How do those poor people get to the libraries? Do we furnish them monthly bus passes? Buy them Obamamobiles?
Government Shuts Down As Congress Fails To Reach Spending Agreement
- Thread starter Mayhem
- Start date
So we shouldn't legislate based on the Bible? So all the hubbub over gay rights, abortion, birth control... that was all by accident? Whoops? Should be up to the individual now? Because it seems like "God's Own Party" doesn't want to leave it up to the individual, and it seems like a lot of individuals don't donate a whole lot. Does this also mean that we should kill the tax breaks for charitable donations, since the government shouldn't be involved? What impact do you think that will have...?
You mean except for the ones that are prone to corruption, which has been a lot of them. And we don't need to regulate them, right? Because that would be government interference. And if these community formed charties are so great, and are solving the problems that government can't... why has healthcare been so fucked up? Why have families gone bankrupt because they couldn't afford surgeries they required. Why haven't these awesome charities made it all better? Why does the problem persist? If your suggestion worked we wouldn't see the ACA because there wouldn't be a need for it.
Very little. I primarily donate time because I know the end result there, and that a massive percentage isn't going to "overhead" which ends up being the pockets of a board of directors...
They can ride the bus and write it off their taxes. Everybody wins!
But hey, if all this is grand and you support what the GOP is doing, I'm sure you'll be thrilled next time the gun control debate pokes it's head out and the Dems decide to shutdown government until the GOP folds. Right? I mean, a lot of Dems see the lack of gun control as a catastrophe that is damaging the nation and costing lives. So if this is a legit tactic for when you don't like what's going on and you feel strongly about it then... hey, unless this is all rhetoric and partisan bullshit on your part you should be thrilled by that.
Now, you could say there's some potential Constitutional issues, but let's face it... the Constitution doesn't matter. SCOTUS gave the ACA the thumbs up and the Republicans don't seem to care. SCOTUS shot down DOMA based on the Constitution, but that doesn't seem to stop a bunch of Republicans from striving for "traditional marriage". Roe v. Wade is hand waved, 14th Amendment be damned. So hey, what's a 2nd Amendment, give or take, between friends, right? Right?
bobjustbob
Proud member of FreeOnes Hall Of Fame. Retired to
Happy, you are wrong again. No one gets refused medical attention when they come into a hospital emergency room. You don't need blood pouring out of a severed arm. Deaf mutes will get in. Any woman ready to drop a child will have their child USA citizenship. Stop the panic. I want these good people coming into this country. They make shit money yet send some of their dollars back home.
Let's take a scenario. A Mexican dude gets here and is making some money. He is sending money home. Why not bring a person here to earn some more money? Let them compete with citizens for jobs paying the same wages? So what if our citizens think these jobs are shit and won't take them, pay those that will. Work what they have to offer and boost them for good work. They'll buy an iPad. Sell tacos during a street fest. Nothing wrong with that. Churn some bucks.
Let's take a scenario. A Mexican dude gets here and is making some money. He is sending money home. Why not bring a person here to earn some more money? Let them compete with citizens for jobs paying the same wages? So what if our citizens think these jobs are shit and won't take them, pay those that will. Work what they have to offer and boost them for good work. They'll buy an iPad. Sell tacos during a street fest. Nothing wrong with that. Churn some bucks.
Yes, they'll get healthcare... that they can't afford that will bankrupt them. ACA isn't about providing healthcare, that already does get provided. It's about making sure people don't lose everything they own because they need surgery, about making sure people with preexisting conditions can get coverage, etc. etc. etc..
Unless of course you think losing everything you own isn't worthy of panic?
Oh, and don't forget that when people who don't have insurance and can't pay well... can't pay what happens? Court time leading to fines, seized assets, garnished wages, and further descent into poverty. And of course that Court time and the enforcement is paid for by who? Then Medicaid pops up thanks to this. And who pays that? So you're looking at a bad system where you're still paying. That system also happens to destroy people's lives though. Mainly the poor. (Hey, should we call this "class warfare"? It's a popular buzzword these days!)
So why not at least try to fix the system. If the ACA doesn't do it, at least it's a start. A start that the GOP didn't want to take. If nothing else this forces the issue.
