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Thread: Republican mainstream flirts with brief default

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    Republican mainstream flirts with brief default

    From Reuters:

    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.
    http://www.reuters.c...E75700720110608

    IMO, this would be a reckless move. First, the amount of spending reductions necessary to immediately balance the budget would wipe out economic growth, therefore, if sustained they would produce a significant self-inflicted national recession. Second, in theory, the Republicans might gain from a short default-large fiscal consolidation deal, but such a deal would not be very likely. A long default would cut against the Republicans. Raising the debt ceiling with little meaningful fiscal consolidation would be perilous, as Republicans would have to defend their fiscal credibility, but that would be a fight they could wage without inflicting harm on the nation. A short default followed by significant fiscal consolidation is not likely, precisely because the Republicans backing such a notion have repeatedly and widely displayed their cards. Hence, the Democrats know that there is a limit to how long they would hold out. As a result, they would not capitulate, and then the Republicans would be faced by a bad choice and an awful one: yield and receive blame for inflicting lasting damage on U.S. credit or persist and receive blame for damaging U.S. credit and engineering a steep recession, possibly of global magnitude.

    To push the U.S. acros a line it has never before crossed will, despite the Druckenmiller hypothesis (which is not widely shared), damage U.S. credit. Once a red line is crossed, few would have reason to believe that political leaders might, when things become even more difficult, cross additional red lines. In effect, the psychological barriers that were assumed to exist and preclude U.S. default would be shattered as far as the markets are concerned. Those responsible for the reckless move will bear full accountability for its consequences. Their electoral prospects would very likely be severely damaged. Perceptions of their fitness to govern would be greatly undermined. They would be viewed as the persons who deliberately damaged American credit. All of those consequences would be deserved.

    In the end, I do expect an agreement to raise the debt ceiling, because no responsible political leader would be willing to take the default course. I do worry that the deal will come with fiscal consolidation that is on the weak side. That will be a fair battle for the 2012 campaign. It will be far more responsible than pushing the U.S. across a red line into technical default on some of its obligations, even if debt payments are made on time.

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    Re: Republican mainstream flirts with brief default

    If they don't raise the debt ceiling, it will literally be the stupidest (economic) thing that our Congress has done in 222 years. And that's not an exaggeration.
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    Re: Republican mainstream flirts with brief default

    Quote Originally Posted by Kandahar View Post
    If they don't raise the debt ceiling, it will literally be the stupidest (economic) thing that our Congress has done in 222 years. And that's not an exaggeration.
    Not much to add there?? That pretty much says it all..

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    Re: Republican mainstream flirts with brief default

    Quote Originally Posted by Kandahar View Post
    If they don't raise the debt ceiling, it will literally be the stupidest (economic) thing that our Congress has done in 222 years. And that's not an exaggeration.
    Then let's bring on the stupid... the more the better.
    I think if Thomas Jefferson were looking down, the author of the Bill of Rights, on whats being proposed here, hed agree with it. He would agree that the First Amendment cannot be absolute. - Chuck Schumer (D). Yet, Madison and Mason wrote the Bill of Rights, according to Sheila Jackson Lee, 400 years ago. Yup, it's a fact.


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    Re: Republican mainstream flirts with brief default

    So the answer is to print more money and apply for a Discover card to make the payment on the maxed-out AMEX card, which makes the payment on the maxed-out Visa card, which can then make the payment on the maxed-out Mastercard?

    What's the world gonna do? Nothing. We own their asses militarily and otherwise. We go under, they do, too.

    Stop giving these buffoons more money, and maybe somehow, someway they'll start using it more wisely.

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    Re: Republican mainstream flirts with brief default

    Damn right, this would be the SMARTEST thing they could do. Force the damn gov't to live within it's own means. What a very CONSERVATIVE idea!

    So it's stupid to make our gov't live within it's means? I think you, Don, are part of the problem, not the solution.

    Tell me, why SHOULD anyone trust the US Gov't? What have they done to show they are trustworthy? They are spending our grandkids money, giving it away by the hundreds of billions, and worse yet, are trying to borrow more.

    Think about it, Don. If you had a neighbor who kept asking you for money, and for years spent more than he took in by borrowing it from you, wouldn't you, at some point, say NO? Well, the republicans have finally hit that point.
    Last edited by dontworrybehappy; 06-08-11 at 10:31 AM.

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    Re: Republican mainstream flirts with brief default

    Quote Originally Posted by dontworrybehappy View Post
    Damn right, this would be the SMARTEST thing they could do. Force the damn gov't to live within it's own means. What a very CONSERVATIVE idea!

