What Happens If The USA Defaults?

No effect. the boat is sinking, & even if theres no default, the boat will keep sinking.

Default will just speed up the process.

The rest of the world goes down with it...

Enjoy!

If the US defaults, the Aussie dollar will go even higher than it is now.

one thing i never understood what does the US blow it's money on with such a crap safety net ... definitely not it's citizens.

other countries have healthy and robust social safety nets with a fraction of the debt load.

1. The federal government made at least $72 billion in improper payments in 2008.[1]

2. Washington spends $92 billion on corporate welfare (excluding TARP) versus $71 billion on homeland security.[2]

3. Washington spends $25 billion annually maintaining unused or vacant federal properties.[3]

4. Government auditors spent the past five years examining all federal programs and found that 22 percent of them -- costing taxpayers a total of $123 billion annually -- fail to show any positive impact on the populations they serve.[4]

5. The Congressional Budget Office published a "Budget Options" series identifying more than $100 billion in potential spending cuts.[5]

6. Examples from multiple Government Accountability Office (GAO) reports of wasteful duplication include 342 economic development programs; 130 programs serving the disabled; 130 programs serving at-risk youth; 90 early childhood development programs; 75 programs funding international education, cultural, and training exchange activities; and 72 safe water programs.[6]

7. Washington will spend $2.6 million training Chinese prostitutes to drink more responsibly on the job.[7]

8. A GAO audit classified nearly half of all purchases on government credit cards as improper, fraudulent, or embezzled. Examples of taxpayer-funded purchases include gambling, mortgage payments, liquor, lingerie, iPods, Xboxes, jewelry, Internet dating services, and Hawaiian vacations. In one extraordinary example, the Postal Service spent $13,500 on one dinner at a Ruth's Chris Steakhouse, including "over 200 appetizers and over $3,000 of alcohol, including more than 40 bottles of wine costing more than $50 each and brand-name liquor such as Courvoisier, Belvedere and Johnny Walker Gold." The 81 guests consumed an average of $167 worth of food and drink apiece.[8]

9. Federal agencies are delinquent on nearly 20 percent of employee travel charge cards, costing taxpayers hundreds of millions of dollars annually.[9]

10. The Securities and Exchange Commission spent $3.9 million rearranging desks and offices at its Washington, D.C., headquarters.[10]

11. The Pentagon recently spent $998,798 shipping two 19-cent washers from South Carolina to Texas and $293,451 sending an 89-cent washer from South Carolina to Florida.[11]

12. Over half of all farm subsidies go to commercial farms, which report average household incomes of $200,000.[12]

13. Health care fraud is estimated to cost taxpayers more than $60 billion annually.[13]

14. A GAO audit found that 95 Pentagon weapons systems suffered from a combined $295 billion in cost overruns.[14]

15. The refusal of many federal employees to fly coach costs taxpayers $146 million annually in flight upgrades.[15]

16. Washington will spend $126 million in 2009 to enhance the Kennedy family legacy in Massachusetts. Additionally, Senator John Kerry (D-MA) diverted $20 million from the 2010 defense budget to subsidize a new Edward M. Kennedy Institute.[16]

17. Federal investigators have launched more than 20 criminal fraud investigations related to the TARP financial bailout.[17]

18. Despite trillion-dollar deficits, last year's 10,160 earmarks included $200,000 for a tattoo removal program in Mission Hills, California; $190,000 for the Buffalo Bill Historical Center in Cody, Wyoming; and $75,000 for the Totally Teen Zone in Albany, Georgia.[18]

19. The federal government owns more than 50,000 vacant homes.[19]

20. The Federal Communications Commission spent $350,000 to sponsor NASCAR driver David Gilliland.[20]

21. Members of Congress have spent hundreds of thousands of taxpayer dollars supplying their offices with popcorn machines, plasma televisions, DVD equipment, ionic air fresheners, camcorders, and signature machines -- plus $24,730 leasing a Lexus, $1,434 on a digital camera, and $84,000 on personalized calendars.[21]

22. More than $13 billion in Iraq aid has been classified as wasted or stolen. Another $7.8 billion cannot be accounted for.[22]

23. Fraud related to Hurricane Katrina spending is estimated to top $2 billion. In addition, debit cards provided to hurricane victims were used to pay for Caribbean vacations, NFL tickets, Dom Perignon champagne, "Girls Gone Wild" videos, and at least one sex change operation.[23]

24. Auditors discovered that 900,000 of the 2.5 million recipients of emergency Katrina assistance provided false names, addresses, or Social Security numbers or submitted multiple applications.[24]

