreck
cosmictrainwreck's picture

so, let me see if I've got this right (I'm pretty slow): a "technical" default is just "on paper".... it's not really "real" whereas an actual default would be where we make a declaration, give public notice and tell all to kiss our ass? File CH. 7 at the IMF, or should it be the Hague?

Wed, 06/08/2011 - 09:21 | 1350376 Boston
Boston's picture

Wanna bet?

I know it's counter intuitive, but the knee jerk reaction to a technical default will be to run into Treasuries.  

As difficult it would be, the government will defer payments on someone else OTHER than Treasury holders.  Just as the Fed bailed out the Chinese and their MBS holdings in late 2008, the government will not screw the Chinese (and all other Treasury holders) this time.

The only question in my mind, is the distribution of the rally.  I suppose rally won't be as strong in the 25-30 year part of the curve as it would be in the 2-5 year zone.

 

Wed, 06/08/2011 - 11:02 | 1350894 tmosley
tmosley's picture

Find me one example in all of human history where a default, "technical" or otherwise, resulted in MORE demand for the bonds of the defaulting nation.

JUST ONE EXAMPLE.

Wed, 06/08/2011 - 07:58 | 1350090 lolmaster
lolmaster's picture

The US and other fiatsters are in perpetual default daily. Its called printing money. Why not make it official?

Wed, 06/08/2011 - 09:13 | 1350340 css1971
css1971's picture

Ah well, because it is credit, they can call it all back in. So no inflation! see!

Wed, 06/08/2011 - 08:00 | 1350096 lolmao500
lolmao500's picture

If the US does a technical default, what happens to silver/gold?

If the US does a short technical default but cuts massively the budget, what happens to silver/gold?

If the US cuts massively the budget, like, let's say, no deficit, won't the GDP crash 12-15%??

Wed, 06/08/2011 - 08:10 | 1350125 swissinv
swissinv's picture

I doubt the USD would survive this

Wed, 06/08/2011 - 08:33 | 1350194 bronzie
bronzie's picture

"If the US does a technical default, what happens to silver/gold?"

all asset classes are being repriced relative to the precious metals

this repricing will continue until all of the Western economies have been 'fixed'

'fixed' can mean lots of things so what should we watch for as signs that the repricing might be nearing an end?

this is the primary change I am watching for:

a return to positive real interest rates - this means interest rates will have to rise (significantly) above the rate of inflation - currently this would require the Fed to set interest rates somewhere above 10% vs the 0% we have - 10% interest rates from the Fed means 30 year mortgage rates (even for excellent borrowers) are 14 or 15%

these rising rates will be the final nail in the housing market's coffin - with mortgages costing 14% or more the only buyers will be cash buyers (but they will come in and clear the market)

when the economy has actually been fixed things will appear to be very bad (remember this saying: "buy when there is blood in the streets")

- housing will have fallen far below its long-term price trendline - rentals will pay the cash investor 10+% return on his money but there will be no (affordable) mortgages available to buy these rentals

- govt bonds will be paying 15-20% interest but very few people will have any money to buy these bonds (which is part of the reason the dividend will have to be raised so high)

the technical default being discussed in this article is just another move in the ongoing "maintain the status quo" game - unfortunately, we are past the point where the status quo can (or should) be maintained so a "quick technical default" accomplishes exactly zero with respect to fixing the US economy

Wed, 06/08/2011 - 08:59 | 1350239 Rynak
Rynak's picture

What matters is not price but buying power - so, in the case of gold/silver, the exchange-ratio with goods, or other currencies.

There are too many unknowns to know what will precisely happen in such a case.

In a totally rational world, the phase AFTER a default would send gold/silver to "normal" levels (be that up or down - in the case of gold, probably down).... IF the new currency is trusted AND not based on gold/silver (if it is based on gold/silver, even if just anchored... then this will keep PMs at current levels or send them higher, because of them being used to back a currency).

But that's just what would happen in a rational and fair market. This isn't a rational and fair market.

