So what exactly happens if the US doesn't raise the debt ceiling

Started by Razgovory, July 07, 2011, 03:17:15 PM

Previous topic - Next topic
Print
Go Down Pages1 2 3 4 5 6
User actions

Razgovory

July 07, 2011, 03:17:15 PM
This may surprise you all, but I'm not an economist.  I don't know exactly what happens if the debt ceiling isn't raised.  The idea I have is that the US may default and it'll be like Argentina a decade ago.  Except possibly worse since the US economy is the largest in the world and could drag the rest of the world down with us and the IMF isn't likely to be able to bail us out.  This is probably not accurate, but I really don't have anything better to go on.  Some GOP types are saying it won't be so bad, and nothing major will happen.  I do not trust them.  Especially considering the one that said it is Michelle Bachman.
I've given it serious thought. I must scorn the ways of my family, and seek a Japanese woman to yield me my progeny. He shall live in the lands of the east, and be well tutored in his sacred trust to weave the best traditions of Japan and the Sacred South together, until such time as he (or, indeed his house, which will periodically require infusion of both Southern and Japanese bloodlines of note) can deliver to the South it's independence, either in this world or in space.  -Lettow April of 2011

Raz is right. -MadImmortalMan March of 2017

Slargos

#1
July 07, 2011, 03:20:26 PM
Whoever has the largest stocks of canned goods and bottle caps will be a rich man.

The Minsky Moment

#2
July 07, 2011, 03:37:17 PM
Geithner says he won't or can't prioritize.  He is full of it.  If the ceiling isn't raised, he will in fact prioritize interest payments on debt and some other stuff. 

The biggest immediate impact is that all the rating agencies will downgrade US sovereign debt.
The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.
--Joan Robinson

The Brain

#3
July 07, 2011, 03:41:17 PM
You would have to sell off any items of worth that may be found in the US.
Women want me. Men want to be with me.

Razgovory

#4
July 07, 2011, 03:49:52 PM
Quote from: The Minsky Moment on July 07, 2011, 03:37:17 PM
Geithner says he won't or can't prioritize.  He is full of it.  If the ceiling isn't raised, he will in fact prioritize interest payments on debt and some other stuff. 

The biggest immediate impact is that all the rating agencies will downgrade US sovereign debt.

That's bad right?
I've given it serious thought. I must scorn the ways of my family, and seek a Japanese woman to yield me my progeny. He shall live in the lands of the east, and be well tutored in his sacred trust to weave the best traditions of Japan and the Sacred South together, until such time as he (or, indeed his house, which will periodically require infusion of both Southern and Japanese bloodlines of note) can deliver to the South it's independence, either in this world or in space.  -Lettow April of 2011

Raz is right. -MadImmortalMan March of 2017

MadImmortalMan

#5
July 07, 2011, 03:51:54 PM
Quote from: Razgovory on July 07, 2011, 03:49:52 PM
Quote from: The Minsky Moment on July 07, 2011, 03:37:17 PM
Geithner says he won't or can't prioritize.  He is full of it.  If the ceiling isn't raised, he will in fact prioritize interest payments on debt and some other stuff. 

The biggest immediate impact is that all the rating agencies will downgrade US sovereign debt.

That's bad right?

Yeah. It means we have to pay more in interest to borrow. The deficit could explode very quickly.
"Stability is destabilizing." --Hyman Minsky

"Complacency can be a self-denying prophecy."
"We have nothing to fear but lack of fear itself." --Larry Summers

Razgovory

#6
July 07, 2011, 03:53:14 PM
That seems counterproductive as a method of controlling deficit then.
I've given it serious thought. I must scorn the ways of my family, and seek a Japanese woman to yield me my progeny. He shall live in the lands of the east, and be well tutored in his sacred trust to weave the best traditions of Japan and the Sacred South together, until such time as he (or, indeed his house, which will periodically require infusion of both Southern and Japanese bloodlines of note) can deliver to the South it's independence, either in this world or in space.  -Lettow April of 2011

Raz is right. -MadImmortalMan March of 2017

DGuller

#7
July 07, 2011, 03:57:14 PM
The country needs to be bankrupted in order to be saved from fiscal ruin.

The Minsky Moment

#8
July 07, 2011, 04:01:28 PM
Quote from: Razgovory on July 07, 2011, 03:49:52 PM
That's bad right?

let's say its not something for America to brag about on its Facebook page.
The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.
--Joan Robinson

crazy canuck

#9
July 07, 2011, 04:13:19 PM
I heard some Canadian economists saying a resulting increase in bond rates would increase cost of borrowing for mortgages in Canada.

Some speculation that this kind of ceiling brinksmanship may cause at least some effect in rates even if they get their act together and raise the ceiling.

DGuller

#10
July 07, 2011, 04:18:16 PM
Quote from: crazy canuck on July 07, 2011, 04:13:19 PM
Some speculation that this kind of ceiling brinksmanship may cause at least some effect in rates even if they get their act together and raise the ceiling.
I'd be surprised if it doesn't have some effect.  There are clearly some insane people at the helm of our country, and insane people are capable of doing things that in the future, people studying history would be asking "WTF were they thinking?"  That insanity factor has to be priced in.

HisMajestyBOB

#11
July 07, 2011, 04:43:34 PM
Quote from: DGuller on July 07, 2011, 04:18:16 PM
Quote from: crazy canuck on July 07, 2011, 04:13:19 PM
Some speculation that this kind of ceiling brinksmanship may cause at least some effect in rates even if they get their act together and raise the ceiling.
I'd be surprised if it doesn't have some effect.  There are clearly some insane people at the helm of our country, and insane people are capable of doing things that in the future, people studying history would be asking "WTF were they thinking?"  That insanity factor has to be priced in.

I predict the 2001-2011+ period will officially be known by historians as the "WTF?" period.
Three lovely Prada points for HoI2 help

Neil

#12
July 07, 2011, 04:54:24 PM
Quote from: HisMajestyBOB on July 07, 2011, 04:43:34 PM
I predict the 2001-2011+ period will officially be known by historians as the "WTF?" period.
I think they'll start it right after the end of the Cold War.
I do not hate you, nor do I love you, but you are made out of atoms which I can use for something else.

Martinus

#13
July 07, 2011, 05:09:11 PM
Quote from: The Brain on July 07, 2011, 03:41:17 PM
You would have to sell off any items of worth that may be found in the US.

Raciss.

Admiral Yi

#14
July 07, 2011, 05:12:42 PM
Quote from: The Minsky Moment on July 07, 2011, 03:37:17 PM
Geithner says he won't or can't prioritize.  He is full of it.  If the ceiling isn't raised, he will in fact prioritize interest payments on debt and some other stuff. 

The biggest immediate impact is that all the rating agencies will downgrade US sovereign debt.

If he prioritizes interest I don't see why the raters would downgrade.
Print
Go Up Pages1 2 3 4 5 6
User actions