25. Congress recently gave Alaska Airlines $500,000 to paint a Chinook salmon on a Boeing 737.[25]

26. The Transportation Department will subsidize up to $2,000 per flight for direct flights between Washington, D.C., and the small hometown of Congressman Hal Rogers (R-KY) -- but only on Monday mornings and Friday evenings, when lawmakers, staff, and lobbyists usually fly. Rogers is a member of the Appropriations Committee, which writes the Transportation Department's budget.[26]

27. Washington has spent $3 billion re-sanding beaches -- even as this new sand washes back into the ocean.[27]

28. A Department of Agriculture report concedes that much of the $2.5 billion in "stimulus" funding for broadband Internet will be wasted.[28]

29. The Defense Department wasted $100 million on unused flight tickets and never bothered to collect refunds even though the tickets were refundable.[29]

30. Washington spends $60,000 per hour shooting Air Force One photo-ops in front of national landmarks.[30]

31. Over one recent 18-month period, Air Force and Navy personnel used government-funded credit cards to charge at least $102,400 on admission to entertainment events, $48,250 on gambling, $69,300 on cruises, and $73,950 on exotic dance clubs and prostitutes.[31]

32. Members of Congress are set to pay themselves $90 million to increase their franked mailings for the 2010 election year.[32]

33. Congress has ignored efficiency recommendations from the Department of Health and Human Services that would save $9 billion annually.[33]

34. Taxpayers are funding paintings of high-ranking government officials at a cost of up to $50,000 apiece.[34]

35. The state of Washington sent $1 food stamp checks to 250,000 households in order to raise state caseload figures and trigger $43 million in additional federal funds.[35]

36. Suburban families are receiving large farm subsidies for the grass in their backyards -- subsidies that many of these families never requested and do not want. [36]

37. Congress appropriated $20 million for "commemoration of success" celebrations related to Iraq and Afghanistan.[37]

38. Homeland Security employee purchases include 63-inch plasma TVs, iPods, and $230 for a beer brewing kit.[38]

39. Two drafting errors in the 2005 Deficit Reduction Act resulted in a $2 billion taxpayer cost.[39]

40. North Ridgeville, Ohio, received $800,000 in "stimulus" funds for a project that its mayor described as "a long way from the top priority."[40]

41. The National Institutes of Health spends $1.3 million per month to rent a lab that it cannot use.[41]

42. Congress recently spent $2.4 billion on 10 new jets that the Pentagon insists it does not need and will not use.[42]

43. Lawmakers diverted $13 million from Hurricane Katrina relief spending to build a museum celebrating the Army Corps of Engineers -- the agency partially responsible for the failed levees that flooded New Orleans.[43]

44. Medicare officials recently mailed $50 million in erroneous refunds to 230,000 Medicare recipients.[44]

45. Audits showed $34 billion worth of Department of Homeland Security contracts contained significant waste, fraud, and abuse.[45]

46. Washington recently spent $1.8 million to help build a private golf course in Atlanta, Georgia.[46]

47. The Advanced Technology Program spends $150 million annually subsidizing private businesses; 40 percent of this funding goes to Fortune 500 companies.[47]

48. Congressional investigators were able to receive $55,000 in federal student loan funding for a fictional college they created to test the Department of Education.[48]

49. The Conservation Reserve program pays farmers $2 billion annually not to farm their land.[49]

50. The Commerce Department has lost 1,137 computers since 2001, many containing Americans' personal data.[50]

That is some seriously fucked up shit right there....

If they default, they lose their " perfect " credit rating, and this results in higher interests on outstanding loans. You get it?

Check your history books, but the US credit rating was downgraded already about 6 years ago while Bush was in power ...

I didn't read every part of it.

BUT.

And it's a big one. Take that money away and what's the consequences?

All that wasted money flowed into the US economy. Then some flowed out buying imports.

Look at Greece, cutting Government spending is about the only thing a Government can do. But it leaves a lot of people poorer, a lot of shops close, a lot of people lose their jobs, a lot of people go on welfare and then a lot of people decide they have nothing to lose and decide you have what they want.

And these guys have guns like you and don't give a shit.

The problem isn't just Government spending. It's moving the manufacturing base overseas or buying imports. How many here drive a BMW, Mercedes, Jag or any other foreign car. Where was your computer manufactured, not assembled actually made. Look at the labels on your clothes. And the list goes on.

The easy fix is cut Government waste, but it won't work as well as higher taxes or higher manufacturing in the US . Same goes for most Western economies.

WOW crazy shit, even if 50% is correct, that is a good place to start saving money.

im in Australia and im rich so i dont care

nothing happens

i agree.

Honestly no one knows.
Both sides are saying different stuff will or wont happen.
I believe the gov is so big, that honestly they just do not know.