The only thing you can really bet on, in the case of PMs, is that they may lose/gain a lot and you may be temporarily forbidden to trade them.... but they will not become as worthless as a crashing fiat, stocks, mortgages, etc.... so, you may lose a lot, any they may be temporarily useless.... but they will not become worthless in the long run. So, they cannot "crash".

P.S.: What all this really is about, is the difference between mental rights/promises, like debt, stocks, fiat, and so on.... and physically controling physical things. For the former, they can be taken away from you, by plain decree. Someone can just say "you don't have that right anymore" or "i just wont keep my promise",  et voila, you have nothing. For physical items instead, they can only take them away from you with material force.... so unless they do this, and unless no one ever again considers your possessions useless (demand)... your physical goods will always have SOME value, because there will always be someone to whom it may be useful.

In fact, even controlling land matches those criteria. The problem is just that it is a bit more difficult, to take land with you to some other place, and your control of it is visible to everyone, while smaller physical items would be easier to hide.

Wed, 06/08/2011 - 11:47 | 1351115 taint
taint's picture

All, STOP with this TECHNICAL default nonsense.   There is no such thing as a technical default.   You either DEFAULT or you do NOT DEFAULT.

Wed, 06/08/2011 - 07:58 | 1350102 bad craziness
bad craziness's picture

in gold i trust.  night night nincompoops

Wed, 06/08/2011 - 08:00 | 1350108 HowardBeale
HowardBeale's picture

Enough already with the "U.S. bonds will rally if armageddon comes" bullshyte. Just can't take much more of this propoganda.

One need not listen very carefully to hear collapse a thumpin' up the front steps toward the door...

Wed, 06/08/2011 - 08:23 | 1350150 cosmictrainwreck
cosmictrainwreck's picture

this is Twilight Zone stuff: default makes Treasuries a "real safe haven"? I guess the fact that I'm confused is why I flunked out of law school.....

Wed, 06/08/2011 - 08:00 | 1350109 writingsonthewall
writingsonthewall's picture

Technical default, partial default, temporary default - are these simply different ways of saying default?

Q. Does everyone get their money back?

A. No - then it's a default

A. Yes - Then you haven't defaulted

You can't start saying you haven't defaulted because some people got their money back - that's like saying I wasn't really bankrupt because I made a payment on my credit card (even though I lost my house, car and everything else I bought on credit)

 

I think the default question has arisen because the republitards have finally worked out that there is no easy way out of this mess....the Democraps are still in denial.

It's like watching an ugly contest - there will be no winners - only losers.

Wed, 06/08/2011 - 09:02 | 1350290 GeorgeHayduke
GeorgeHayduke's picture

Well, the Republitards have only figured it out since the president is a Democrap. If a Republitard wins the presidency in 2012 this realization will be completely forgetten, only to become suddenly realized by the Democraps. In politica fiscal responsibility only applies to the other guys.

Wed, 06/08/2011 - 15:10 | 1351946 Cathartes Aura
Cathartes Aura's picture

+ a good laugh - thanks for noting the bottom line, this is all a staged FARCE, and anyone not viewing this from the cheap seats, with all personal preparations ongoing, will let the farce become their drama.

Wed, 06/08/2011 - 08:05 | 1350123 White.Star.Line
White.Star.Line's picture

The US is starting to feel like one big debtors prison, with Ben B and Timmy G adding years to our sentences with every new day of monetization.

Wed, 06/08/2011 - 08:14 | 1350138 spinone
spinone's picture

The generations coming after the boomers will have no reason to pay it back, and probably no means. Expect street protests from the younger folks suffering with high student debts, high CC debt, no jobs, no healthcare and no prospects.

Wed, 06/08/2011 - 08:44 | 1350238 youngman
youngman's picture

Do you think the youth today care it they default..NOPE...they could give a shit..in fact its a medal of honor for them I bet.....its the new morality..give it to da man....that is what the schools have taught them...the game is rigged....so cheat....its okay

Wed, 06/08/2011 - 08:59 | 1350272 bronzie
bronzie's picture

"Do you think the youth today care it they default"

Fourth Turning by Strauss and Howe ...

