Posted on 02/26/2010 12:22:23 PM PST by GeronL
Our debt will soon equal the GDP. How could we possibly pay it off without huge spending cuts? Increasing taxes significantly will not work, I think we all know the harm that will do. Something is going to have to give.
This country is endangered by its very own lifestyle of pawning everything off to the future. Well, the future is arriving. I don't think it will hold off for a lot longer.
China and other countries are already getting very nervous about buying our debt at the same time we are producing more debt than ever before. Has the government pressured US banks into buying debt that foreign countries won't buy? Is that one of the reasons why lending has fallen off?
Will those banks have anything but worthless bonds if the US "defaults"?
I have huge doubts that even a GOP Congress will make big spending cuts. Will they defund Planned Parenthood? NPR? ACORN? etc etc. Will they trim entitlement programs? Will they lower the income level to get those entitlements?
I really doubt they would and no way Obama signs it.
They might think they can get away with the sham for a "little while longer" by padding GDP numbers with government debt spending but how long will that work?
What if Japan, China and other creditor nations just announce they will buy no more debt unless the terms are changed to protect them from a default or from the US trying to inflate its way out.
Obviously the US could never agree to such terms. The refusal will be seen as a sign that the US really will inflate its way out or default.
That would start a global panic, wouldn't it?
What likely scenarios can you think up?
My wife’s penchant for Coach purses...
Good question. But you probably won’t get any answers because once again this forum is having technical difficulties. I’ve tried to post comments and they aren’t showing up.
Another successful terror attack would do it.
Also, another major series of bank defaults.
Like a huge room full of dominoes... set enough of them off at once, and everything goes down.
How the Democrats Created the Financial Crisis: Kevin Hassett ... See More
“Now that the collapse has occurred, the roadblock built by Senate Democrats in 2005 is unforgivable. Many who opposed the bill doubtlessly did so for honorable reasons. Fannie and Freddie provided mounds of materials defending their practices. Perhaps some found their propaganda convincing.
But we now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years.
Throughout his political career, Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.
Clinton, the 12th-ranked recipient of Fannie and Freddie PAC and employee contributions, has received more than $75,000 from the two enterprises and their employees. The private profit found its way back to the senators who killed the fix.
There has been a lot of talk about who is to blame for this crisis. A look back at the story of 2005 makes the answer pretty clear.
Oh, and there is one little footnote to the story that’s worth keeping in mind while Democrats point fingers between now and Nov. 4: Senator John McCain was one of the three cosponsors of S.190, the bill that would have averted this mess.”
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0
YouTube video clip:
“Shocking Video Unearthed Democrats in their own words Covering up the Fannie Mae, Freddie Mac Scam that caused our Economic Crisis”
http://www.youtube.com/watch?v=_MGT_cSi7Rs
One more...
“The Democrats and Obama caused the financial crisis of 08 by supporting Fannie Mae and Freddie Mac and covering up their bad books.”
http://www.youtube.com/watch?v=UVVVzEKauzY
I don’t know the answer but it does not take long before the future becomes the present. It is here before you know it.
I would say the economic collapse is already well underway.
I think it will be much simpler, debt holders refuse to buy any more bonds or treasuries at the rates offered and we will be forced to raise the interest rates on those to 1970s levels. This will freeze all economic growth and you’ll have a stagflation type incident like Japan did in the 90s.
It’s likely that at some point a lot of people who work and have worked hard will simply leave the country and emigrate to countries like Panama, Costa Rica, small countries with little bureaucracy. After taking their money, manpower, and skills out of the country, the government will likely end up supporting an entire welfare nation that will go bankrupt and there won’t be anyone to start/run/build businesses since no one will want their businesses in the US because of taxation, forced AA, and other similar things.
THen the US will completely collapse and be left out of future business/diplomatic/military alliances and treaties, business or otherwise.
It’s likely that at some point a lot of people who work and have worked hard will simply leave the country and emigrate to countries like Panama, Costa Rica, small countries with little bureaucracy. After taking their money, manpower, and skills out of the country, the government will likely end up supporting an entire welfare nation that will go bankrupt and there won’t be anyone to start/run/build businesses since no one will want their businesses in the US because of taxation, forced AA, and other similar things.
