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New IMF Head Says US Must Raise Debt Limit, or Face 'Nasty Consequences'
fysdt writes with this from an article on ABC News: "The International Monetary Fund's new chief foresees 'real nasty consequences' for the U.S. and global economies if the U.S. fails to raise its borrowing limit. Christine Lagarde, the first woman to head the lending institution, said in an interview broadcast Sunday that it would cause interest rates to rise and stock markets to fall. That would threaten an important IMF goal, which is preserving stability in the world economy, she said. The U.S. borrowing limit is $14.3 trillion. Obama administration officials say the U.S. would begin to default without an agreement by Aug. 2."
We all know they are going to raise the debt limit. Every time this comes up, whichever party is in power votes to raise the limit. Whichever party is not in power delays the vote to the last minute, using the occasion for political grandstanding.
It would frankly be wonderful if enough Congresscritters had the chuzpa to not raise the limit. Force some fiscal responsibility, even if it is probably too late. But, no, this is the Congress that still hasn't passed a budget for 2011 - they just gave up, and there is every sign that there will be no official budget for 2012 either.
Enjoy life! This is not a dress rehearsal.
Obviously, the wealthy do. I believe this is the first time that the US has participated in an extended war w/o raising tax rates. During WWII, the income tax rate reached 94% on income over $200k, from Income tax in the United States, History of top rates:
It must have been something you assimilated. . . .
The US Constitution says the government isn't allowed to default on the debt. But the Debt Limit Law isn't in the Constitution - it's just a law that says that Congress doesn't authorize borrowing more than $X, and requires some actions if we hit that limit, including not spending more money than we're taking in. It's questionable whether it really even applies, because Congress has passed a budget law since the last Debt Limit Law update, and that budget says they're going to be spending more than they're taking in so they're going to be in more debt.
So what can the Executive Branch do when they hit the debt limit?
I'm guessing that they'll probably do a combination of politically unpopular spending cuts and Federal pay cuts and try to blame the Republicans, plus the Washington Monument's going to be doomed until there's a solution. I don't think they'll default on the debt, not just because it's unconstitutional, but because it seriously degrades their chances of borrowing any more money in the near future, which they want to be able to do - Obama's threatening that, but I think it's more of a political game of chicken.
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
Obama offered a plan for $4 trillion in deficit cuts, with 75% coming from spending cuts (including cuts to entitlement programs). The Republicans turned it down, because in their minds even $100B a year in tax hole closures and rate increases is too much. They are now pursuing only a $2T deficit reduction package, all because they care more about their rich benefactors than the economy.
So don't go saying both sides are unreasonable. The Democrats have been perfectly reasonable. It's the tea-baggers that are the problem.
Am I the only one that is starting to think this default thing might not be so bad? We've tried bailouts, the banks said "thanks" and promptly foreclosed, we bailed out the ultracorps like GE who said "thanks!" and promptly sent the jobs to India, meanwhile the government is building new aircraft carriers and pissing money into the F35 black hole like the cold war was scheduled to restart next Tuesday and Americans are living in tents because they can't find work. Did I miss anything?
Maybe if we default we won't be able to keep borrowing money, imports will fall off the face of the planet, and we might actually have to start manufacturing things again? Just a thought. But so far we have done everything the bankers wanted and while they got a couple more yachts it certainly hasn't helped this country out, if anything their trickling on the American people has made things MUCH worse.
I really am starting to wonder if it is time for the fall, if it is time for our own Arab spring. it is obvious the elected officials will no longer listen to or obey the will of the people, not on the three wars killing our kids, not on the border leaking like a sieve, not on H1-Bs when there are 100 Americans or more applying for every job, not on anything anymore. maybe it is time for this system to go away and a new one to replace it, one that listens to the people. Because frankly I don't see how we can continue down this path without almost certain full scale class war.
ACs don't waste your time replying, your posts are never seen by me.
Somehow there is no problem for the courts 'interpreting' the law when it concerns private citizens.
So if you murder somebody, I don't see them trying to do an interpretive dance around that fact and come up with a different explanation on what that law really says.
But when it concerns the law, which is supposed to apply to the government, now all of a sudden we need an 'interpretation'?
That's a bunch of nonsense.
SCOTUS is not supposed to be interpreting the law, he is supposed to be upholding it.
There is nothing to interpret there. When somebody says: validity will not be questioned. They mean just that. That it is valid, and it cannot be declared invalid by the government. That's all there is to it. It doesn't mean it must be paid at all. But it's valid.
Same with the rest of the Constitution - it does not need interpretation, it needs honest fucking people being judges, so they would uphold the fucking law.
You can't handle the truth.
Been there, learned a trick.
If you saw anything coming before hand, you might still have a car left. You can sleep in your car. Your first X bucks go to a gym membership. That's your shower. Then your next $20 goes to one of those fancier "street boxes" where they can't tell what 188 Main St #24 is.
Rent + cars are the killers of today's economy - a lot of places have really skewed rents vs the jobs available.
My first Journal Entry ever, in 8 years! http://slashdot.org/journal/365947/aphelion-scifi-fantasy-horror-poetry-webzine
there are massive hordes of credit default swaps against US debt out there right now.
credit default swaps are almost completely secret. nobody knows how many are out there. there could be a hundred billion, there could be 10 trillion.
if you allow the US debt to default, it will make the Russian and Asian defaults of 1997/1998 look like a kids birthday party.
When Lehman went under, the money market funds started to crash, and then the credit system started to crash. Yes, McDonalds was going to have problems meeting payroll.
the US government is like tens of thousands of Lehman Brothers, not in its operation but in the tentacles it has to every other financial product and financial system on the planet. credit default swaps against US debt are just the tip of the iceberg - and they are completely secret. we have no idea how many other products and institutions of the 'shadow banking system' are linked to US debt, or what the repercussions would be.
we would see currency devaluation on a massive scale. we could see entire companies disappear overnight. we could see entire countries central reserves emptied, overnight.
it could make the AIG bailout look like a child asking for 5 cents for a gumball.
it would be like taking a cigarette lighter and throwing it into a fireworks factory.
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some people want to see the factory blow up. yes, it would be awesome, and serve the factory owners right for running such a sweatshop. but it is completely irresponsible to allow it to happen.
the only safe way to take apart the fireworks factory is brick by brick, slowly, over time. not in a massive explosion that will destroy an entire quadrant of the city.