Because despite getting bipartisan support in the Senate and a supermajority the House Republicans won't pass immigration reform. Including those who help write it. :dunno:
So much dumb in Happy's posts. Do you even realize the main reason people file for bankruptcy protection? To keep their home and their car. These poor people don't file bankruptcy to relieve themself of medical debt they just don't pay it. Who picks up the tab? Working familes through higher premiums and higher medical bills. I used to think you had a little ability to articulate a reasonable argument but all you have done here is advocate government control of our healthcare system and for the government to take our tax dollars and spend it better than we can. The government has never taken over private industry and made it better. Not once! I'm sorry that people don't have things but I will be damned if the government is going to take my hard earned money and give it away to others because they know how to spend it better than i do without a fight. Tax credits for bus fare lmao You really are a hopeless case.
Mayhem
Banned
A U.S. Default Seen as Catastrophe Dwarfing Lehman’s Fall
http://www.businessweek.com/news/20...-unprecedented-catastrophe-dwarfing-lehman#p3
Anyone who remembers the collapse of Lehman Brothers Holdings Inc. little more than five years ago knows what a global financial disaster is. A U.S. government default, just weeks away if Congress fails to raise the debt ceiling as it now threatens to do, will be an economic calamity like none the world has ever seen.
Failure by the world’s largest borrower to pay its debt -- unprecedented in modern history -- will devastate stock markets from Brazil to Zurich, halt a $5 trillion lending mechanism for investors who rely on Treasuries, blow up borrowing costs for billions of people and companies, ravage the dollar and throw the U.S. and world economies into a recession that probably would become a depression. Among the dozens of money managers, economists, bankers, traders and former government officials interviewed for this story, few view a U.S. default as anything but a financial apocalypse.
The $12 trillion of outstanding government debt is 23 times the $517 billion Lehman owed when it filed for bankruptcy on Sept. 15, 2008. As politicians butt heads over raising the debt ceiling, executives from Berkshire Hathaway Inc.’s Warren Buffett to Goldman Sachs Group Inc.’s Lloyd C. Blankfein have warned that going over the edge would be catastrophic.
“If it were to occur -- and it’s a big if -- one would expect a series of legal triggers, potentially transmitting the default to many other markets,” said Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., the world’s largest fixed-income manager. “All this would add to the headwinds facing economic growth. It would also undermine the role of the U.S. in the world economy.”
Lehman Aftermath
The U.S. stock market lost almost half its value in the five months following Lehman’s failure. The country had its worst recession since the Great Depression (INDU), taking the global economy down with it. Unemployment (USURTOT) surged to 10 percent, the highest in three decades.
Another depression was prevented only by unprecedented action by the Federal Reserve, which pumped $3 trillion into the financial system. The U.S. Treasury provided about $300 billion of capital for the nation’s banks.
“If we miss an interest payment, that would blow Lehman out of the water,” said Tim Bitsberger, a former Treasury official under President George W. Bush and now a New York-based managing director at BNP Paribas SA. “Lehman was an isolated company, and now we are talking about the U.S. government.”
Buffett has asked politicians to stop using the debt limit as a weapon in policy debates. Morgan Stanley CEO James Gorman urged employees to contact their congressmen to remind them about the “unacceptable consequences” of a default.
‘Nuclear Bombs’
“It should be like nuclear bombs, basically too horrible to use,” Buffett, 83, said in an interview published by Fortune magazine last week.
One unexpected consequence of Lehman’s collapse was the seizing up of the repurchase agreement, or repo, market -- a form of secured, short-term borrowing used by Wall Street banks and investment firms. Many of Lehman’s trading counterparts discovered the collateral they believed was backing their loans wasn’t there to grab as rules allowed. That scared investors in the rest of the market, closing off other trades and leading to fire sales of securities and further price declines.
A government default could freeze the repo market more than Lehman’s collapse because U.S. debt forms its backbone. At least $2.8 trillion of Treasuries serve as collateral for repo and reverse-repo loans, according to Fed data.
