consequences of default
Posted: Wednesday Oct 16 11:42:46AM 2013
Bobwins, I see you haven't defined this as a left or right wing issue. I think you're right. Here, nationally, many years ago, the liberals got us into big debt and the conservatives just made it worse. Eventually, the government of the day (liberals) did something about it and the subsequent conservative government wants to get it back in balance after spending more during the recession. Some Canadians might not like the way cuts (and spending) were handled, but at least the problem was recognized and dealt with in some meaningful fashion. Our system is designed to produce majority governments, which can be good and bad...
Anyway, back to work...
Posted: Wednesday Oct 16 11:03:05AM 2013
Sadly I don't think there will be a change for the better in the US Government. The politicians don't have the guts to tell Americans that they can't afford to keep paying for programs that give away money we don't have. They buy votes and now there are so many voters on the take that they won't vote to cut their own benefits.
Spending double or triple your revenues doesn't work for any company, business or family but the politicians only think about getting re elected. So their time frame is short and they don't care about future generations.
The only possible way to pay back the trillions in debt and benefits that they have already legally obligated themselves to is inflation. They have to print enough money to lower the value of the dollar and pay back the debts with dollars worth much less. The tapering talk will dominate but they won't actually stop printing because they can't without pretty immediate negative consequences.
That's part of the problem. Rather than accept a normal recession, the politicians have to show the public they are "doing something" about the financial crisis of the day. So they invent spending programs to make it all better.
And those spending programs never end, even if the economy eventually recovers. So the spending continues at an ever increasing rate and voters never throw the bums out of office.
Very discouraging. Not sure what it will take to change the course. Certainly not the stupid political drama that we have had to endure recently. Canada got their act together a few years ago. What sparked the change towards balanced budgets?
Posted: Tuesday Oct 15 7:57:04PM 2013
At the risk of statng the obvious, if the US defaults on its debt I think the market gets clobbered. In the near term I can see a 1000 -2000 point drop. Even if they manage to scrape something together, unless the American government gets serious about cutting their spending, this is likely to mark the turning point in America's status as the superpower. The US is increasingly looking like the Wizard of Oz. On the other hand, the one good part of this episode is that it may cause Americans, and all Western nations to get serious about our debt.