Is The American Govt. Going To Default On Their Loans By Aug 2?

[drynot]

Hey guys. What the heck is happening down there in the US? I keep hearing about the possibility of the US Govt. defaulting on loan payments as early as Aug 2, 2011 which is right around the corner... Something to do with raising the debt ceiling another 4 trillion dollars or so...

What's the real skinny?

[Little BabyDoll Christine]

No, there is more than enough to do business and service existing debt. They could also sell off assets, especially land in the Western states, since they own so much of it. In fact they own as much as 83% of soe states

Rasing a debt limint means only making it possible to get new debt. sort of like getting more credit after you have max-ed out your card

As to what is happening. Can you say "Greece"?

[LuvsGurl]

Quite simply, NO. There will be no US default and to even consider one is ludicrous.

Allow me to explain.

Congress does not control payments on US debt, the Treasury Department does.

Treasury Sec. Geither has already made it pretty damn clear in several interviews that a default will not happen on his watch. The Treasury Dept. has a pretty sizable list of powers granted to it under US Code... including the power to tax. They have several tools at their disposal to raise the money necessary to keep making debt payments. They could force the govt. into a shutdown and use the money earmarked to pay congress and the military and social security if they really wanted to.

So, in the end, Congress will squabble and play partisan politics and throw a tantrum like a kid being dragged off the playground (as they always do) but in the end the bills will still get paid.

I, for one, hope it does lead to a government shutdown. I believe total collapse is really what it's going to take to make everyone in this nation see how corrupt, ineffective and plain old broken the Federal government is. The debt/spending crisis reflects a failure of government to compromise and a failure of elected representatives to listen to their constituents. At this point the entire system needs to be tossed out with yesterday's garbage. Every single elected official needs to be booted out of office and replaced by new people who aren't mired in DC bullshit and will actually work to set this nation on the right course again. If the new reps won't work for the People then boot them out and keep searching until we find folks that will.

[DaddyHatiwolf]

Political games are coming before the good of the people. Same with any country with a government running it.

[Little BabyDoll Christine]

Why should we believe Tax Cheat Timmy? The fact is, If it were going to happen, those fools could say all the want. What happens when a person stands in the middle of a railroad track and a train is coming at full speed and the person waves his hand and shouts "stop!". Do you think that will make the train stop?. If wishes were fishes all men would feast daily

Defualt occurs when a debt cannot be serviced, The current debt can be serviced. Raising the debt limit, as I said and if you think about it, merely means giving oneself permission to go deeper in debt, it does not address anything current, In fact, raising the debt limit is a precursor to default since it piles more debt on. It is like saying "I owe 30 dollars and cannot pay it: I think I will up the ante to 50 (and not pay that if I cannot pay the 30)

[LuvsGurl]

Let's look at it another way.

A default by the US would destabilize the entire global economy, which is on shaky ground already. The dollar is the world's reserve currency. A lot of its value rests in America's AAA credit rating. People are willing to invest in America because we have the best credit on the planet. A default would result in the reduction of America's credit rating, which would send investors fleeing and massively devalue the dollar, which in turn would cause a domino effect on all global markets. We're talking complete global economic collapse. If you thought the Great Depression was bad you ain't seen nothing.

Welcome to globalized society. Everything being done by one nation has an effect on all the others. There are no more isolationists, there are no more lone wolves. What we do effects what everyone else does, and what they do effects what we do. From the factory worker in China to the billionaire investor on Wall St to the winemaker in France, we're all connected.

[Fontaine]

It is highly unlikely. Although while the repubs and dems are playing chicken with our debt maybe one of them aught to just bite the bullet. Sadly, it will probably be the Dems since Repubs are about as moving as a the great wall of china

[LuvsGurl]

We all know that the folks in DC work for Wall St. Markets are already getting antsy, and we've got 3 weeks to go. Once things give an indication of starting to slide they'll sit right down and get to work... b/c none of them want to lose the big piles of money they are sitting on. The rest of this "debate" is political posturing put on for spectators.

[ldatsea]

debt will be paid (income taxes are enough to service the debt)

Social security WILL be paid ( its the law they cant NOT pay it and income taxes are enough)

many other programs would have to shut down..

whats going on is politics as usuall on both sides no one will back down

HOWEVER we MUST stop spending money on programs and GOV must return to a level described in Our constitution not the Monstrosity it has become...

many things the gov does should restored back to the individual states (education) etc.

why we send money to the gov so the gov can send the some of the money back to the states for education is Stupid!

and this is ONE DEPT! of our government....

bureaucracy does not make efficient use of money or resources they use them and that's all they will ever do....