‘Holy Cripes’
In the event of a default, Treasuries might no longer be eligible as collateral for repo agreements, according to James Kochan, Wells Fargo Funds Management LLC’s chief fixed-income strategist. The cheap funding for the holdings lowers the yields demanded on the investments, and unwinding the positions could amplify losses for lenders and borrowers.
If Treasuries were ejected from the market, “Well, holy cripes,” Kochan said in an interview.
In 2011, the last time Congress was gridlocked over the extension of the debt ceiling, repo rates rose as money-market funds pulled back because they didn’t want the risk of holding a security in default.
“A lot of this is about fear of the unknown,” said Scott Skyrm, a former head of repo and money markets for Newedge USA LLC and author of “The Money Noose: Jon Corzine and the Collapse of MF Global.” “There is no upside to being in the market in that environment, so people pull out.”
The U.S. didn’t default on its debt in 2011. Republicans and Democrats reached a last-minute deal to raise the borrowing limit. Even so, the posturing hurt consumer confidence and wiped out $6 trillion of value from global stocks.
Historical Lessons
While none of the people interviewed for this story expect the world’s largest economy to default this time either, most say the chances of it happening now are higher than in the past.
“It would be insane to default, but it’s no longer a zero-percent probability,” said Simon Johnson, a former chief economist of the International Monetary Fund who teaches economics at the Massachusetts Institute of Technology and is a columnist for Bloomberg View.
The U.S. hasn’t defaulted since 1790, when the newly formed nation deferred until 1801 interest obligations on debt it assumed from the states, according to “This Time Is Different,” a history of financial crises by Carmen Reinhart and Kenneth Rogoff.
Technical Default
In 1979, the U.S. was late to make payments on about $122 million of bills, in part because of “severe technical difficulties” that the Treasury said stemmed from a word-processing failure, according to the Financial Review’s August 1989 issue. While payments were made after a short delay, including with interest for tardiness, the hiccup caused yields to rise by half a percentage point and stay there for months.
A default today could be deemed “technical” because it would be the result of the government’s unwillingness to pay, not its ability, JPMorgan Chase & Co. analysts including Alex Roever said in a report last week.
In a technical default, only the prices of Treasury bonds that mature or have coupon payments would fall, according to the analysts. Money-market funds wouldn’t be forced to sell government bonds, and the Fed probably would continue accepting them as collateral for emergency cash.
That distinction is nothing more than an effort to downplay the danger of default, according to MIT’s Johnson. Sovereign defaults are always about the political will to pay because most governments can print money to make payments if they want to, Johnson said.
Insufficient Funds
Labeled technical or not, a default is still a default, said Jim Grant, founder of Grant’s Interest Rate Observer.
“People have typically turned to Treasuries as a safe haven, but what will happen when they realize it’s not safe anymore,” said Grant, who has followed interest rates since the 1970s. “Financial markets are all confidence-based. If that confidence is shaken, you have disaster.”
Treasury Secretary Jacob J. Lew has said the government will have only $30 billion of cash left by Oct. 17 to meet its commitments. Those can run as high as $60 billion a day, which means the Treasury will need to borrow more to meet its liabilities, Lew said. Goldman Sachs expects the Treasury’s cash balance to be depleted by Oct. 31 and “possibly quite a bit sooner,” analysts at the bank wrote in an Oct. 5 report.
The Treasury has $120 billion of short-term bonds coming due on Oct. 17, according to data compiled by Bloomberg. An additional $93 billion of bills are due on Oct. 24. On the last day of the month, $150 billion needs to be paid back, including two-year and five-year notes that mature. The total due from Oct. 17 through Nov. 7 is $417 billion.
Fed Support
While some expect a 2013 default will drive up yields only on Treasury securities coming due, others including former Deputy Treasury Secretary Roger Altman see a wider impact in bond yields, pushing up borrowing costs.
“That would be higher interest costs over some considerable period of time for the U.S. and for U.S. taxpayers,” said Altman, who’s chairman of New York-based investment bank Evercore Partners Inc.
The yield on 10-year U.S. bonds dropped to a two-month low of 2.58 percent on Oct. 3. While short-term bill rates and the cost to insure against a default have risen, volatility in Treasuries has fallen, a sign that investor confidence in the Federal Reserve’s bond-purchase program is outweighing worries over the budget battle.
