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Author Topic:   United States Debt Default
Straggler
Member (Idle past 237 days)
Posts: 10332
From: London England
Joined: 09-30-2006


Message 1 of 211 (624057)
07-15-2011 3:38 PM


Is the United States going to default on it's debt and plunge the global financial system into a crisis of never-seen-before proportions?

I don't really understand the intricacies of this at all. Can anyone explain:

Why this has come to a head now?
What is likely to happen?
What could happen (worst case but reasonably possible scenario)?
What are the consequences?
Who can we blame?


Replies to this message:
 Message 2 by AZPaul3, posted 07-15-2011 4:06 PM Straggler has taken no action
 Message 3 by jar, posted 07-15-2011 4:15 PM Straggler has replied
 Message 6 by xongsmith, posted 07-15-2011 5:56 PM Straggler has taken no action
 Message 7 by xongsmith, posted 07-15-2011 5:56 PM Straggler has taken no action
 Message 12 by frako, posted 07-15-2011 6:47 PM Straggler has taken no action

  
Straggler
Member (Idle past 237 days)
Posts: 10332
From: London England
Joined: 09-30-2006


(2)
Message 24 of 211 (624188)
07-16-2011 1:44 PM
Reply to: Message 18 by Jon
07-15-2011 10:57 PM


Re: Straggler's not an American.
Jon writes:

Straggler's not an American.

Straggler's not an American.

Straggler's not an American.

Straggler's not an American.

Never has Straggler agreed so much with Jon.


This message is a reply to:
 Message 18 by Jon, posted 07-15-2011 10:57 PM Jon has taken no action

  
Straggler
Member (Idle past 237 days)
Posts: 10332
From: London England
Joined: 09-30-2006


Message 25 of 211 (624189)
07-16-2011 1:46 PM
Reply to: Message 3 by jar
07-15-2011 4:15 PM


Re: Possible
There is talk in the news today of a downgrade of the US credit rating from it's AAA status if something significant doesn't happen soon. Is this likely and if so what effect will it have?

This message is a reply to:
 Message 3 by jar, posted 07-15-2011 4:15 PM jar has replied

Replies to this message:
 Message 26 by jar, posted 07-16-2011 2:00 PM Straggler has replied

  
Straggler
Member (Idle past 237 days)
Posts: 10332
From: London England
Joined: 09-30-2006


Message 27 of 211 (624194)
07-16-2011 2:17 PM
Reply to: Message 26 by jar
07-16-2011 2:00 PM


Re: Possible
The role of credit rating agencies in all this seems very strange. Who are they and why do they get to decide things that can have disastrous consequences for nations and individuals?

I guess I am thinking as much of Greece and Portugal and Spain and the UK as I am the US with that question. But it does seem they have a bizzarre degree of power over people's lives and their position on this specific US issue could be key couldn't it?


This message is a reply to:
 Message 26 by jar, posted 07-16-2011 2:00 PM jar has replied

Replies to this message:
 Message 28 by jar, posted 07-16-2011 2:21 PM Straggler has replied

  
Straggler
Member (Idle past 237 days)
Posts: 10332
From: London England
Joined: 09-30-2006


Message 29 of 211 (624197)
07-16-2011 2:27 PM
Reply to: Message 28 by jar
07-16-2011 2:21 PM


Credit Ratings Agencies
This is what I am referring to:

US debt talks deadlock edges ratings agencies toward downgrade

Link writes:

The agency indicated that even an agreement on the debt ceiling might not be enough: "If an agreement is reached, but we do not believe that it will stabilise the US's debt dynamics, we, again all other things unchanged, would expect to lower the long-term 'AAA' rating, affirm the 'A-1+' short-term rating, and assign a negative outlook on the long-term rating."

In response, Jeffrey Goldstein, the US Treasury's under secretary for domestic finance, said: "Congress must act expeditiously to avoid defaulting on the country's obligations and to enact a credible deficit reduction plan that commands bipartisan support."

Not an issue as far as you are concerned?