[square_duck]

For us 'older' people here, we have all heard this kind of BS before, and yet the US is still here running and spending like qwazy etc.

here is a link to an article in Motley fool that pretty much sums things up in simple terms. Read the responses too, as they are interesting, some entertaining, and insitful

http://www.fool.com/investing/general/2011/07/14/next-stop-economic-armageddon.aspx?source=ihpsitth0000003

But basically yes, it's all grandstanding, and political posturing etc.

Personally I wouldn't mind seeing congress not getting paid...that might be funny to watch as there aren't any paychecks for anyone it "might" give them a taste of what a lot of others out here in the 'real world' have had to deal with . Then, maybe they would stop screwing around with their petty games and get a good clue of reality! and stop playing chicken with other peoples money and livelihoods!

[Diapered Jason]

Yes Square_Duck, these events are exactly like the events that occurred during the Clinton Administration back in the mid 90s. If worse comes to worse, there will just be a government shut down. I think what you will see is cuts to the federal budget as well as a raise in taxes. I know Republicans do not want to raise taxes, but they will have to. I know Democrats do not want to cut entitlements, but they will have to. Obviously Christine, we must raise the debt to pay off interest on our current debt as well as pay off our other commitments, then somehow magically balance the budget to achieve a surplus so we see slow negative change in slope of the raising debt which hopefully will eventually begin to decrease over time. I would not expect a sudden sharp decrease in the debt as that is not really possible. The system is too big for spontaneous change. Since the budget cannot be balanced in time, the debt limit must be raised.

There is no doubt the cuts will be tough decisions as the politicians will have a million different groups screaming at them to not cut this or that. It is very interesting to note that a majority of people favor cutting spending over raising taxes, but they become very divided when you ask them specifically what to cut. Nobody wants their programs or interests cut. That said, on top of our spending issues, we also have many revenue problems, which hopefully they will address. There is too much tax dodging going on. Also, rich people should pay more taxes as they are very well off in this economy.

Like usual, I think the politicians will make an agreement at the last minute. The game has already begun.

I say it is Democrat hunting season, no it is Republican hunting season, Democrat hunting season, Republican hunting season, Democrat hunting season, Democrat hunting season, Republican hunting season, Democrat hunting season, well I say it is Republican hunting season and I say shoot. BANG!

[BoTox]

Simple ECON 101 says you can't keep spending more than you take in. Only an idiot (of a president) would keep saying we need to "invest (tax and spend)" more on the economy when half of all Americans pay NO TAXES! Where's the shared sacrifice, where's the fairness in that? 0bama needs to stop burning jet fuel and campaigning for his billion dollar campaign fund long enough to see HE is the problem. He can't keep blaming Bush for the rest of his term. Government is not the solution.

American needs a real conservative administration to reign in the runaway government that has ballooned to the monstrosity it has become.

And don't get me started on the whole 0bamacare fiasco, where a citizen can be compelled to buy something as a condition of being a citizen, unless you are in Nancy Pelosi's district.

[square_duck]

UGH! I can write pages ad nausium about this stuff, but I don't have to time or patience, since I just got home from work

Anyways, the short and sweet, it would cause a GLOBAL CATASTROPHE if the US defaulted, PERIOD. We are in a global economy, and what happens in one area reverberates around the world and has ramifications here. Greece is a prime sample, they keep failing to get their collective sh*t together, and continue to have issues, and we see the effect on our own stock market, when it drops 50 or more points etc.

The same happens all around the world, look what happened after the earthquake and tsunami in Japan....economies took a hit when many companies couldn't get parts or what ever from japan because the factory they were make in was either wiped out or badly damaged or due to power outages, cannot get up to any sort of capacity for production.

Thats just the effects that 1 or 2 small countries (economies) have on the rest of the world. Now imagine what would happen if the power house called the USA defaulted, it would cause an insane amount of financial chaos around the world...period.

Secondly, the US has T*R*I*L*L*I*O*N*S of dollars invested in other economies all around the world. The law (or rule) used to be that The Government couldn't "invest' anymore than 10% of what it brought in in any 1 year (or something like that) but that rule (or law) changed a number of years ago, and now the Government is 'allowed' to invest up to 30% of their income or GDP in other economies etc. We are heavily invested in other markets and companies and countries. Some of these are relativly small, and any amount of disturbance in their markets or economy would be devastating.