Rating Downgrade
Some point to Standard & Poor’s 2011 downgrade of the U.S. credit rating, which led to an increase in Treasury prices, not a drop. Even after the rating was lowered by one level to AA+ from AAA, investors continued buying U.S. government bonds as they flocked to safety, according to Joe Davis, chief economist at Vanguard Group Inc.
A downgrade to default rating would be different, said Peter Tchir, founder of New York-based TF Market Advisors. Investors, structured vehicles, collateral agreements, derivatives contracts and other trading covenants have ratings-based rules that could force the replacement of Treasuries in a trade or portfolio, he said.
“Once the system starts to break down related to settlement and payments, then liquidity disappears, as we saw after Lehman,” Tchir said. “Perhaps the things we’re worried about now will be fine after a U.S. default, but who knows what others will not be.”
‘Create Chaos’
Treasuries are among the most popular forms of collateral pledged at derivatives clearinghouses, including the one owned by CME Group Inc. (CME:US), the world’s largest futures market. Government agencies such as Freddie Mac and Fannie Mae, which use interest-rate swaps and derivatives to hedge mortgage portfolios, would be affected by a downgrade because it could lower their counterparty ratings and result in more collateral being demanded by trading partners.
“We can’t even imagine all the things that might happen, just like Henry Paulson couldn’t imagine all the bad things that might happen if he let Lehman go down,” said Bill Isaac, chairman of Cincinnati-based Fifth Third Bancorp and a former chairman of the Federal Deposit Insurance Corp., referring to the former U.S. Treasury secretary. “It would create chaos in financial markets.”
Capital Shortfalls
Higher borrowing costs could slow the housing recovery. If 30-year mortgage rates climbed to 6.5 percent from 4.5 percent, a borrower who can now afford the monthly payment on a $200,000 loan would only be able to take on about $160,000 of debt when buying a property, forcing down sale prices.
It would be “bad -- both for affordability and for consumer confidence,” said Jed Kolko, chief economist for Trulia Inc., an online property-listing service.
Banks would have to write down securities on their books that are losing value and face capital shortfalls, according to MIT’s Johnson.
“The government wouldn’t have the cash to rescue the banks this time either,” Johnson said.
About half of the U.S. debt is held by foreign governments, central banks and other overseas investors, according to Treasury data. A default would throw those holdings into question as well as the dollar’s status as the world’s reserve currency, Johnson said. During the 2011 debt-ceiling scare, foreign investors shunned Treasury auctions for about three months, according to data compiled by JPMorgan.
China, Japan
China is the largest holder of U.S. Treasuries, with $1.3 trillion in July, according to Treasury data. Japan follows with $1.1 trillion.
Even if Treasury prices aren’t affected by a default, the damage in other markets could be devastating. U.S. stocks fell 7 percent in one day when Congress rejected the government’s bank-rescue package in 2008, before passing it a few days later.
The market shocks would be enough to tip the U.S. back into recession and drag the world economy down, according to Desmond Lachman, a fellow at the Washington-based American Enterprise Institute. The event could prove to be the trigger that reverses a weak and fragile recovery, said William Cunningham, head of credit portfolios for the investment arm of Columbus, Ohio-based Nationwide Mutual Insurance Co. Lehman’s collapse was a similar spark, he said.
“Is this the straw among other things that tips an economy without drivers of growth back down into a negative spiral?” Cunningham said.
War Rooms
While a short-lived default might be fixed without major damage to the global economy, drawing a line between short and long isn’t easy, according to Evercore’s Altman.
“If you missed an interest payment by two hours, the markets might look entirely beyond that and forgive you,” Altman said. “If you miss an interest payment by two days, four days, six days, that’s a different story. It’s very difficult to be scientific about this.”
During the final days of Lehman Brothers, Wall Street firms set up war rooms to chart the potential impact of the firm’s demise and prepare strategies to cope with the consequences. Their scenarios, which focused on credit-default swaps, didn’t forecast the contagion that quickly spread after the bankruptcy.
