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Forums - General - Someone thinks America will collapse soon...

scat398 on 31 July 2011

I still find it funny how are politicians continue to ignore the fact that in the next 15 years we won't be able to pay the interest on our debt let alone our actual expenditures.

I hate to say it, but civil war seems to be the only possible outcome in the next 15 years. Eventually people will take to the streets when they have no jobs and a debt that can never be paid.



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badgenome on 31 July 2011
Akvod said:
badgenome said:
Akvod said:


The Democrats never dragged out a debt ceiling debate until 2 days before the treasury runs out of money.

This is madness. The damage is already done, whether we raise the debt ceiling or not. If our legislative branch is going to put the world economy at risk until (?) the last minute, who knows if they're going to do it again in the future.

Firstly, the treasury cannot run out of money unless it chooses to. And if having billions of dollars flowing in every single day is "running out of money", then I only wish I could run out of money. Second, I would argue that the Democrats are doing exactly that, just as much as the Republicans. After all, it's the Republican House which has produced two bills, both of which were immediately killed by the Senate without even taking them up for debate. Maybe there are good reasons not to "rush" a balanced budget amendment through like this, but the second bill was pronounced dead on arrival even before Boehner had to tack on a BBA, and that despite the fact that it was remarkably similar to Reid's own bill - aside from the fact that Boehner's bill has, you know, actual cuts (to the extent we are even talking about cuts, since these are all actually only reductions in the growth of spending) instead of bullshit accounting tricks. Reid couldn't even muster a substantive reason as to why, unless you count "EWWWW IT SMELLS LIEK TEH T PARTY!!111" as substantive (which you might).

If you really think the damage done by these dickheads squabbling over the debt ceiling is worse than that done by the debt itself... I really don't know what to say to that. That's pretty out there.

The treasury is running out of money... that's a fact. Unless you're proposing that the platinum coin idea is a viable one. Still doesn't change the fact that we're trying to avoid having to resort to extreme measure to pay our obligations.

A balanced budget adment is completely out of the question. It's not a matter of "rushing" it. It's simply radical.

The squabling is ultimately due to the Republicans. The President initially wanted to just have a debt ceiling raise, no strings attached. Just like all the other times. The Republicans are the ones that actually tied this to the deficit. Not the Democrats. The Republicans wanted to use this as an opportunity to enact spending cuts.

Uh... no. Even leaving aside the fact that American fiscal policy has long boiled down to, "Fire up the presses, boys!" - which risks inflation, sure, but you've long argued that we're facing deflation, not inflation, no? - failing a debt ceiling deal, we can still easily meet our real obligations with the money that continues to come in on a daily basis.

I mean, I know you're this diehard believer in Keynesian nonsense who hangs onto the every utterance of Paul Krugabe like it's the fucking Gospel, but in what way is a balanced budget amendment (especially one with so many exemptions for defense and entitlements as the Republicans' worthless attempt at one) more "radical" than this ruinous deficit spending? When so many Democrats agree that spending needs to be cut, to the point that even Obama professes to not want a clean debt ceiling raise anymore, what on Earth is the argument against agreeing to cuts now? Given the similarities between the Reid and Boehner bills, Reid's entire reason for killing Boehner's bill boils down to, "I don't wanna!" That doesn't exactly jibe with his stance that we're facing ahhhhhhhh, financial armageddon! If anything, not only are the Democrats playing politics with the situation just as much as the Republicans, they're playing an even stupider game here.



richardhutnik on 31 July 2011
mrstickball said:

Someone just placed a $1 billion dollar short on the US today. I believe it was none other than George Soros who just shuttered his business due to his worries about federal regulation. Also one of the few people that likely knows enough about America's inner workings to risk so much money.

http://moneymorning.com/2011/07/25/the-1-billion-armageddon-trade-placed-against-the-united-states/

To understand what this means: Someone took $1 billion dollars and placed it on the US losing its AAA credit rating, which would likely come from a default or other source that essentially spells doom for the US (a loss in credit rating means we pay more interest out on our bonds as investors will demand more money for their riskier play).

