What Happens If the US Defaults Next Week?

You mean "when we default"

Day the Dollar Died:

http://www.youtube.com/watch?v=2N8gJSMoOJc

I've discussed this.

I have spent the whole day building my collar on the vix.

The prop desks have spent the last 2 hours holding the range allowing for HF's to enter this trade.

Two things, there is an outright default, which is just an awful awful thing. A default is worst case, it ensures a downgrade which honestly isn't that important right now.

A downgrade is bad, it ensures a default next year or some revenue generation measure or spending cut next year as well.

Both are bad, a downgrade on some short term measure is what we should shoot for honestly. I don't see a long term measure happening, it could and I'm buying calls on the way down, but I don't think its gonna happen.

I would also say the chance of outright default is the highest its ever been. This staffer issue and the house leadership walking right by the mics says a lot. Obama did not help yesterday with his veto threat. Both sides are making this worse. Don't listen to Reid and Schumer, they're just trying to be as big of crybabies as Boehner.

Ok if we default, almost immediately the price of a lot of goods are going to change. They will still be availabe, just their prices will change drastically.

If you travel, be careful especially if by air. Airlines have to run on a profit and they may cancel many flights, refund your ticket force you to get another much more expensive ticket, etc.

Things won't hit the fan immediately, but in a few weeks the panic will start getting bad. Many banks will have lines outside them. ATM's will be out of cash.

It will be a bad winter, X-mas sales will be awful, meaning all those seasonal jobs in the winter will be gone and the country will be deep in recession, even if nominally we are still GDP positive from violent cash flow in the markets.

But next spring SHTF, expect an arab spring style situation that will turn class, race, social warfare style. Lot of riots, lot of hollowed out cores of cities, etc. Bad things, all bad things.

The one good thing I can take out of this, is all the troops in Iraq and Afghanistan have been doing alot of basically peacekeeping, police, and setting up democracy. When they come home they're gonna have the experience to deal with troublemakers here in the U.S. And yes, they need to come home in this case so we can have an election next year. Also I expect the Olympics to go forward.

America is on its way to a third world nation. Thank you Nancy Pelosi, Barack Obama, and Harry Weed. Don't complain if you voted, you're partly responsible for this, we all are. Spending and consuming beyond our means.

Hopefully fat people lose some weight. Any Fat on Skinny crime will not be tolerated. Fatty Fatty Fat Fats.

The only reason it won't be a calamity is because it is purely a political default and not an economic default. The US has the ability to borrow like no other country in the world. Everyone lines up to get US Treasuries. The only reason the US would default is because the politicians won't lift the debt ceiling and borrow more money.

But there is only so long that the markets will roll along with crazy US politics. Eventually, someone big will make a move out of US Treasuries and the lemmings will all make a run for the cliff. Then we will be up against another systemic collapse as interest rates rise, banks start hemoraging losses and economic activity grinds to a halt.

All the politicans have to do is raise the debt ceiling and this whole crisis will pass. But Republicans are manufacturing a crisis to get people to support drastic spending cuts without any increase in revenues. Without a crisis, no one would take such a plan seriously.

LOL @ all the chicken littles on this board. I love listening to white people with too much time on their hands.

Rashid Ramzi 2012 wrote:

LOL @ all the chicken littles on this board. I love listening to white people with too much time on their hands.

lol no.

how many trillions in money markets are based on bonds?

you see the money market liquidation will occur if a defaulty doo happens. Say goodbye to leverage and credit. Buh-bye.

people of course try to pull all their cash out of the bank at the same time, and suddenly dildos, dildos everywhere.

Its like a train wreck, or AIDs, or a country being led by a snickers bar.

It doesn't end well.

BTW:

THE WORDS 'TRACK MEET' WAS JUST MENTIONED ON CNBC!

Listen Retards... the USA pulls in around 200 Billion a month in tax receipts. This is plenty of money to pay interest on the outstanding debts. What is left over can pay social security and military. It wasn't too long ago, 2007, when the federal budget was around 200 billion/month. So that means government must shrink if we're to not raise the debt ceiling. Imagine that? The debt ceiling is actually there for a purpose. We don't need much of what the government thinks it needs all this money for.