Wed, 06/08/2011 - 09:12 | 1350308 GeorgeHayduke
GeorgeHayduke's picture

That's a pretty righteous attitude. The youth of today is held hostage to the decisions of one of the most self-centered, self-absorbed, self-important generations in the history of the world. Why should they pay for the excesses of this group of folks who plans to set themselves up nicely while leaving the debt bueden to the next generation?

Where did they learn that the game is rigged, so cheat anyway? Perhaps from the older generation that's showed them that in both politics and business these days? I know, I know, it's easier to blame the schools than to accept the burden of leading by example...yet another fine characteristic of the Boomers.

Hell, I'm even a 1961 Boomer and I can't stand the generation myself. Why should younger folks?

Wed, 06/08/2011 - 09:19 | 1350348 topcallingtroll
topcallingtroll's picture

Default now.

 

I hate the selfish boomers who have put their children in debt peonage.

Wed, 06/08/2011 - 10:48 | 1350809 SYantiss
SYantiss's picture

you must not own any HUD or section 8 housing...  

 

I'm not disagreeing, however.

Wed, 06/08/2011 - 11:05 | 1350915 FreeNewEnergy
FreeNewEnergy's picture

Hey, ignorant fuckhead, why bash the Boomers? They're not responsible for the actions of irresponsible government leaders and bankers who continue to fuck us daily.

You must be a 30-something douche-bag with student debt to be calling out your elders. Boomers tried in the 60s to make changes and what happened? Four dead in O-H-I-O.

I understand your sentiment. I am skipping my 40th HS reunion this summer because the gang I grew up with have sold out to the system and are - as a whole - economically ignorant and not worth my time.

But not all of us are in that camp. I, for one, have been trying for years to get people to understand debt, currency devaluation and fiat money, but sadly, most people have more important things to do like mow their lawns, watch their kids' soccer matches or tune in to their fav. TV shows.

It's not just boomers, either. I know people in their 20s and 80s who don't listen, don't want to know. Ignorance spans all generations.

So, STFU, asswipe.

Wed, 06/08/2011 - 10:13 | 1350622 bronzie
bronzie's picture

"The youth of today is held hostage to the decisions of one of the most self-centered, self-absorbed, self-important generations in the history of the world"

Fourth Turning by Strauss and Howe ...

Wed, 06/08/2011 - 15:19 | 1351990 Cathartes Aura
Cathartes Aura's picture

"the youth of today" are captured by their computers, cell phones, Xboxes, and various other electronics. . .

Wed, 06/08/2011 - 08:13 | 1350140 PaperBear
PaperBear's picture

$1.4 trillion deficit ?

How much do they spend on military operations outside the USA ?

It is this spending that MUST be cut.

"a steep climb in interest rates worldwide and a tumbling dollar" ?

Would that per chance send PMs to the moon ?

Wed, 06/08/2011 - 08:15 | 1350143 PaperBear
PaperBear's picture

Are people's dollars losing purchasing power hand over fist ?

If the answer is yes then that's a form of default.

Wed, 06/08/2011 - 08:18 | 1350144 overmedicatedun...
overmedicatedundersexed's picture

the FRN may go up or down before it implodes..debt limit or none, who benefits from a strong FRN??

not the fed, not the treasury, not the pols for a strong FRN kills jobs, more BK's, incr drop in real estate..the fed knows with out an inflated weak FRN we are screwed on current DEBT.

so don't know about next week, but at some point PM's are going verticle as the FRN is debased they cannot do anything else,

Wed, 06/08/2011 - 08:19 | 1350145 Azannoth
Azannoth's picture

Transitory default, bitchezz !

Wed, 06/08/2011 - 08:17 | 1350149 PaperBear
PaperBear's picture

This derivative market will crash sooner or later.

How much real money will people have when it does ?

Wed, 06/08/2011 - 08:22 | 1350157 buzzsaw99
Wed, 06/08/2011 - 08:30 | 1350175 Blano
Blano's picture

ZHers of all stripes can you help me out here??

