What if the US defaults?

the_leander

the_leander

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HAVING a former Merrill Lynch boss caution against irresponsibility is somewhat akin to hearing Beyonce’s choreographer laying into excessively raunchy dance routines. But Richard Bernstein, once chief investment strategist at the collapsed investment bank, is sincerely convinced that the US should not go into technical default.

Yet that is just what could happen in early August, if some Republicans have their way. In layman’s terms, the planet’s largest economy has already maxed out its credit card limit, which is $14.3 trillion. Unless Congress lets it go higher, the US Treasury will run out of cash and be forced to delay bond interest payments.
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Full story, here.
 
the_leander said:
What if the US defaults?
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I read a while back that if the US was to run into debt problems it would make the problems in Europe seem utterly insignificant.
My guess is a default would cause a mass exodus of cash from the US and into elsewhere. That could be economically catastrophic given how much the US relies on other countries money.
 
GV is Greg Valliere, Chief Political Strategist for Potomic Research Group on his outlook and what he is advising his clients.
GV: There are two "worst case" scenarios. The most obvious-default -is extremely unlikely. Tim Geithner is not going to preside over default; he'll simply pay interest on the national debt in August if he has two. The other "worst case" scenario cannot be ruled out-Geithner avoids default but has no money to pay for anything else-Social Security, military pay, all government programs. That would be disastrous for the economy and the stock market, but probably a positive for the bond market. A total meltdown like this in August cannot be ruled out, but default is very, very unlikely.
There's one other scenario I do not rule out-everyone will want to leave town in late July, and they may do a temporary debt ceiling extension, maybe 1 trillion dollars, accompanied by 1 trillion in spending cuts, which is do-able. Of course, that means we have to do thru this all over again by late fall . . .
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Here the info I got it from 'Ken Duberstein: Pelosi Undermining President on Debt'
 
Maybe I should take up the fiddle.
 
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