THen the US will completely collapse and be left out of future business/diplomatic/military alliances and treaties, business or otherwise.
Simple, pump cash into the economy and inflate the debt away. You hurt the little guy but hey, it is an excuse to increase the welfare state.
WTF is going on with FR? I says you have 8 comments but I see only 1
Deflation, as nobody will have jobs.
Odd, my first attempt to reply never showed up.
I’m afraid they have already decided to pump cash into the economy and purposely cause inflation. If you make the dollar worth half as much, the debt is worth half as much.
This will hurt the average person, which gives them the excuse to expand the welfare state.
First FR will start to act weird, Posts will disappear. Then.....
Americans leaving and not paying the HUGE TAX increase obama will inact...Like the people leaving NY and NJ....America having to default beause Obama is spending too much on HC and Stimulus Bills and NOT creating jobs...No NEW source of revenue....(Unlike tax cuts).. Everything is going to add up and eventually like a casino the marker is going to get called and America isn’t going to have the money to pay
Watch for the federal government to start backing its securities with hard assets like land.
Run that scenario forward.
Hello GeronL,
Start selling stuff off.
Come on man. You being a Texan, wouldn’t you like to own say the Alamo? Maybe Big Bend park?
I know I’d like to put a bid on Glacier National. Or maybe the U.S.S> Ronald Reagan.
My wife stops spending.....
A server slow-down on Free Republic.
The U.S. would rebound immediately if it dumped Social Security and all the the other subsidies and entitlements killing us with debt and taxes, but I'll never bet on the lazy, greedy fools of America doing that.
Nationalize Ebay immediately; put it under the control of the USPS, and let the Postal Inspectors totally eliminate all fraud; use of Ebay would soar if they got rid of the incompetent billionaires who’ve been running it.
The U.S. would rebound immediately if it dumped Social Security and all the the other subsidies and entitlements killing us with debt and taxes, but I'll never bet on the lazy, greedy fools of America doing that.
The U.S. would rebound immediately if it dumped Social Security and all the the other subsidies and entitlements killing us with debt and taxes, but I'll never bet on the lazy, greedy fools of America doing that.
It’s already started.
I don’t know anything much either except having read a little about the catastrophe in Iceland and Argentina, people woke up one day, found the banks were closed or were closing by noon, people tried to get their money out but the banks would only give them a token amount. By the time they could access funds, the money had been reissued at a highly devalued rate. Those that had food and water and guns and ammo in Argentina did best, there were roving gangs who looted and committed crimes, and still there was a plane of normalcy—had to go to work but watch your and your family’s backs at all times. Risky in the city, but just as bad in the country where you’d be too isolated to get defense against gangs, so smaller tightknit towns were the best places defensively, or certain buildings. Everything was inflated, food scarce, people desperate.
I would not doubt they’d reissue devalued currency here in the USA. Tangibles baby...tangibles.
It’s already started.
Lori’s posts.....
I don’t know anything much either except having read a little about the catastrophe in Iceland and Argentina, people woke up one day, found the banks were closed or were closing by noon, people tried to get their money out but the banks would only give them a token amount. By the time they could access funds, the money had been reissued at a highly devalued rate. Those that had food and water and guns and ammo in Argentina did best, there were roving gangs who looted and committed crimes, and still there was a plane of normalcy—had to go to work but watch your and your family’s backs at all times. Risky in the city, but just as bad in the country where you’d be too isolated to get defense against gangs, so smaller tightknit towns were the best places defensively, or certain buildings. Everything was inflated, food scarce, people desperate.
I would not doubt they’d reissue devalued currency here in the USA. Tangibles baby...tangibles.
Lori’s posts.....
Don’t worry. We have the Undocumented Kenyan / Indonesian / Hawaiian in office and he knows how to spend money real gooood.