I do not think we need to raise taxes, I think we need to close tax loop holes.
We need to cut gov waste, stupid programs, helping other countries, end wars ( actually bring troops home)
We need to collect what other countries owe us, or say hey China, here is our IOU from these other countries.
We need to rework several social programs, from welfare to farm programs.
If Gov workers say this will all cost to much, Bull find some cheaper workers.

cut military spending to 1 billion. problem solved. spending 2000 billion dollars per year is pure insanity.

49. The Conservation Reserve program pays farmers $2 billion annually not to farm their land.[49]

This program IS needed, just not sure how much.
I own 80 acres and I am in the CRP program, I get around $1,100 a year, but my land taxes are around $800+ a year.
For as far as you can see around my land, it is all farmland.
The CRP helps with wildlife, and keeping the wind from blowing all the top soil away. (dust bowl)

Ridiculous govt spending - small amount of people making alot of money.
Exporting jobs, importing goods - small amount of people making alot of money.
Defense spending - small amount of people making alot of money. Sure alot of people make a living in defense industries but this is a small amount compared to the damage done to the country's economic viability affecting millions and millions of people.

benefit the few at the expense of many, and so it goes until one day...fail.

I laugh and cringe when all the news is about how these politicians can't agree on budget in order to lift the debt ceiling. Lift the debt ceiling.

Yes that's what's really important, the ability to add more financial stress to the system and keep future generations buried.

I'm in the USA and I'm rich, so I hope the dollar falllllls of the face of the planet. The fact remains, is I will come out in the end. Fuck everybody, go me

Congress already voted to raise the debt ceiling, the democrats and the Senate are stopping it from happening.

What will happen if we default? We wont. We have enough revenue coming in to pay our debts and keep paying our social programs (short term) other things will need to be cut (short term) in order to do it.

In theory here is what will likely happen. I say theory because nobody really knows for sure:

We have enough money to pay a lot of our bills so social security, military pay etc will get handled, at least for a short period of time. However, we will quickly run out. What I read is that if the default lasts longer than 7-10 days we will be out of money and things will start happening.

Among the possibilities are that our credit rating falls which could raise interest rates and cause some serious inflation. We could also see military personnel not getting paid. There is a chance some Social Security and Medicare/Medicaid won't get paid and there are likely government contractors that wouldn't get paid.

The main issue is that if we default, our credit rating goes down and interest goes up it could cause chaos in other markets as they lose confidence in us. This, hypothetically, could cause a huge collapse in markets around the world which could potentially lead to pulling us into another recession.

I really don't think we will default. There are enough options on the table that something will get done. Right now our leaders are just playing a game of chicken to see who blinks first. Eventually someone will. If nobody does and we are left to default both sides will play the blame game. Whichever side ends up on the bottom of that game will likely find themselves out of a job after the 2012 election and neither party wants that.

Im no so sure about that. If the US default results in a global economic slowdown, which in turn means lower exports for China to say US and Euro. Then you have as a result, a lower demand for commodities.

Australia's economy is driven largely by demand for commodities, especially from China. Plus if there is a global slow down its a risk off trade and thus traditionally not great for Aussie dollar.

Ron Paul lovers are gonna have an orgasm when they read his latest post:

http://www.bloomberg.com/news/2011-0...-ron-paul.html

This precisely-
"It isn?t too late to return to fiscal sanity. We could start by canceling out the debt held by the Federal Reserve, which would clear $1.6 trillion under the debt ceiling. Or we could cut trillions of dollars in spending by bringing our troops home from overseas, making gradual reforms to Social Security and Medicare, and bringing the federal government back within the limits envisioned by the Constitution. Yet no one is willing to step up to the plate and make the hard decisions that are necessary. Everyone wants to kick the can down the road and believe that deficit spending can continue unabated.

Unless major changes are made today, the U.S. will default on its debt sooner or later, and it is certainly preferable that it be sooner rather than later.

If the government defaults on its debt now, the consequences undoubtedly will be painful in the short term. The loss of its AAA rating will raise the cost of issuing new debt, but this is not altogether a bad thing. Higher borrowing costs will ensure that the government cannot continue the same old spending policies. Budgets will have to be brought into balance (as the cost of servicing debt will be so expensive as to preclude future debt financing of government operations), so hopefully, in the long term, the government will return to sound financial footing."

Simple. Dollar up, market down.

so ronnie paul says

bull fucking shit.

x2

Political games.

I'm going to ask a question, and this is not a joke. Who thinks that now would be a good time to get that Glock I've been thinking about buying? Or should I go for the Mossberg combat shotgun?

you gonna take out ron paul?

BOTH!!!!

But, not for this debt default thing.

