Highly unlikely but interesting to contemplate.

[Guest]

What would happen if the US defaults on it's debt?

I know SFA about world economics and was wondering what the end result would be of the global sugar daddy running out of sugar?

Chook.

[Guest]

Chook

Imagine being absolutely broke, to the point of owing money to people who want that money. These people can't kill you but they can cripple you. That's Ireland.

Now imagine that your country will start to fray at the edges and social order will break down. That's Greece.

Now imagine you owe more money than every single civilization in history combined and then trebled.

That's America.

That old axiom about America sneezing and us getting the flu has now transformed.

It's now if America defaults, we're back in the caves by the end of the month.

[Guest]

Chook

Imagine being absolutely broke, to the point of owing money to people who want that money. These people can't kill you but they can cripple you. That's Ireland.

Now imagine that your country will start to fray at the edges and social order will break down. That's Greece.

Now imagine you owe more money than every single civilization in history combined and then trebled.

That's America.

That old axiom about America sneezing and us getting the flu has now transformed.

It's now if America defaults, we're back in the caves by the end of the month.

At least we'll be able to treat women as they deserve to be - oh yeah I went there!!

I hear what you're saying = financial armageddon, societies collapsing, no reality TV, the rich having lots and lots of nothing. But what then?

Do countries declare bankruptcy? Would we become 100% self sufficient because we have too? How would it play out after the collapse?

Chook.

[Guest]

Defaulting on ones debt means not having the ability to make ones interest payments. America has enough money to pay it's interest. It's just that it will need to cut it's spending and raise taxes so that China keeps buying it's debt.

[Guest]

there will less fat americans and even less fat american tourists.

[Guest]

It is just simple that if any country like America, China, Russia, Japan and lots of more do best work for there economically conditions than it create a good effect on us but if they failed to do so then be ready to go to our caves back......!!!

[Guest]

To clarify the following, I found this out independent of Glenn Beck.

There's something called Mutually Assured Economic Destruction, which is the idea that if one country is financially destroyed then every country suffers. It's why Greece, Ireland and Spain have been bailed out because if they go then we'll all suffer.

[Guest]

To clarify the following, I found this out independent of Glenn Beck.

There's something called Mutually Assured Economic Destruction, which is the idea that if one country is financially destroyed then every country suffers. It's why Greece, Ireland and Spain have been bailed out because if they go then we'll all suffer.

MAED doesn't sound like a free market concept to me, sounds more like a communist/socalist concept?

Chook.

[Guest]

MAED doesn't sound like a free market concept to me, sounds more like a communist/socalist concept?

Chook.

It was designed by the U.N. so that probably explains that.

[Guest]

It was designed by the U.N. so that probably explains that.

Rather a significant contradiction don't you think, a socialist concept propping up a capitalist one? Don't tell Melon the worlds so called "free markets" are based on a socialist concept, his head will explode trying to come to terms with that.

Chook.

[crikey chris]

The US will not default. This is just a game of political football between China and the US.

How could a drug dealer blame it's customer of taking too much drugs?

Could China tell the US to repay all the trillions of debt and bills now?
or could China afford to sell off the US Treasury Bill they holding ATM?
They may try to diversify it but hardly much choice for China to choose ATM.

China definitely has the right to raise their concerns with the US debt binge, but I don't think there is much they can do about it ATM.

Both China and US are holding each others balls pretty tight.
To make life easier, one of them is trying to free their balls from one another which could take some time to resolve.

Look at how it easy it is for the US to pressurize China. Blow it's economy up with inflation !!!

As General Bernanke lines up the cannons, the Chinese government is justifiably having kittens.

Now for them to control 'price pressures', the Chinese government have to face their boogey man........unemployment!

Their exports are getting too dear and that added to their internal debt issues and an appreciating Yuan means trouble ahead.

The US economy is a basketcase. China has to control inflation.
Europe is using short term 'bandaid' solutions to without sorting out the real issues.

The global economy is heading for a ride in a washing machine.




below is an article that illustrates the power struggle between China and the US.


http://www.scmp.com/portal/site/SCMP...rld&s=Business


'Worried' China warns U.S. against debt downgrade

Beijing reminds Washington of 'investors' interests' after Moody's agency puts United States' AAA debt rating on downward watch
Ed Zhang in Beijing

Jul 15, 2011



China yesterday called on the United States to protect "the interests of investors" after rating agency Moody's placed the United States' top debt rating on a downgrade watch.

Days after reporting the highest inflation figures in three years, what worried Chinese officials the most appeared to be the US economy. Two government officials on two separate occasions yesterday urged Washington to "act more seriously and effectively" to protect investors in US Treasury bonds - of which China held US$1.153 trillion worth by April, according to US data.

"We hope the US government adopts responsible policy and measures," Foreign Ministry spokesman Hong Lei told a briefing. Yu Bin, a senior official from the ministerial-level State Council Development Research Centre, said Beijing noted that the US economy was "worse than expected" and said; "The US economy is a worry."