Now, some banks are preparing contingency plans for a possible U.S. default, such as stocking retail branches with more cash, the New York Times reported last week. Those preparations might prove useless once again.
“Nobody knows what would happen if there were a default because the reality is there’s never been even a technical default in the U.S.,” said Russ Koesterich, chief investment strategist at BlackRock Inc., the world’s largest asset manager. “Everyone’s flying blind.”
http://www.businessweek.com/news/20...-unprecedented-catastrophe-dwarfing-lehman#p3
Anyone who remembers the collapse of Lehman Brothers Holdings Inc. little more than five years ago knows what a global financial disaster is. A U.S. government default, just weeks away if Congress fails to raise the debt ceiling as it now threatens to do, will be an economic calamity like none the world has ever seen.
Failure by the world’s largest borrower to pay its debt -- unprecedented in modern history -- will devastate stock markets from Brazil to Zurich, halt a $5 trillion lending mechanism for investors who rely on Treasuries, blow up borrowing costs for billions of people and companies, ravage the dollar and throw the U.S. and world economies into a recession that probably would become a depression. Among the dozens of money managers, economists, bankers, traders and former government officials interviewed for this story, few view a U.S. default as anything but a financial apocalypse.
The $12 trillion of outstanding government debt is 23 times the $517 billion Lehman owed when it filed for bankruptcy on Sept. 15, 2008. As politicians butt heads over raising the debt ceiling, executives from Berkshire Hathaway Inc.’s Warren Buffett to Goldman Sachs Group Inc.’s Lloyd C. Blankfein have warned that going over the edge would be catastrophic.
“If it were to occur -- and it’s a big if -- one would expect a series of legal triggers, potentially transmitting the default to many other markets,” said Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., the world’s largest fixed-income manager. “All this would add to the headwinds facing economic growth. It would also undermine the role of the U.S. in the world economy.”
Lehman Aftermath
The U.S. stock market lost almost half its value in the five months following Lehman’s failure. The country had its worst recession since the Great Depression (INDU), taking the global economy down with it. Unemployment (USURTOT) surged to 10 percent, the highest in three decades.
Another depression was prevented only by unprecedented action by the Federal Reserve, which pumped $3 trillion into the financial system. The U.S. Treasury provided about $300 billion of capital for the nation’s banks.
“If we miss an interest payment, that would blow Lehman out of the water,” said Tim Bitsberger, a former Treasury official under President George W. Bush and now a New York-based managing director at BNP Paribas SA. “Lehman was an isolated company, and now we are talking about the U.S. government.”
Buffett has asked politicians to stop using the debt limit as a weapon in policy debates. Morgan Stanley CEO James Gorman urged employees to contact their congressmen to remind them about the “unacceptable consequences” of a default.
‘Nuclear Bombs’
“It should be like nuclear bombs, basically too horrible to use,” Buffett, 83, said in an interview published by Fortune magazine last week.
One unexpected consequence of Lehman’s collapse was the seizing up of the repurchase agreement, or repo, market -- a form of secured, short-term borrowing used by Wall Street banks and investment firms. Many of Lehman’s trading counterparts discovered the collateral they believed was backing their loans wasn’t there to grab as rules allowed. That scared investors in the rest of the market, closing off other trades and leading to fire sales of securities and further price declines.
A government default could freeze the repo market more than Lehman’s collapse because U.S. debt forms its backbone. At least $2.8 trillion of Treasuries serve as collateral for repo and reverse-repo loans, according to Fed data.
‘Holy Cripes’
In the event of a default, Treasuries might no longer be eligible as collateral for repo agreements, according to James Kochan, Wells Fargo Funds Management LLC’s chief fixed-income strategist. The cheap funding for the holdings lowers the yields demanded on the investments, and unwinding the positions could amplify losses for lenders and borrowers.
If Treasuries were ejected from the market, “Well, holy cripes,” Kochan said in an interview.
In 2011, the last time Congress was gridlocked over the extension of the debt ceiling, repo rates rose as money-market funds pulled back because they didn’t want the risk of holding a security in default.