If the debt ceiling isn't raised, then you have to revert to pay as you go, right??  Would that not by default result in a balanced budget??  Seems to me the only reason they all want a debt ceiling raise is so nobody has to make any difficult spending decisions and eliminate a bunch of crap, i.e. kick the can down the road more.

Any debt that does mature can either be paid off or even rolled over, which doesn't increase the debt itself, right??  I know going cold turkey will be a shock, but that seems inevitable anyways. 

What am I missing??  Thanks.

Wed, 06/08/2011 - 08:34 | 1350199 buzzsaw99
buzzsaw99's picture

The debt system benefits the banks only. If they bought back all the treasuries then the interest component of the debt would go to zero. Inflation would soar for awhile but at least we would have the monkey off our backs.

Wed, 06/08/2011 - 11:56 | 1351130 1911A1
1911A1's picture

I don't think this is correct.  Buying back $14T in debt is deflationary.

Reduced govt spending as a result of zero debt increase is deflationary.

Debt destruction due to true default is deflationary.

Wed, 06/08/2011 - 08:42 | 1350211 Note to self
Note to self's picture

Dead old people in the streets.

Wed, 06/08/2011 - 09:14 | 1350344 topcallingtroll
topcallingtroll's picture

so what?

The families are supposed to take care of their own. 

Wed, 06/08/2011 - 08:39 | 1350215 alexwest
alexwest's picture

what you missing is
in 2011 yy US fed revenues are around 2.2 trln
outlays - 3.8 trln $
US' GDP is around 10-11 trln, ( excl gov debt & phony stats)

so , if you cut even half of deficit ~700-800 bln, so instanly US is in deepest ressesion , comparable only w/ 1930x.. 2008 ressesion will look like piece of cake. half of population will be w/out job, there will be revolution

US lived beyond means for too many years , shipping jobs offshore, living on credit high ..

it started w. Reagan, so called fiscal responsible who run biggest deficits in history (as ratio of GDP), excluding Obama..

no way out.. USA is fucked , 2-3 yers max
alx

Wed, 06/08/2011 - 08:44 | 1350237 Blano
Blano's picture

That's what I'm afraid of, we're way past the tipping point.

Thank you.

Wed, 06/08/2011 - 09:13 | 1350336 topcallingtroll
topcallingtroll's picture

that sounds like a great idea!

 

Hit the reset button.

Wed, 06/08/2011 - 08:27 | 1350176 Carbon Penguin
Carbon Penguin's picture

BTC to 100 if this happens?

Wed, 06/08/2011 - 08:36 | 1350192 KidHorn
KidHorn's picture

Let me do the math...

The US spends roughly twice as it receives in taxes. Much of what it spends in then collected back in taxes. If they have to balance the budget, they immediately have to cut 50% of spending. What will go? SS? Medicare/ade? Defense? Will they furlow all employees and contractors?

Then tax collections will plummet and they'll probably have to cut an additional 50% on top of that. So effectively goverment spending will drop by 75%.

I'm all in favor of trying to restore balance, but this will be a disaster. If the pubs get their way, they'll lose every seat in the next election.

Wed, 06/08/2011 - 09:12 | 1350332 topcallingtroll
topcallingtroll's picture

The republicans will lose the next election?  Maybe.

 

But it is guaranteed the big socialist government is killed permanently.  No one would ever lend money to us again.  We would be effectively cut off from the debt markets. 

 

Once we are cut off from the debt markets there is nothing the socialists can do to restart deficit spending.  Leviathian would be dead.

Wed, 06/08/2011 - 11:45 | 1351086 JLee2027
JLee2027's picture


If the pubs get their way, they'll lose every seat in the next election.

You need to stop blaming "pubs" and start acting like an American. A 75% reduction in government would put us back in the 1960's...the high point of American power. It's been all downhill since.