Bottom line, we're not going to DEFAULT. We're going to live within our means. Hopefully... otherwise this crap is going to continue to play out over and over until the dollar is worth less than the toilet paper you're using.

The reason these deals being thrown around aren't going to work is because they promise future spending cuts. These are false promises. Back when Reagan was president the same thing happened. Politician raised the debt ceiling in exchange for cuts, but guess what...? The cuts never came. That's what's going to happen now if they work some deal.

>doesn't include Medicare

>doesn't include Welfare

>doesn't include Market Operations

>doesn't include State bailouts

expects to be taken seriously, starts posts off with 'listen retards' yeah the only people listening to you are retarded.

As has been mentioned by the Republican Leadership, the "Republican Brand" becomes toxic. Just like after the Great Depression, for a generation or two people will recognize what a bunch of irresponsible losers Republicans/Tea Party and such really are.

Which is why I'm not so sure now that Obama shouldn't just sit there and let the Republicans put the country into default that they get blamed for.

Imagine that... we as a nation can't afford to pay for all the promised services. Where is the money going to come from? We can keep raising the debt ceiling and monetizing the debt to pay for it all. Or we can increase taxes on everybody to pay for all that's promised. Or we can grow our way out of the problem... which probably won't happen because every extra dollar is being used to grow government. Or how about we simply bring the troops home, quite being the policeman of the world and live within our means?

Can't keep kicking the can down the road Bub.

That's what J.P. Morgan says about the matter.

Rashid Ramzi 2012 wrote:

... I love listening to white people with too much time on their hands.

Sounds like you've got too much time on your hands.

the consequences would be unimaginable.

electricity? Water? What if these stopped?

What if the company that delivers food to your grocery store in the city goes bust (or has their money locked up in a bankrupt bank?). How does food get to the store? Because typically this is a low margin/high volume business, so there would only be 1-2 companies providing this service.

These are not academic questions that make you go, "Wow! Kool idea!" there will be real consequences. The standard of living in the US could take a 50yr step back very quickly as institutions (public and private) dissolve, and have to be rebuilt from the ground up.

This idea that the "market" will fill the hole is laughable. There are numerous oligopolies in the US (food, rail transport, airplane manufacture) that cannot expand to fill a SUDDEN void left by bankrupt participant when the credit to expand will evaporate.

...careful what you wish for ILP. How do you hedge your counterparty risk with the Clearing Corporation? What if they go tits up? Then your, "smart trades" mean nothing as they are tied up in court.

I don't think the US defaults next week even if the debt ceiling isn't lifted. Servicing the debt has got to be at the top of the list. Because of that, we don't default. Instead, we enter a period of forced government shutdown until the debt ceiling is raised. Markets will go to sh!t, temporarily. Maybe our credit rating gets hit. Interest rates will rise. Bond prices will fall. Gold and silver prices will rise.

Then, eventually an agreement will be made to raise the debt ceiling, and most of those things will reverse. To what degree they reverse depends a lot on how long it takes to reach a deal, and what the deal looks like when it is passed.

However, if Geithner decides to pass on servicing the debt and pay other bills instead, then you will see some ugly shit. That's why I don't think that is even a possibility. That would definitely drop our credit rating significantly and cause interest rates to go through the roof. It would trigger an economic pull back greater than 2008 and there would be no stimulus to pull us out of it.

Dykestrafax wrote:

>doesn't include Medicare

>doesn't include Welfare

>doesn't include Market Operations

>doesn't include State bailouts

expects to be taken seriously, starts posts off with 'listen retards' yeah the only people listening to you are retarded.

++++++++++++++++++

Actually he has it right. Everyone knows there's enough revenue to fund current entitlements and defense, but maybe not HUD, DEA, DOL and a few other non-essential mega bureacrasies.

Nothing happens.

james R. wrote:

Educate Me Freely wrote:

What happens if the US doesn't raise the debt ceiling and we default?

Hey, I have an idea. Why don't you ask your BOYFRIEND this question, you disgusting HOMOSEXUAL?

Did I accidentally reference something?