“A lot of this is about fear of the unknown,” said Scott Skyrm, a former head of repo and money markets for Newedge USA LLC and author of “The Money Noose: Jon Corzine and the Collapse of MF Global.” “There is no upside to being in the market in that environment, so people pull out.”
The U.S. didn’t default on its debt in 2011. Republicans and Democrats reached a last-minute deal to raise the borrowing limit. Even so, the posturing hurt consumer confidence and wiped out $6 trillion of value from global stocks.
Historical Lessons
While none of the people interviewed for this story expect the world’s largest economy to default this time either, most say the chances of it happening now are higher than in the past.
“It would be insane to default, but it’s no longer a zero-percent probability,” said Simon Johnson, a former chief economist of the International Monetary Fund who teaches economics at the Massachusetts Institute of Technology and is a columnist for Bloomberg View.
The U.S. hasn’t defaulted since 1790, when the newly formed nation deferred until 1801 interest obligations on debt it assumed from the states, according to “This Time Is Different,” a history of financial crises by Carmen Reinhart and Kenneth Rogoff.
Technical Default
In 1979, the U.S. was late to make payments on about $122 million of bills, in part because of “severe technical difficulties” that the Treasury said stemmed from a word-processing failure, according to the Financial Review’s August 1989 issue. While payments were made after a short delay, including with interest for tardiness, the hiccup caused yields to rise by half a percentage point and stay there for months.
A default today could be deemed “technical” because it would be the result of the government’s unwillingness to pay, not its ability, JPMorgan Chase & Co. analysts including Alex Roever said in a report last week.
In a technical default, only the prices of Treasury bonds that mature or have coupon payments would fall, according to the analysts. Money-market funds wouldn’t be forced to sell government bonds, and the Fed probably would continue accepting them as collateral for emergency cash.
That distinction is nothing more than an effort to downplay the danger of default, according to MIT’s Johnson. Sovereign defaults are always about the political will to pay because most governments can print money to make payments if they want to, Johnson said.
Insufficient Funds
Labeled technical or not, a default is still a default, said Jim Grant, founder of Grant’s Interest Rate Observer.
“People have typically turned to Treasuries as a safe haven, but what will happen when they realize it’s not safe anymore,” said Grant, who has followed interest rates since the 1970s. “Financial markets are all confidence-based. If that confidence is shaken, you have disaster.”
Treasury Secretary Jacob J. Lew has said the government will have only $30 billion of cash left by Oct. 17 to meet its commitments. Those can run as high as $60 billion a day, which means the Treasury will need to borrow more to meet its liabilities, Lew said. Goldman Sachs expects the Treasury’s cash balance to be depleted by Oct. 31 and “possibly quite a bit sooner,” analysts at the bank wrote in an Oct. 5 report.
The Treasury has $120 billion of short-term bonds coming due on Oct. 17, according to data compiled by Bloomberg. An additional $93 billion of bills are due on Oct. 24. On the last day of the month, $150 billion needs to be paid back, including two-year and five-year notes that mature. The total due from Oct. 17 through Nov. 7 is $417 billion.
Fed Support
While some expect a 2013 default will drive up yields only on Treasury securities coming due, others including former Deputy Treasury Secretary Roger Altman see a wider impact in bond yields, pushing up borrowing costs.
“That would be higher interest costs over some considerable period of time for the U.S. and for U.S. taxpayers,” said Altman, who’s chairman of New York-based investment bank Evercore Partners Inc.
The yield on 10-year U.S. bonds dropped to a two-month low of 2.58 percent on Oct. 3. While short-term bill rates and the cost to insure against a default have risen, volatility in Treasuries has fallen, a sign that investor confidence in the Federal Reserve’s bond-purchase program is outweighing worries over the budget battle.
Rating Downgrade
Some point to Standard & Poor’s 2011 downgrade of the U.S. credit rating, which led to an increase in Treasury prices, not a drop. Even after the rating was lowered by one level to AA+ from AAA, investors continued buying U.S. government bonds as they flocked to safety, according to Joe Davis, chief economist at Vanguard Group Inc.
