shutdown

[no_such_reality]

[quote=6packscaredy]What’s the worst case if they cannot compromise?[/quote]

Well, either Wall Street and the world investment community reacts the way they did to the shutdown and ignore it or the don’t.

Either we mint a trillion dollar coin or we default on our debt (or do we?) I don’t think we do, all they have to do is appropriate a modest sum to paying the interest.

So 50% investment collapse, or nothing.

Who knows. I tend to lean towards more chaos rather than less.

[The-Shoveler]

I vote for the trillion dollar coin.
Just because I think it would be hilarious.

[scaredyclassic]

A trillion dollar coin should large. Perhaps the size of a tractor tire. 20 of the nations Strongest men work full time toting it about.

[SK in CV]

[quote=no_such_reality][quote=6packscaredy]What’s the worst case if they cannot compromise?[/quote]

Well, either Wall Street and the world investment community reacts the way they did to the shutdown and ignore it or the don’t.

Either we mint a trillion dollar coin or we default on our debt (or do we?) I don’t think we do, all they have to do is appropriate a modest sum to paying the interest.

So 50% investment collapse, or nothing.

Who knows. I tend to lean towards more chaos rather than less.[/quote]

We don’t need a trillion dollar coin to solve this problem. We need a continuing resolution to appropriate funds so the government can spend money. We’re still two weeks away from the trillion dollar coin issue, though there are some republicans that have suggested that doubling down on the hostage taking and include the debt limit as an additional hostage along with the continuing resolution.

At least part of the market took notice yesterday afternoon that this thing may not end soon. Oddly the bond market hasn’t bought into it yet. When it does, look for yields to spike and bonds to fall. And if nothing is resolved by the next FOMC meeting, Bernanke will delay tapering again, but the Fed won’t be able to buy fast enough to keep bonds from falling.

[livinincali]

[quote=no_such_reality]
Either we mint a trillion dollar coin or we default on our debt (or do we?) I don’t think we do, all they have to do is appropriate a modest sum to paying the interest.
[/quote]

The government collects about 2.5+ trillion dollars in revenue each year from various sources. The interest on the debt is only about 500 billion. We aren’t going to default on the debt. We have plenty of money to make the interest payments on debt already incurred. We might default on some other obligation like sending out medicare checks on a timely basis or cutting social security checks by some percentage but the last thing the treasury is going to do is default on an interest payment for a bond.

[SK in CV]

[quote=livinincali]
The government collects about 2.5+ trillion dollars in revenue each year from various sources. The interest on the debt is only about 500 billion. We aren’t going to default on the debt. We have plenty of money to make the interest payments on debt already incurred. We might default on some other obligation like sending out medicare checks on a timely basis or cutting social security checks by some percentage but the last thing the treasury is going to do is default on an interest payment for a bond.[/quote]

How is not sending out medicare checks or cutting social security checks or failing to pay a defense contractor not defaulting on government debt? It is. Those are still government debts.

[scaredyclassic]

the fact that the markets seem unconcerned about serious repercussions makes me think that serious repercussions are more likely than currently thought.

[SK in CV]

[quote=6packscaredy]the fact that the markets seem unconcerned about serious repercussions makes me think that serious repercussions are more likely than currently thought.[/quote]

In 3 of 4 major indicators, the market is concerned. Equities are down. The dollar is down. Gold is up. The only market that doesn’t seem to be concerned this moment is the bond market. Though the immediate issue before congress is only mildly threatening to bonds, and that threat is probably offset by the pressure the hostage taking in Washington places on the Fed to maintain quantitative easing at current levels.

[livinincali]

[quote=SK in CV]
How is not sending out medicare checks or cutting social security checks or failing to pay a defense contractor not defaulting on government debt? It is. Those are still government debts.[/quote]

Failing to pay for work already performed may be a default but not issuing a social security check is not a default of debt. It could be classified as a default of a obligation created by a law that government passed but you can choose to change that law. Actually you can change that law rather easily as it isn’t in the constitution even though it would be impossible politically. That’s what happened in Greece when they had to reduce their budget. Government pension payments were cut dramatically.

Certainly you could cut 30% of military spending and they would have to cut employees and cancel orders for planes and ships but that wouldn’t be a default either. You could close the Department of Education and that wouldn’t constitute a default. You could cut the payments for various medical service Medicare will pay for. All of those things would be unpopular but they wouldn’t be a default of debt. They aren’t debt to begin with. They are spending obligations created by government bills that could be overturned.

The Supreme court has already ruled that social security is a tax and entitlement program so it isn’t a debt the federal government has to it’s people. See this supreme court case. http://en.wikipedia.org/wiki/Flemming_v._Nestor

[SK in CV]

[quote=livinincali][quote=SK in CV]
How is not sending out medicare checks or cutting social security checks or failing to pay a defense contractor not defaulting on government debt? It is. Those are still government debts.[/quote]

Failing to pay for work already performed may be a default but not issuing a social security check is not a default of debt. It could be classified as a default of a obligation created by a law that government passed but you can choose to change that law. Actually you can change that law rather easily as it isn’t in the constitution even though it would be impossible politically. That’s what happened in Greece when they had to reduce their budget. Government pension payments were cut dramatically.