    So it's stupid to make our gov't live within it's means? I think you, Don, are part of the problem, not the solution.
    I really don't think so...

    I think Don gets the bigger picture, something he's quite good with I think, I think people too far one way or the other are the problem... Keep spending a **** load, or let the US default and collapse your economy and quite possibly the world economy...

    That'd be grand

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    Re: Republican mainstream flirts with brief default

    Quote Originally Posted by donsutherland1 View Post
    From Reuters:



    http://www.reuters.c...E75700720110608

    IMO, this would be a reckless move. First, the amount of spending reductions necessary to immediately balance the budget would wipe out economic growth, therefore, if sustained they would produce a significant self-inflicted national recession. Second, in theory, the Republicans might gain from a short default-large fiscal consolidation deal, but such a deal would not be very likely. A long default would cut against the Republicans. Raising the debt ceiling with little meaningful fiscal consolidation would be perilous, as Republicans would have to defend their fiscal credibility, but that would be a fight they could wage without inflicting harm on the nation. A short default followed by significant fiscal consolidation is not likely, precisely because the Republicans backing such a notion have repeatedly and widely displayed their cards. Hence, the Democrats know that there is a limit to how long they would hold out. As a result, they would not capitulate, and then the Republicans would be faced by a bad choice and an awful one: yield and receive blame for inflicting lasting damage on U.S. credit or persist and receive blame for damaging U.S. credit and engineering a steep recession, possibly of global magnitude.

    To push the U.S. acros a line it has never before crossed will, despite the Druckenmiller hypothesis (which is not widely shared), damage U.S. credit. Once a red line is crossed, few would have reason to believe that political leaders might, when things become even more difficult, cross additional red lines. In effect, the psychological barriers that were assumed to exist and preclude U.S. default would be shattered as far as the markets are concerned. Those responsible for the reckless move will bear full accountability for its consequences. Their electoral prospects would very likely be severely damaged. Perceptions of their fitness to govern would be greatly undermined. They would be viewed as the persons who deliberately damaged American credit. All of those consequences would be deserved.

    In the end, I do expect an agreement to raise the debt ceiling, because no responsible political leader would be willing to take the default course. I do worry that the deal will come with fiscal consolidation that is on the weak side. That will be a fair battle for the 2012 campaign. It will be far more responsible than pushing the U.S. across a red line into technical default on some of its obligations, even if debt payments are made on time.
    I also think that it will be raised, however, I don't think that it is a guaranteed thing. There are those in Congress who are doing a political cost/benefit analysis on how it would affect the upcoming election. We know that the base of the right-wing is positively giddy about the idea of the US defaulting and the potential economic ramifications that it would have. For some reason, the American right has become infatuated with the idea of returning the US to the 1800s when the US was globally considered to be a second or even third rate economic/military power - the errant child of the faltering British Empire still under its patronizing protection.

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    Re: Republican mainstream flirts with brief default

    Quote Originally Posted by Jetboogieman View Post
    I really don't think so...

    I think Don gets the bigger picture, something he's quite good with I think, I think people too far one way or the other are the problem... Keep spending a **** load, or let the US default and collapse your economy and quite possibly the world economy...

    That'd be grand
    Bull****. The problem is Don CAN'T see the bigger picture. He fails to see that eventually our debtors will no longer buy our debt. Then we are screwed.

    Since when is spending within your means a bad idea? I'd love to hear mr other explain that one.
    Last edited by dontworrybehappy; 06-08-11 at 10:41 AM.

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    Re: Republican mainstream flirts with brief default

    Quote Originally Posted by dontworrybehappy View Post
    Bull****. The problem is Don CAN'T see the bigger picture. He fails to see that eventually our debtors will no longer by our debt. Then we are screwed.

    Since when is spending within your means a bad idea? I'd love to hear mr independent explain that one.
    Look, Dons a smart guy, read his post, instead of just looking at it, and his logic is sound.

    I can only go off of what i see the people who know about this stuff, are saying, and what theyre saying is, not raising the debt ceiling would be disastrous.

    I don't just come up with these positions out of thin air, ive looked at it, and logic would suggest that, that assertion is correct. i mean hell, do you think of republicans could get away with doing it, they wouldn't? If they thought it was a good idea, then why aren't they just sitting back and saying "we're just not going to raise it"?

    Now, the other side of the coin, is this has never been done before by a country with an economy your size...

    But i say, **** it.

    Let's put you in charge el presidente, do it, and let's see what the outcome is :

    Do

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