Political games.

That's the common wisdom, but it's wrong.


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Get both, each is useful.

But most importantly, learn how to shoot them and practice often.

I think you have this backwards.



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I had read that on CNN.com. Here is what the story said: "If Congress fails to raise the $14.3 trillion debt limit by August 2, Americans could face rising interest rates, a declining dollar and increasingly jittery financial markets, among other problems."

I would guess that if the value of the dollar continues to drop and interest rates go up we would see inflation correct? I may be wrong about that though.

Although I am curious. I you are one of the guys on this board that really seem to understand the markets and financial sector. If default happens what do you think would take place?

http://www.wtfnoway.com/

A series of new graphics showing how much $ we are actually talking about

Really? How so?

The way they have it phrased is possible, but it doesn't read as cause and effect. I probably took your statement the wrong way (as one causing the other). Weakness in currency is definitely part of the inflation picture. Of course, specific prices may rise on normal supply and demand factors, even with a strengthening currency.

Rising interest rates are normally associated with reducing inflation because it is designed to slow down demand in a heating economy, thus reducing prices.

My take on what would happen (actually, this is what I think is likely anyway over the next 6-12 months) is that defaulting on the debt will put additional pressure on an already limp economy and actually have the temporary effect of another "flight to quality" where the Dollar strengthens (or remains range bound) and treasuries have a decent bid under them.

Under this scenario, I expect what minimal inflation we have to peter out and a general disinflation (possibly slipping into deflation) to take hold. Basically, the same type of pressures that occurred in 2008 when we saw broad assets declines in everything except the US$ and Bonds (although the longer this goes on the more difficult it will be for the long end to hold yields this low).


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i can start the bidding on my remingington 870 tactical assault 12 gauge shotgun at $500. standard issue for many police force, para-military, & bad asses.

bonus: already named shottie mcboomerson. fresh too, never been on a killing spree (close a couple times though) & ready for the financial apocolypse as it shoots pretty much anything you can shove in the hole!

Read this

http://www.newswithviews.com/Coffman/mike126.htm

A US default is a non-issue. It will not happen. Always remember that the media is a brainwashing machine. They will say whatever they believe will sell. The reality is that an agreement with concessions on both sides will be reached just before the deadline. The media is simply describing the negotiations in a dramatic way that entices the mainstream, so they can cash in on ratings. The more people that watch the news, the more they can charge advertisers for their commercials.

In simple terms, two fold:

1) Only very recently did China overtake the US as the largest manufacturer in the world. In fact, In 2008, US manufacturing output was greater than that of the manufacturing output of China, India, and Brazil combined, despite manufacturing being a very small portion of the entire US economy as compared to most other countries. The manufacturing China is doing is mostly low skilled (ie; they are good at making Nikes, T-shirts, toothpaste and stuff that falls apart real quick). Contrariwise, the US is the leader in manufacturing aerospace, petrochemicals, telecommunications, military, agricultural and construction machinery, food processing and other high end, high skilled goods.

2) Because the loss of certain manufacturing jobs -- while I have sympathy for the specific individuals, towns, etc. that suffer as a result -- is only one part of the equation. Comparative Advantage raises wealth in total. IOW, there are larger gains than losses. They just don't accrue to everybody equally. I would even go as far as to say that attempts to keep the manufacturing jobs in question in the US actually retards the development of high skilled and/or knowledge-based exports, by raising the price of manufactured goods.



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Interesting. I was reading the other day that some experts expect silver and gold to decrease in value over the next few months in a "correction." Do you think something like a short term strengthening of the dollar could lead to this occurring?

I started buying gold and silver in the late 90's when gold was $250-$280 and silver was $5. I got out to soon (I exited 90% of my holdings over a year ago), because it seemed a bit frothy to me and I was worried a further deflation may not be avoided.

So yes, I think they are vulnerable to a decline (based on the scenario I gave in the other post), but I've been wrong so far and left some money on the table.

I do think in the big picture (3-5 years), the US$ will continue to decline and gold/silver will see more gains. I hope I have a chance to buy them again on the predicted correction you read about.



ETA: I don't expect the hyperinflation that a lot of people are forecasting and I see that as the least likely scenario at this point.

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"34. Taxpayers are funding paintings of high-ranking government officials at a cost of up to $50,000 apiece."

seriously hahaha

I find myself wishing I had bought more silver several years back. When I got into it Silver was around $7-$8 per ounce and today it is around $40. I still have the coins I bought (sadly not too many) and might sell them if it starts to drop too much then buy again once it bottoms out and starts to rise again.

I guess hindsight is always 20/20

it wont happen

Too big to fail doesn't apply only to Bank of America.