[sreeb]

[quote=briansd1]

Think about it KSMountain, if you owed a whole year’s worth of income on your credit cards, and and wanted to pay them off quickly, you’d have to tighten the belt for a while.

[/quote]

Brian, the government now owes 5 whole years of its income.

Every year, it borrows another 8 months of its income.

It is going to take more than tightening the belt for a while.

[sreeb]

[quote=urbanrealtor]
The problem with us “becoming Greece” is that all of Greece’s debt was externally denominated.
[/quote]

That is not really correct in the sense it is for say Hungary since Greece is a member of the EMU and the EURO is their internal currency.

I agree that we have the option to devalue our currency and they don’t. I don’t agree that this is a painless solution to any of our problems.

The fundamental problem Greece has is that their interest rates are now much higher than their economies growth rate so their debt continually grows in relation to their ability to pay. They are running large deficits which also accumlate to their debt. Further, they need to continually refinance their debt at higher rates as it comes due which increases their deficits.

Most americans have a certain arrogance with regard to the dollar that leads them to believe it will be trusted world wide no matter how many we print, how big our debt grows, or how big a deficit we run. All past experience has shown it to be (almost) as good as gold and it will continue to be until there is a loss of confidence.

I don’t expect the next few years to be too confidence inspiring.

[sreeb]

[quote=urbanrealtor]
The problem with us “becoming Greece” is that all of Greece’s debt was externally denominated.
[/quote]

That is not really correct in the sense it is for say Hungary since Greece is a member of the EMU and the EURO is their internal currency.

I agree that we have the option to devalue our currency and they don’t. I don’t agree that this is a painless solution to any of our problems.

The fundamental problem Greece has is that their interest rates are now much higher than their economies growth rate so their debt continually grows in relation to their ability to pay. They are running large deficits which also accumlate to their debt. Further, they need to continually refinance their debt at higher rates as it comes due which increases their deficits.

Most americans have a certain arrogance with regard to the dollar that leads them to believe it will be trusted world wide no matter how many we print, how big our debt grows, or how big a deficit we run. All past experience has shown it to be (almost) as good as gold and it will continue to be until there is a loss of confidence.

I don’t expect the next few years to be too confidence inspiring.

[sreeb]

[quote=urbanrealtor]
The problem with us “becoming Greece” is that all of Greece’s debt was externally denominated.
[/quote]

That is not really correct in the sense it is for say Hungary since Greece is a member of the EMU and the EURO is their internal currency.

I agree that we have the option to devalue our currency and they don’t. I don’t agree that this is a painless solution to any of our problems.

The fundamental problem Greece has is that their interest rates are now much higher than their economies growth rate so their debt continually grows in relation to their ability to pay. They are running large deficits which also accumlate to their debt. Further, they need to continually refinance their debt at higher rates as it comes due which increases their deficits.

Most americans have a certain arrogance with regard to the dollar that leads them to believe it will be trusted world wide no matter how many we print, how big our debt grows, or how big a deficit we run. All past experience has shown it to be (almost) as good as gold and it will continue to be until there is a loss of confidence.

I don’t expect the next few years to be too confidence inspiring.

[sreeb]

[quote=urbanrealtor]
The problem with us “becoming Greece” is that all of Greece’s debt was externally denominated.
[/quote]

That is not really correct in the sense it is for say Hungary since Greece is a member of the EMU and the EURO is their internal currency.

I agree that we have the option to devalue our currency and they don’t. I don’t agree that this is a painless solution to any of our problems.

The fundamental problem Greece has is that their interest rates are now much higher than their economies growth rate so their debt continually grows in relation to their ability to pay. They are running large deficits which also accumlate to their debt. Further, they need to continually refinance their debt at higher rates as it comes due which increases their deficits.

Most americans have a certain arrogance with regard to the dollar that leads them to believe it will be trusted world wide no matter how many we print, how big our debt grows, or how big a deficit we run. All past experience has shown it to be (almost) as good as gold and it will continue to be until there is a loss of confidence.

I don’t expect the next few years to be too confidence inspiring.

[sreeb]

[quote=urbanrealtor]
The problem with us “becoming Greece” is that all of Greece’s debt was externally denominated.
[/quote]

That is not really correct in the sense it is for say Hungary since Greece is a member of the EMU and the EURO is their internal currency.