I’m sure they’ll find a way to get rid of national currencies and come up with a world-wide monetary system. That eliminates the exchange rate (such an idea won the Nobel Prize for Economics around 1999 or so).
Then a personal chip in your right hand or forehead so you become your own debit / charge card. Just don’t forget your PIN.
Lori’s posts.....
Lori’s continued doom and gloom posts.
When the last 2 or 3 economic cheerleaders here on FR finally throw in the towel.
I'm thinking that if abortion was not as legal is it is, there are probably millions of people more in the US able to keep Social Security going. Plus, there would be less illegal aliens working in the US who send their earnings to Mexico. Instead, there would be US citizens working those jobs, spending or saving in the US.
Medicare D should be repealed, then Medicare A/B, then Social Security, in that order. Every other budget item don't do much for the debt/deficit.
You’re right about China, but realize this is a two-way street. By pegging their currency to the dollar, they’ve kept prices for China-made goods artificially low, but in doing so they’ve also created millions of jobs for Chinese peasants, something decades of Communism failed to do. They need someone to continue consuming at the rate we have been, or those factories start to slow down, and they have angry, starving people to deal with. The resolution of the trade imbalance will be a delicate tightrope act, with serious consequences for both sides if they screw it up.
Historically, the US Dollar has been the safe haven investment. Why? Because up til now the world has had great faith in our ability to fulfill our promises. More than any other nation, China has bet it’s future on the US, by accumulating huge reserves ($1-2 trillion, most agree) in exchange for all the stuff we’ve bought from them. But what is a dollar? It’s not gold or “real money”, it’s just a promise to pay. China has some difficult times ahead, as the economic lifeblood they need can no longer come from US at the rate it has in the past, and as they are forced to revalue the RMB.
Here’s my doomsday scenario - probably triggered by some random event we can’t even begin to predict:
The financial markets will suddenly realize there is much more risk to US Treasuries than has been priced in thus far. This will either force the Treasury to pay higher interest to attract buyers, or the Fed will be told to print up more money to buy the T bills that otherwise would not be sold. This will bring the specter of inflation - say at 10% or higher, with no growth until the debt is inflated away. Because it requires no overt political action, I think this is likely the default choice (especially considering the gutless wonders we have in DC).
All the easy options are behind us. The 30+ year orgy is over, the days of over-spending and over-consuming will end, one way or the other, ushering in a new economic reality. The only thing that is certain is that the economy of the future is going to be a lot different than the economy of the past. And it will be painful.
A war between Israel and Iran that would close the Persian Gulf. The price of oil would skyrocket, gasoline would go way up in price, igniting inflation and layoffs. Stock market would collapse. Hussein would not know how to react.
I second that.
Too bad the voters did not listen to Ross Perot 20 years ago when he warned us of the giant sucking sound that is all your jobs leaving the country. Politicians, bankers and big business have been screwing the people for many years in many ways.
Too bad we dont have a free press. I trust Russia Today (Pravda) more then I trust the mainstream media.
Rant off
It’s likely that at some point a lot of people who work and have worked hard will simply leave the country and emigrate to countries like Panama, Costa Rica, small countries with little bureaucracy. After taking their money, manpower, and skills out of the country, the government will likely end up supporting an entire welfare nation that will go bankrupt and there won’t be anyone to start/run/build businesses since no one will want their businesses in the US because of taxation, forced AA, and other similar things.If that was true, Sweden would have collapsed a long time ago. Taxation doesn't destroy countries, it just weakens them, they get slow and a bit lazy. It *does not* cause mass emigration. Countries collapse when they default on their debts. Taxation is odious, debt is fatal.THen the US will completely collapse and be left out of future business/diplomatic/military alliances and treaties, business or otherwise.
Yeah...coming for sure...and watch for taxes etc. on foreign companies here to esculate.
He would enact emergency powers, dissolve congress and become Presidente for life. Ala Hugo Chavez, they are buds you know.
Well, Sweden is a small country that doesn’t have the amount of people we have on the rolls, plus our country is bigger and much more people literally flooding in.
You should try signing out and then resigning in. It’s happened to me too.
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