Wed, 06/08/2011 - 08:39 | 1350207 bugs_
bugs_'s picture

those waskally wepublicans!  (its now all about the briefs)

PS: need zerohedge briefs so the zh guys can send out classier pics LOL

Wed, 06/08/2011 - 08:42 | 1350214 wombats
wombats's picture

This article just sounds like fear mongering and demogogury.  Pre-emptively blame the Republicans for a problem that hasn't even happened yet.

The real problem is that the Gov't spends too much and the administration will do anything, including threats to drive the country over the default cliff to rally the public and markets to their cause of never-ending spending increases and gov't power.

Wed, 06/08/2011 - 09:10 | 1350323 topcallingtroll
topcallingtroll's picture

We don't have to default just because we fail to raise the debt limit.

 

We just have to live within our means.  What a concept!

Wed, 06/08/2011 - 08:39 | 1350217 ziggy59
ziggy59's picture

please...lets test the 'economists' theories. doomsday hasnt occurred and it won't. Tiny Tim and his matches...LOL

 burn this M**** house down

Wed, 06/08/2011 - 08:47 | 1350228 grunk
grunk's picture

A kinetic nonpayment action.

It'll only be a couple of days.

Wed, 06/08/2011 - 08:47 | 1350230 kito
kito's picture

Long Live the One Eyed King!!!!!

Wed, 06/08/2011 - 08:55 | 1350260 mayhem_korner
mayhem_korner's picture

'brief' default = a 'little' pregnant

Wed, 06/08/2011 - 08:52 | 1350262 spanish inquisition
spanish inquisition's picture

Politicians posturing during an election year? Inconceivable!

What the worst that can happen?

1. With no money for the war machine, it is possible that peace may break out over the world.

2. With no payments going to congressmen and their staff, it may be a good opportunity to short hookers and blow.

 

Wed, 06/08/2011 - 09:09 | 1350317 topcallingtroll
topcallingtroll's picture

I think a default is the grown up thing to do.

Wed, 06/08/2011 - 08:58 | 1350278 ZackAttack
ZackAttack's picture

Pawlenty was the same guy who said on Sunday that it wasn't really default if we just shafted the domestic creditors but not the foreign ones:

PAWLENTY: … President Obama was setting up this false choice between default and raising the debt ceiling. And at least for a while, you can take away that false choice by ordering the Treasury to pay the obligations to outside creditors first, and there's enough cash flow to do that for quite some time.  

http://abcnews.go.com/ThisWeek/week-transcript-tim-pawlenty-mitch-daniels/story?id=13714378&page=4

Just, wow. I thought this guy was supposed to be one of Red Team's grownups.

Wed, 06/08/2011 - 09:09 | 1350303 Note to self
Note to self's picture

No such thing.

Wed, 06/08/2011 - 09:12 | 1350314 topcallingtroll
topcallingtroll's picture

We can zero out a lot of internal government spending.   We don't need to increase the debt limit. 

We can live within our means.  We can raise taxes or cut spending. 

 

Time to shit or get off the pot.

Wed, 06/08/2011 - 11:47 | 1351099 JLee2027
JLee2027's picture

I can't wait for the days that Government returns to Governing, and not debt servicing. Just default, dammit.

Wed, 06/08/2011 - 09:04 | 1350286 Idiocracy
Idiocracy's picture

Republicans: "C'mon hon, just the tip..."

China: "No! are you crazy?"

Wed, 06/08/2011 - 09:05 | 1350292 Lazane
Lazane's picture

guarantor of last resort? the american dollar? yep I think so

Wed, 06/08/2011 - 09:10 | 1350306 CEOoftheSOFA
CEOoftheSOFA's picture

Just give the Chinese Hawaii for the month of August. 

Wed, 06/08/2011 - 09:11 | 1350307 topcallingtroll
topcallingtroll's picture

Don't prudent people who save money want to see a rise in interest rates?

I pray for a default.  Interest rates will rise to the point the government will have to cut services.

I am embarrassed by all the dependency displayed by the whiny american public.  Let's default and cut them off.  Let's have interest rates rise so that thrift and discipline are rewarded again.  People need an honest return on their savings.

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