As an example, Warren Buffet (Berkshire Hathaway owner) owns over 200 million shares of Coke a Cola stock, which closed today at $67.67...you do the math, because my calculator doesn't go up that high....lets just say that 1 investment is worth a L*O*T. now, what would happen if Mr. Buffet decided to liquidate that investment, and decided to sell all 200 million shares at once in one day. I am sure he would get a call from the CEO of the company asking WTF he was doing! though I'm sure Mr.Buffet and the CEO of Coke are god buddies, I am sure it would cause a LOT of worry should Mr Buffet decide to pull the plug on his investment. Though this wont happen because Warren Buffet receives a very nice dividend payment (.47 a share x 200 million shares = $94,000,000 every 3 months) so I don't imagine this happening, but I hope you get the idea.

Now put that on a global scale, with the US being the Investor with millions of shares (and billions of dollars) in every global market imaginable. If we mess around to much we can literally wreck an economy and or destroy a country over night scary huh??

It's called economic warfare, and we are winning this one but with that we make enemies, who want to wreck our economy, and I think thats why Gold is doing what it's doing. Someone from the middle east (where the currency is backed by gold not 'credit') driving up the price to pressure the dollar into the ground...see?? economic terrorism and warefare.

Anyways....if the US defaults, it would be:

1) Total suicide for the country

2) Destructive beyond imagine on a global setting due to all our heavy investment in other economies.

3) It would be totally irresponsible and would accomplish absolutely nothing.

So the powers that be LITERALLY have to actually DO something....and the smart thing would be cute the %$#@! spending and learn to live with in their means!

I don't see any reason to raise taxes either, because it's NOT the tax payers fault the ^%$##@@! Government is running out of control. So why make everyone pay for the leaders F*ck ups??

Lets try cutting government employees pay (congress and senate and president!) and see what happens!

Anyways, (in a rather large) nutshell, thats about it. It's not going to happen, it can't....unless some meglomaniac really WANTS to start a total global meltdown and essentially destroy every country on the face of the earth.....just because he(she) can...

[Guest diaperboykcmo]

Bottom line it's politics! BHO has tripled the debt! You know how he always Blames Bush, and how he says he inherrited this and inherrited that. Unemployment when BHO took over was 7.3%, now 9.2%! Unemployment is so high, cause of government restrictions and regulations. EPA job killer! Small Business, can't hire, they're in limbo with Obama care. Obamacare Job killer! EPA, pushing Obama's green job agenda. BHO used the stimulus as a slush fund, wasted the money. He even joked about shovel ready jobs. Not to mention Illegals draining our social services.

Debt under Bush was 10.6 trillion. Remember the Dems took over in 07, they control the purse strings. We also had 2 wars to deal with along with the housing bubble burst. Barney Frank, and Chris Dodd should be in prison, freddie and Fannie. Chris Dodd was getting inside trading with country wide! Community reinvestment act, forcing banks to loan to peope who can't afford to pay it back. That led to the financial crisis. Also the Illegals Draining the social services! The debt is now under Obama 14.3 trillion +

Gallon of gas, was $1.83 under Bush. Now it's $3.74. BHO used the BP oil spill as an excuse to push his "GREEN" agenda! He vetoed Bush's moratorium for offshore drilling. He even instituted some new policies, he restricted shallow water drilling. He's in contempt of court, cause a Louisiana Fed judge said they couldn't do that. The head of the EPA, Ken Salazar did a end run round the judges ruling!

Were also in a pointless war with Lybia. Were actually on the side of A Al Queda supported, muslim Brotherhood. These people were behind the assassination of Sadat!

3 things. One of the biggest secrets is, there's enough oil here in the US. If we drilled. We wouldn't need the Middle east, they know that, everytime we talk about drilling here at home. OPEC releases more oil, watch for yourself. When the prices went up under Bush, he lifted the moratorium prices went down! OPEC knows, if we actually explored and drilled here, they would drown in their oil!

2 Illegals are killing us! Jobs, economy, crime, drain our social services. We should worry about our own citizens! Why should we support another country, that's what were doing! Democrats want the illegals, they want the vote! They want the power!

3, if you raise taxes on the so called Rich. The cost will get past on to us, the middle class! Plus small business, won't be able to pay their employees. So it will actually hurt us.

Legalize pot. Create jobs, cut the crime rate. Everyone will be more chilled!

[LuvsGurl]

I don't see any reason to raise taxes either, because it's NOT the tax payers fault the ^%$##@@! Government is running out of control. So why make everyone pay for the leaders F*ck ups??

Well, yes and no. The taxpayers are the ones demanding all these government services. We want our clean beaches and beautiful national parks, we want years of benefits for the unemployed, we want healthcare for everyone, we want our vehicles to get better fuel mileage, we want college loans to be accessible to everyone, you see where I'm going with this.