A downgrade to default rating would be different, said Peter Tchir, founder of New York-based TF Market Advisors. Investors, structured vehicles, collateral agreements, derivatives contracts and other trading covenants have ratings-based rules that could force the replacement of Treasuries in a trade or portfolio, he said.
“Once the system starts to break down related to settlement and payments, then liquidity disappears, as we saw after Lehman,” Tchir said. “Perhaps the things we’re worried about now will be fine after a U.S. default, but who knows what others will not be.”
‘Create Chaos’
Treasuries are among the most popular forms of collateral pledged at derivatives clearinghouses, including the one owned by CME Group Inc. (CME:US), the world’s largest futures market. Government agencies such as Freddie Mac and Fannie Mae, which use interest-rate swaps and derivatives to hedge mortgage portfolios, would be affected by a downgrade because it could lower their counterparty ratings and result in more collateral being demanded by trading partners.
“We can’t even imagine all the things that might happen, just like Henry Paulson couldn’t imagine all the bad things that might happen if he let Lehman go down,” said Bill Isaac, chairman of Cincinnati-based Fifth Third Bancorp and a former chairman of the Federal Deposit Insurance Corp., referring to the former U.S. Treasury secretary. “It would create chaos in financial markets.”
Capital Shortfalls
Higher borrowing costs could slow the housing recovery. If 30-year mortgage rates climbed to 6.5 percent from 4.5 percent, a borrower who can now afford the monthly payment on a $200,000 loan would only be able to take on about $160,000 of debt when buying a property, forcing down sale prices.
It would be “bad -- both for affordability and for consumer confidence,” said Jed Kolko, chief economist for Trulia Inc., an online property-listing service.
Banks would have to write down securities on their books that are losing value and face capital shortfalls, according to MIT’s Johnson.
“The government wouldn’t have the cash to rescue the banks this time either,” Johnson said.
About half of the U.S. debt is held by foreign governments, central banks and other overseas investors, according to Treasury data. A default would throw those holdings into question as well as the dollar’s status as the world’s reserve currency, Johnson said. During the 2011 debt-ceiling scare, foreign investors shunned Treasury auctions for about three months, according to data compiled by JPMorgan.
China, Japan
China is the largest holder of U.S. Treasuries, with $1.3 trillion in July, according to Treasury data. Japan follows with $1.1 trillion.
Even if Treasury prices aren’t affected by a default, the damage in other markets could be devastating. U.S. stocks fell 7 percent in one day when Congress rejected the government’s bank-rescue package in 2008, before passing it a few days later.
The market shocks would be enough to tip the U.S. back into recession and drag the world economy down, according to Desmond Lachman, a fellow at the Washington-based American Enterprise Institute. The event could prove to be the trigger that reverses a weak and fragile recovery, said William Cunningham, head of credit portfolios for the investment arm of Columbus, Ohio-based Nationwide Mutual Insurance Co. Lehman’s collapse was a similar spark, he said.
“Is this the straw among other things that tips an economy without drivers of growth back down into a negative spiral?” Cunningham said.
War Rooms
While a short-lived default might be fixed without major damage to the global economy, drawing a line between short and long isn’t easy, according to Evercore’s Altman.
“If you missed an interest payment by two hours, the markets might look entirely beyond that and forgive you,” Altman said. “If you miss an interest payment by two days, four days, six days, that’s a different story. It’s very difficult to be scientific about this.”
During the final days of Lehman Brothers, Wall Street firms set up war rooms to chart the potential impact of the firm’s demise and prepare strategies to cope with the consequences. Their scenarios, which focused on credit-default swaps, didn’t forecast the contagion that quickly spread after the bankruptcy.
Now, some banks are preparing contingency plans for a possible U.S. default, such as stocking retail branches with more cash, the New York Times reported last week. Those preparations might prove useless once again.
“Nobody knows what would happen if there were a default because the reality is there’s never been even a technical default in the U.S.,” said Russ Koesterich, chief investment strategist at BlackRock Inc., the world’s largest asset manager. “Everyone’s flying blind.”