I agree that we have the option to devalue our currency and they don’t. I don’t agree that this is a painless solution to any of our problems.

The fundamental problem Greece has is that their interest rates are now much higher than their economies growth rate so their debt continually grows in relation to their ability to pay. They are running large deficits which also accumlate to their debt. Further, they need to continually refinance their debt at higher rates as it comes due which increases their deficits.

Most americans have a certain arrogance with regard to the dollar that leads them to believe it will be trusted world wide no matter how many we print, how big our debt grows, or how big a deficit we run. All past experience has shown it to be (almost) as good as gold and it will continue to be until there is a loss of confidence.

I don’t expect the next few years to be too confidence inspiring.

[sreeb]

[quote=urbanrealtor]
If we ever really had a problem paying on those bonds we could just literally print the cash and mail it to the bond holders.[/quote]

This is step one on the path to hyperinflation. It has been done many times in the past but I don’t think you can point to a single case where it had a good result.

You can do it but not without consequences.

[sreeb]

[quote=urbanrealtor]
If we ever really had a problem paying on those bonds we could just literally print the cash and mail it to the bond holders.[/quote]

This is step one on the path to hyperinflation. It has been done many times in the past but I don’t think you can point to a single case where it had a good result.

You can do it but not without consequences.

[sreeb]

[quote=urbanrealtor]
If we ever really had a problem paying on those bonds we could just literally print the cash and mail it to the bond holders.[/quote]

This is step one on the path to hyperinflation. It has been done many times in the past but I don’t think you can point to a single case where it had a good result.

You can do it but not without consequences.

[sreeb]

[quote=urbanrealtor]
If we ever really had a problem paying on those bonds we could just literally print the cash and mail it to the bond holders.[/quote]

This is step one on the path to hyperinflation. It has been done many times in the past but I don’t think you can point to a single case where it had a good result.

You can do it but not without consequences.

[sreeb]

[quote=urbanrealtor]
If we ever really had a problem paying on those bonds we could just literally print the cash and mail it to the bond holders.[/quote]

This is step one on the path to hyperinflation. It has been done many times in the past but I don’t think you can point to a single case where it had a good result.

You can do it but not without consequences.

[sreeb]

I don’t think you will see the lines drawn across income levels. I’m expecting it to come down to the productive class vs the leaching class. Much of the financial class has now joined the leaches.

I believe we are already so far gone that default is inevitable, the only question is who gets defaulted on.

It is going to come down to either the entitled (voters) or the bond holders (foreigners and bankers). By the time the 2012 elections are over, the bond holders will realize that it won’t be the entitled. Then we become Greece. Interest rates will spiral rapidly as first risk is priced in and then the budget effect of the higher rates creates positive feed back.

[sreeb]

I don’t think you will see the lines drawn across income levels. I’m expecting it to come down to the productive class vs the leaching class. Much of the financial class has now joined the leaches.

I believe we are already so far gone that default is inevitable, the only question is who gets defaulted on.

It is going to come down to either the entitled (voters) or the bond holders (foreigners and bankers). By the time the 2012 elections are over, the bond holders will realize that it won’t be the entitled. Then we become Greece. Interest rates will spiral rapidly as first risk is priced in and then the budget effect of the higher rates creates positive feed back.

[sreeb]

I don’t think you will see the lines drawn across income levels. I’m expecting it to come down to the productive class vs the leaching class. Much of the financial class has now joined the leaches.

I believe we are already so far gone that default is inevitable, the only question is who gets defaulted on.

It is going to come down to either the entitled (voters) or the bond holders (foreigners and bankers). By the time the 2012 elections are over, the bond holders will realize that it won’t be the entitled. Then we become Greece. Interest rates will spiral rapidly as first risk is priced in and then the budget effect of the higher rates creates positive feed back.

[sreeb]

I don’t think you will see the lines drawn across income levels. I’m expecting it to come down to the productive class vs the leaching class. Much of the financial class has now joined the leaches.

I believe we are already so far gone that default is inevitable, the only question is who gets defaulted on.

It is going to come down to either the entitled (voters) or the bond holders (foreigners and bankers). By the time the 2012 elections are over, the bond holders will realize that it won’t be the entitled. Then we become Greece. Interest rates will spiral rapidly as first risk is priced in and then the budget effect of the higher rates creates positive feed back.

[Author]

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