The Federal government is HUGE mostly because we wanted it to be so. They wouldn't have gotten involved in all of this stuff if we hadn't asked them to. But the prevailing attitude in America today is that the government should feed, house and clothe us, they should raise our children, tell us where to live and what to drive, etc. All that costs money.

Thanks to the Bush era tax cuts government revenue simply isn't enough to sustain all this, so they borrow close to half of every dollar. If we want any of these services to continue we MUST undo all the Bush era cuts and return taxes to where they were under the Clinton administration.

[Diapered Jason]

3, if you raise taxes on the so called Rich. The cost will get past on to us, the middle class! Plus small business, won't be able to pay their employees. So it will actually hurt us.

The rest of that is bull shit, so I will concentrate on this key issue. Taxes on the rich will not hurt the middle class. Clinton has proven this just as much as Ronald Reagan has proven less taxes on the rich actually hurts the middle class (trickle down economics was a failure, but do you know why they tried it). There is a finite amount of money in the world and the rich is sitting on too much of it. In fact, the wealthiest people in this country have seen significant raises in their salary while the middle and lower class have seen stagnant wages. It is the reason you probably have no money right now. Please explain how businesses will be unable to hire in the U.S. when they continually build manufacturing facilities overseas to increase their bottom line. When the rich get more money, they pocket it, they do not spend it. It has been shown and even predicted that if the greedy person is asked if he/she wants more money, he/she will take it. Why were they given tax cuts in the first place contributing to an unbalanced federal budget?

[LuvsGurl]

Exactly. The only way to build our economy is from the bottom up. As we don't make any products in this country anymore the only thing keeping people employed is demand for imported goods. The only way to increase demand for imported goods is to put more money in consumers' pockets. When consumers start buying again that increased demand will spur job creation. Then all the people who just got a new (or better) job will go out and spend, which spurs more job creation. The nation is a pyramid, and the only way to make it larger is to start by adding stones at the bottom.

[Diaper Mike 05]

Because more taxes on the rich would not close the budget gap. As a matter of fact, people who want higher taxes for the rich truly don't understand how true trickle-down economics should work.

One thing people don't want to admit is that trickle down economics do work if not overly regulated. Guess what, we are overly regulated in the United States. That raises costs of doing business, which is why the rich don't invest in businesses like the left thinks they should be (or taxed to death, whatever).

We have one of the highest corporate tax rates in the world in the United States. And right now, those who work in manufacturing are worried to death this "recovery" will not be sustained and won't hire workers to the level they need. Capital improvements are down for the same reason. There is also a bigger reason why more taxes is a bad idea, both for the rich and corporations.

Obama and the left have taken to attacking people who fly using corporate jets. Do you know how many jobs and the trickle down that occurs when a corporate jet is bought? You have people who are actually assembling the plane, material suppliers are put to work supplying materials, electronics people making the electricals, pilots who fly the plane, and mostly, the worker(s) (who may happen to be CEOs or Presidents or whatever) who aren't on the government roles. The act of flying means there is a staffing need at an airport, who collect wages. All these people buy the fundamental supplies of life (food, clothing, etc.) from these wages, which puts others to work (food, clothing industry, retail, grocery stores, etc.). All this is needed for a true capitalistic and trickle-down economy to work.

The problem is, the government regulates and regulates and regulates. Regulations and high taxes means less money is made for a product or service. Wage laws also hurt when they try and make a no skill job have a "livable" minimum wage. Skilled workers will get paid what the market demands, but there is no demand for an $8 per hour hamburger flipper. Too much regulations, high taxes, and wage laws drive jobs out of the country. Why would someone have a factory in the United States when it would cost, say, $5 million to produce a jet, when it would only cost, say $2 million in another country. If the going price for a jet is $4 million, it's not feasible to run your business here.

What this country needs to do is get entitlements under control. I'm sorry, but if you think only with your genitals and have kids and never work a day in your life, you don't deserve anything. Social Security, Unemployment, and something to help the disabled who are unable to help themselves is all the help we should be giving out. Instead of overly regulating everything, common sense regulation should be used. Stop "fighting" the war on drugs - it's a sham and we know it. We don't need 3 layers of government in areas (village/town/county in my area) and out of control organizations that say what we can and can't do all the time.

As it has been said - we need to expand the base of taxpayers, not make the current base pay more. We have millions out of work who could be put to work as a result of more spendable income that comes with lower taxes. Lower taxes means more to spend means more people need to produce goods meaning more have more money to buy goods.