Mariahxxx
Official Checked Star Member
You are fucking delusional zippy. so the average wage shouldnt increase along with the cost of living? wow you are a republican't are you? this is why you fucks are losing more and more and will continue to do so.
the studies done show that the minimum wage should be $22 to coincide with the increase in the cost of living.
the studies done show that the minimum wage should be $22 to coincide with the increase in the cost of living.
Rey C.
Racing is life... anything else is just waiting.
Medical Bills Are the Biggest Cause of US Bankruptcies: Study
Published: Tuesday, 25 Jun 2013 | 2:29 PM ET
By: Dan Mangan | Health Care Reporter
Bankruptcies resulting from unpaid medical bills will affect nearly 2 million people this year—making health care the No. 1 cause of such filings, and outpacing bankruptcies due to credit-card bills or unpaid mortgages, according to new data. And even having health insurance doesn't buffer consumers against financial hardship.
The findings are from NerdWallet Health, a division of the price-comparison website. It analyzed data from the U.S. Census, Centers for Disease Control, the federal court system and the Commonwealth Fund, a private foundation that promotes access, quality and efficiency in the health-care system.
"A lot of Americans are struggling with medical bills," said NerdWallet Health Vice President Christina LaMontagne.
NerdWallet estimates that households containing 1.7 million people will file for bankruptcy protection this year.
Rattrap
Doesn't feed trolls and would appreciate it if you
I hate to tell you this, but he's not the one looking bad for this debate. Quite the opposite.
I hate to tell you this Rattrap but you should probably limit your involvement to discussion about scientific matters. You aren't exactly lending insight to other topics. And Rey we can copy and paste all day long articles stating medical bills are the number one cause of bankruptcy filings but it is just not true. I have been filing for clients for over 20 years and while medical bills are certainly included in many petitions it is not at the level that these agenda driven studies conclude. The totak amounts may be higher than consumer debt but the individual cases do not add up to more.
HehehehehehehehehehahaHyena
Closed Account
So... your personal experience and opinion outweigh all the evidence that he produced? Is that correct?
Hey you limey asswipe. Yes that is what I saying. Here's how it works. Any group with an agenda creates a think tank and conducts research to skew the numbers in favor of their cause. Right now the big hoopla is healthcare so start putting info ovt there that medical bills are the number one cause of personal bankruptcy. You fucking right i base my opinion on personal experience.
xfire
New Twitter/X @cxffreeman
Anecdotal evidence isn't proof, and the tactic of think-tanking a cause is typically a right-wing strategy because liberals have the university system to do all their research.
What did you just say? There are no liberal think tanks. No left wing research institutes? I spent 7 years of my life at one of the most liberal institutions in the country. The place is crawling with them. I have season tickets at the Dean Smith Center and Erskine Bowles and John Edwards sit in my section. There is no greater left wing bias than a study conducted that has .edu at the end of it. Thanks for making my point.
xfire
New Twitter/X @cxffreeman
You should re-read my post above, I was drawing a distinction between organizations like The Heritage Foundation, which is a "think-tank", and places where liberals get a great deal of research. It was a subtle joke, sorry for not being more obvious.
Look man. I know I have beee going off lately but my daughter is in her first year at Duke and she is up there getting busted for underage drinking and I found out this weekend that she has leased an 80000 dollar Range Rover turbo that her piece of shit boyfriend talked her into. I am not happy right now.
Mayhem
Banned
Wow! It almost sounds like you're taking out your anger on people who disagree with you based on extraneous circumstances beyond your control. What a koinkydink! Can we expect you to read Sam I Am to us anytime soon?
xfire
New Twitter/X @cxffreeman
You look! lol I wasn't busting your balls or being a smart ass, in fact I was quite sincere when I apologized for being opaque with my obviously unfunny joke. You know, dad's stick together so if you need some assistance disappearing an unwanted suitor, a call to arms wouldn't go unanswered.
Ah. Understandable, we all have our rough times and our off days. As I've said before, I've often found you to be reasonable in the pass, and have frequently appreciated your input. I hope you work things out with you and your daughter. :thumbsup:
I'd rep you for the admission, but you know how it is... you must spread some reputation blah, blah, blah...
Elwood70
Torn & Frayed.
Dads or not, guys stick together so, yeah. Count me in.
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