He said China, as the largest holder of US debt, "needs to carefully assess the risks and improve the structure of its foreign exchange reserves to mitigate" them.

Moody's Investor Service warned on Wednesday it could downgrade the United States' triple-A credit rating because of growing risks the US debt limit will not be raised in time to avoid a default. US lawmakers are locked in a stalemate over deficit reduction plans, agreement on which is needed before President Barack Obama can raise the US$14.29 trillion debt ceiling so the US can meet its obligations.

Following Moody's step, a Chinese rating agency yesterday said it was also putting US sovereign debt on watch for a possible downgrade.

"Factors influencing the US government's ability to repay its debt are steadily worsening," said the Dagong Global Credit Rating Co. "If there is no substantive improvement in its repayment ability or willingness during the observation period, Dagong will appropriately downgrade the national rating of the United States."

A downgrade could sharply raise US borrowing costs, worsening its already dire fiscal position, and send shockwaves through the financial world, which has long considered US debt a benchmark among safe-haven investments. China is also watching nervously if the US Federal Reserve will proceed with a new round of quantitative easing, or QE3.

If it did, Yu said, the impact would not be small. "QE3 will cause the US dollar to depreciate and the commodities to rise in prices, adding fuel to China's domestic inflation." Yu said Chinese consumers would have to pay more for things made from imported materials if the Federal Reserve proceeded with QE3.

Even the mention of QE3 has already pushed the yuan to a 17-year high against the US dollar - as China reported better-than-forecast growth in the first half of the year.

Additional reporting by Associated Press

ed.zhang@scmp.com

[Guest]

So what's stopping the US from increasing it's debt limit forever and ever? Will there come a time when China literally owns the USA, all of it, even Wisconsin?

Sorry I'm just trying to understand why it' such an issue and when it's going to stop or implode.

Chook.

[Guest]

It's basically the result of 60+ years of socialist programs and entitlements that the country should never have introduced.

The Subprime loans thing started with Bill Clinton (essentially that's giving people who cannot afford to pay rent on a one bedroom apartment in Asslick, Montana a chance to own a house in L.A. or New York) and has steadily got worse from there.

As I said before, wars that have no purpose, barring cleaning up messes the Yanks made, and have no end in sight are what's killed America's economy.

They went from being first on the moon to shutting down their space exploration in the space of 42 years.

[crikey chris]

this article shows in how much shit the US economy is in.


http://finance.yahoo.com/blogs/daily...161501130.html

5 Consequences If America Doesn’t Raise the Debt Ceiling
By Peter Gorenstein


America's finances are a mess. The federal government spends too much, and the debt burden is too high.

These are givens, and they are the reasons for public outrage. However, it doesn't mean the government shouldn't raise the debt ceiling. Standard & Poor's warns there is a 50% chance it will lower the U.S. government's AAA credit rating by one or more levels within three months. S&P said yesterday that even if Congress raises the debt limit in time to avert a default, it might lower the U.S. sovereign rating. Meanwhile, only 55% of respondents in the latest Wall Street Journal poll "say that failing to raise the debt ceiling would be a real and serious problem."

Today's Daily Ticker guest David Walker -- the former Comptroller General of the United States and head of the Government Accountability Office -- says it's imperative both sides of the aisle find a compromise that also sets conditions to lower our long-term debt and get us back on track. If they don't, the rest of us will pay.

Here's what he says will happen if the federal government can't reach a deal:

1. $4 billion-plus a day will come out of the economy.

2. Government and civilian military workers will be laid off temporarily. That will result in penalties for late payment, to be paid by taxpayers.

3. Social security payments will be delayed.

4. No one knows how bad the reaction will be, but Walker is confident it will be negative for the stock and bond markets and the economy.

5. Interest rates will rise. For every 1% rise in interest rates, taxpayers will be on the hook for an additional $150 billion in debt payments.

[Guest]

It's basically the result of 60+ years of socialist programs and entitlements that the country should never have introduced.
The Subprime loans thing started with Bill Clinton (essentially that's giving people who cannot afford to pay rent on a one bedroom apartment in Asslick, Montana a chance to own a house in L.A. or New York) and has steadily got worse from there.

As I said before, wars that have no purpose, barring cleaning up messes the Yanks made, and have no end in sight are what's killed America's economy.

They went from being first on the moon to shutting down their space exploration in the space of 42 years.

You mean like paid holidays, paid sick leave, supperannuation, welfare, the pension, Medicare, the PBS, hospital emergency wards, Ambulance service.,..socialist programs like those ones?

When will the right realise that Australia is a centrist nation with a very large and healthy dose of socialism. We recognise and accept that socialist programs and entitlements are part of our way of life and have been for generations. And they are socialist programs the very people that abhore socialsim access and make use of on a daily basis.

It makes me laugh when I hear people rant on about socialism in this country as though it's a big bad thing when in fact it's healthy part of our society.

Chook.