This message is a reply to:
 Message 28 by jar, posted 07-16-2011 2:21 PM jar has replied

Replies to this message:
 Message 30 by jar, posted 07-16-2011 2:56 PM Straggler has replied

  
Straggler
Member (Idle past 237 days)
Posts: 10332
From: London England
Joined: 09-30-2006


Message 31 of 211 (624220)
07-16-2011 3:33 PM
Reply to: Message 30 by jar
07-16-2011 2:56 PM


Re: Credit Ratings Agencies
But are we not now reaching the point where these credit downgrade threats are real?

For the UK, US and other AAA rated nations as well as the likes of Greece and Portugla etc.

I honestly don't know and am not making points here. I want to know what the situation really is.


This message is a reply to:
 Message 30 by jar, posted 07-16-2011 2:56 PM jar has replied

Replies to this message:
 Message 32 by jar, posted 07-16-2011 4:33 PM Straggler has taken no action

  
Straggler
Member (Idle past 237 days)
Posts: 10332
From: London England
Joined: 09-30-2006


Message 114 of 211 (625899)
07-26-2011 10:53 AM


So Where Are We Now?
So what is the latest? Still no deal (as I understand it)

Is the United States going to default on it's debt and plunge the global financial system into a crisis of never-seen-before proportions?

What is now likely to happen?
What could happen (worst case but reasonably possible scenario)?
What are the consequences?
Who can we blame?


Replies to this message:
 Message 115 by Taz, posted 07-26-2011 11:52 AM Straggler has taken no action
 Message 116 by AZPaul3, posted 07-26-2011 11:58 AM Straggler has replied

  
Straggler
Member (Idle past 237 days)
Posts: 10332
From: London England
Joined: 09-30-2006


Message 117 of 211 (625927)
07-26-2011 12:55 PM
Reply to: Message 116 by AZPaul3
07-26-2011 11:58 AM


Re: So Where Are We Now?
AZ writes:

A short term debt ceiling raise coupled with some spending cuts before the Aug 2 deadline meaning we will be doing this again in about 6 months. Oh, joy.

And if that happens won't there be a downgrade on the US credit rating?

And if that happens won't it plunge the global financial system into some sort of a crisis anyway?

I still don't understand who these credit rating agencies are or why they wield so much power.


This message is a reply to:
 Message 116 by AZPaul3, posted 07-26-2011 11:58 AM AZPaul3 has seen this message

Replies to this message:
 Message 118 by cavediver, posted 07-26-2011 1:44 PM Straggler has replied

  
Straggler
Member (Idle past 237 days)
Posts: 10332
From: London England
Joined: 09-30-2006


Message 121 of 211 (625945)
07-26-2011 2:04 PM
Reply to: Message 118 by cavediver
07-26-2011 1:44 PM


Re: So Where Are We Now?
That does actually make sense.

But it seems like the credit agencies are as much a part of the economic system (i.e. have a direct impact on economies) as they are passively making judgements and reporting to potential investors.

To what extent do credit agencies take into effect the credit ratings they give out having an effect on the economy of the country in question and thus it's credit worthiness?

And how subjective is this analysis? Is it number crunching or humans estimating? Or - I guess - A bit of both?


This message is a reply to:
 Message 118 by cavediver, posted 07-26-2011 1:44 PM cavediver has replied

Replies to this message:
 Message 122 by cavediver, posted 07-26-2011 2:17 PM Straggler has taken no action

  
Straggler
Member (Idle past 237 days)
Posts: 10332
From: London England
Joined: 09-30-2006


(1)
Message 184 of 211 (626467)
07-29-2011 1:32 PM


Insanity or Genius?
Crashfrog's print-platinum-coins-scheme sounds like the deranged mutterings of an aluminium hat wearing nutjob on first hearing.

But he is making (what seems to me) a decent case for it.

Is the scheme as mental as it first sounds or is it as genuinely viable as Crash is making it sound?

Can any of the economic savvy members with a more objective outlook on this disagreement than either Crash or AZPaul on this topic shed any light?


Replies to this message:
 Message 185 by cavediver, posted 07-29-2011 3:39 PM Straggler has taken no action
 Message 190 by crashfrog, posted 07-31-2011 11:37 PM Straggler has taken no action

  
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