Certainly you could cut 30% of military spending and they would have to cut employees and cancel orders for planes and ships but that wouldn’t be a default either. You could close the Department of Education and that wouldn’t constitute a default. You could cut the payments for various medical service Medicare will pay for. All of those things would be unpopular but they wouldn’t be a default of debt. They aren’t debt to begin with. They are spending obligations created by government bills that could be overturned.

The Supreme court has already ruled that social security is a tax and entitlement program so it isn’t a debt the federal government has to it’s people. See this supreme court case. http://en.wikipedia.org/wiki/Flemming_v._Nestor%5B/quote%5D

Mostly right, but you’ve changed the equation. If the government doesn’t pay debts already incurred, that’s defaulting on debt, irrespective of whether the debt is secured by a bond or a note. Social Security benefits are a current debt. They can’t be reduced without an act of congress. Certainly future expenditures can be cut, and effectively they already have been. Without a continuing resolution, most new government debt can’t be incurred. (SS benefits being one exception.) If this problem isn’t solved, the recession of 5 years ago will look like a delightful walk in the park. The debt limit will be almost incidental.

[The-Shoveler]

The longer this goes on the better my chances to see the trillion dollar coin.

and yes it should be very large, maybe the size of say a old winchell donut sign.

[UCGal]

[quote=paramount]”I want the government to shut down, I want them all to go home, I don’t ever want to see them go back to work, it’s the biggest waste of money in Earth’s history. This is why America is NO LONGER a FREE COUNTRY. It’s over unless we shut down this mammoth machine. SHUT IT ALL DOWN FOR GOOD!”[/quote]

You have this in quotes. Who are you quoting? I have no idea if this is your statement – or not.

But to clarify – It’s not just sending federal workers home.
* It’s WIC (formula and milk for low income children)
* It’s IRS call centers (which are pretty busy right now because if you filed for extension – that deadline is 10/15.)
* It’s VA call centers. And applications for VA disability are on hold.
* The NIH has halted research.
* It looks like if you’re a green card applicant – your visa app is on hold, even though the clock is still ticking on your application. (I work with several VERY concerned folks.)
* New applications for small business loans aren’t being accepted.
* Locally – Miramar air base is shutting down the commissary, the day care, the youth sports programs, etc. This impacts a lot of families in San Diego. I would imagine it’s similar at North Island.

[spdrun]

The longer this goes on, the larger the chances of Obamacare being repealed AND the public being enraged enough to make both houses blue come 2014. Two blue houses + Obama = a fighting change to pass a true national health insurance scheme with the private insurance companies cut out of providing basic coverage entirely. (They’d still be able to provide supplemental “Medigap” type policies.)

I’d call that a WIN! Hope the anti-public-insurance types dig their own grave here.

[no_such_reality]

[quote=SK in CV][quote=no_such_reality][quote=6packscaredy]What’s the worst case if they cannot compromise?[/quote]

Well, either Wall Street and the world investment community reacts the way they did to the shutdown and ignore it or the don’t.

Either we mint a trillion dollar coin or we default on our debt (or do we?) I don’t think we do, all they have to do is appropriate a modest sum to paying the interest.

So 50% investment collapse, or nothing.

Who knows. I tend to lean towards more chaos rather than less.[/quote]

We don’t need a trillion dollar coin to solve this problem. We need a continuing resolution to appropriate funds so the government can spend money. [/quote]

The Senate already rejected that.

I want the coin. It should be small, like a dime, made of 100% tin and not shiny. Obama should hold it up and say watch this, turn to Lew and hand it to him and say, make a deposit and pay our bills.

Just for sh*ts and giggles.

In all seriousness, the Media is being complete whores on this topic and could do the world a favor and really report the complete obstinance and idiocy occurring from both parties on it.

The Republicans will lose on this one and be perceived as even more disruptive and petty. Sadly, that will actual play well in somewhere between 33%-51% of the house districts.

[SK in CV]

[quote=no_such_reality]
The Senate already rejected that.

I want the coin. It should be small, like a dime, made of 100% tin and not shiny. Obama should hold it up and say watch this, turn to Lew and hand it to him and say, make a deposit and pay our bills.

Just for sh*ts and giggles.

In all seriousness, the Media is being complete whores on this topic and could do the world a favor and really report the complete obstinance and idiocy occurring from both parties on it.

The Republicans will lose on this one and be perceived as even more disruptive and petty. Sadly, that will actual play well in somewhere between 33%-51% of the house districts.[/quote]

You’re missing the point. The coin won’t solve the problem. The coin is a debt limit issue. That isn’t what is causing the shut down. The shut down is being caused by the house not passing a clean continuing resolution, not the senate. The senate already passed one.

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