[redneck diaper boy]

Prezbo is using scare tactics. He could order the government to not make the SS payments but it would be political suicide!

If no deal is made, Prezbo will have to pick and choose who gets paid and who doesn't.

Right now there is a media war going on. The mainstreme media is doing all it can to prop up the worst President in US President in history. Obama has pissed away more money, in two years, than any other American President.

The election of 2012 is comming. The sooner America rids itself of this Marxist menace the better off the world will be.

Hey guys. What the heck is happening down there in the US? I keep hearing about the possibility of the US Govt. defaulting on loan payments as early as Aug 2, 2011 which is right around the corner... Something to do with raising the debt ceiling another 4 trillion dollars or so...

What's the real skinny?

[babyfett]

Prezbo is using scare tactics. He could order the government to not make the SS payments but it would be political suicide!

If no deal is made, Prezbo will have to pick and choose who gets paid and who doesn't.

Right now there is a media war going on. The mainstreme media is doing all it can to prop up the worst President in US President in history. Obama has pissed away more money, in two years, than any other American President.

The election of 2012 is comming. The sooner America rids itself of this Marxist menace the better off the world will be.

Gotta love the intelligent name calling that comes from the GOP supporters. Not a good way to represent your party or to attract new followers to your cause.

The sooner people stop this name calling. THE BETTER OFF THIS COUNTRY WILL BE. Obama is no more of a marxsist than any other past president.

It's both parties fault and they better resolve it real quick or they all will be looking for new jobs in 2012.

[nitrous]

This may sound stupid but why doesn't the US government buy up the oil in Iraq and the mineral rights in Afghanistan? That would add a few more assets to our pot for when we do need the money. We could sell the rights to China to pay off our debt. You know invest our money instead of spending it thrivelously.

I was also wondering if the Treasury can line item cut certain spending bills that have been approved by the house appropreations committees? Such as denying Israel money, and other muchers that lobby for us for money? As much as I would love to see the government shut donw I am strongly apposed to any soldier not recieving pay. They risk their lives on a daily basis they DON'T DESERVE A PAY CUT!

Obama "pissed away" the money redneck to bail out companies and banks. We're also in a war that has not been properly funded. Unfortunately the economic rule in a time of war is to raise taxes, such a thing we have not done yet. Now I know rasing taxes will hinder job growth but it is something we must do.

[Guest diaperboykcmo]

Well, yes and no. The taxpayers are the ones demanding all these government services. We want our clean beaches and beautiful national parks, we want years of benefits for the unemployed, we want healthcare for everyone, we want our vehicles to get better fuel mileage, we want college loans to be accessible to everyone, you see where I'm going with this.

The Federal government is HUGE mostly because we wanted it to be so. They wouldn't have gotten involved in all of this stuff if we hadn't asked them to. But the prevailing attitude in America today is that the government should feed, house and clothe us, they should raise our children, tell us where to live and what to drive, etc. All that costs money.

Thanks to the Bush era tax cuts government revenue simply isn't enough to sustain all this, so they borrow close to half of every dollar. If we want any of these services to continue we MUST undo all the Bush era cuts and return taxes to where they were under the Clinton administration.

Oh how I wish, we would end the BUSH TAX CUTS! Then all you people who have been lying about the tex cuts, would see that's what they are TAX CUTS! Meaning if we end them, everyone's taxes will go UP!

[Guest diaperboykcmo]

The rest of that is bull shit, so I will concentrate on this key issue. Taxes on the rich will not hurt the middle class. Clinton has proven this just as much as Ronald Reagan has proven less taxes on the rich actually hurts the middle class (trickle down economics was a failure, but do you know why they tried it). There is a finite amount of money in the world and the rich is sitting on too much of it. In fact, the wealthiest people in this country have seen significant raises in their salary while the middle and lower class have seen stagnant wages. It is the reason you probably have no money right now. Please explain how businesses will be unable to hire in the U.S. when they continually build manufacturing facilities overseas to increase their bottom line. When the rich get more money, they pocket it, they do not spend it. It has been shown and even predicted that if the greedy person is asked if he/she wants more money, he/she will take it. Why were they given tax cuts in the first place contributing to an unbalanced federal budget?

Jason, everything you say is BS!

[belinda_sue_fox]

This may sound stupid but why doesn't the US government buy up the oil in Iraq and the mineral rights in Afghanistan?

Why buy it when your already stealing it while getting paid to do so.

[sarah_ab]

I have an idea... why don't we just print more money.