If whomever is right, they will win 10:1 against their bet, or would make about $10 billion USD from the deal. Scary stuff, because few people in the world would risk that much personal capital unless they knew it was going to happen.

Bets would be an appropriate word here.  Exactly what casino or bookie is running this game?  Remind me again how being able to place bets like this is actually investing and not gambling.  I kinda don't see how this quantifies as investing.  Since when does hedging against events count as anything, outside of a game to make money?  I understand diversifying one's portfolio to own assets that go against each other depending on market conditions.  But exactly what assets are owned here?  Heck, what debt is owned here connected to assets?

Oh, derivatives?  Hmm... ok.



Akvod on 31 July 2011
badgenome said:
Akvod said:
badgenome said:
Akvod said:


The Democrats never dragged out a debt ceiling debate until 2 days before the treasury runs out of money.

This is madness. The damage is already done, whether we raise the debt ceiling or not. If our legislative branch is going to put the world economy at risk until (?) the last minute, who knows if they're going to do it again in the future.

Firstly, the treasury cannot run out of money unless it chooses to. And if having billions of dollars flowing in every single day is "running out of money", then I only wish I could run out of money. Second, I would argue that the Democrats are doing exactly that, just as much as the Republicans. After all, it's the Republican House which has produced two bills, both of which were immediately killed by the Senate without even taking them up for debate. Maybe there are good reasons not to "rush" a balanced budget amendment through like this, but the second bill was pronounced dead on arrival even before Boehner had to tack on a BBA, and that despite the fact that it was remarkably similar to Reid's own bill - aside from the fact that Boehner's bill has, you know, actual cuts (to the extent we are even talking about cuts, since these are all actually only reductions in the growth of spending) instead of bullshit accounting tricks. Reid couldn't even muster a substantive reason as to why, unless you count "EWWWW IT SMELLS LIEK TEH T PARTY!!111" as substantive (which you might).

If you really think the damage done by these dickheads squabbling over the debt ceiling is worse than that done by the debt itself... I really don't know what to say to that. That's pretty out there.

The treasury is running out of money... that's a fact. Unless you're proposing that the platinum coin idea is a viable one. Still doesn't change the fact that we're trying to avoid having to resort to extreme measure to pay our obligations.

A balanced budget adment is completely out of the question. It's not a matter of "rushing" it. It's simply radical.

The squabling is ultimately due to the Republicans. The President initially wanted to just have a debt ceiling raise, no strings attached. Just like all the other times. The Republicans are the ones that actually tied this to the deficit. Not the Democrats. The Republicans wanted to use this as an opportunity to enact spending cuts.

Uh... no. Even leaving aside the fact that American fiscal policy has long boiled down to, "Fire up the presses, boys!" - which risks inflation, sure, but you've long argued that we're facing deflation, not inflation, no? - failing a debt ceiling deal, we can still easily meet our real obligations with the money that continues to come in on a daily basis.

I mean, I know you're this diehard believer in Keynesian nonsense who hangs onto the every utterance of Paul Krugabe like it's the fucking Gospel, but in what way is a balanced budget amendment (especially one with so many exemptions for defense and entitlements as the Republicans' worthless attempt at one) more "radical" than this ruinous deficit spending? When so many Democrats agree that spending needs to be cut, to the point that even Obama professes to not want a clean debt ceiling raise anymore, what on Earth is the argument against agreeing to cuts now? Given the similarities between the Reid and Boehner bills, Reid's entire reason for killing Boehner's bill boils down to, "I don't wanna!" That doesn't exactly jibe with his stance that we're facing ahhhhhhhh, financial armageddon! If anything, not only are the Democrats playing politics with the situation just as much as the Republicans, they're playing an even stupider game here.

There is a legal limit to how much paper money the treasury can print. Like I said, unless you're seriously considering that the Platinum coin idea is a good option.

This isn't a matter of Keyenesian, Monetarism, etc anymore. Like I said, the damage is already fucking done. Enjoy it. Economist or not, you should think it's stupid to use the debt ceiling and our debt obligations as a bargaining chip (hostage is a better word).

Alexander Hamilton is fucking crying in his grave. Representatives were supposed to be the best of us, the ones that stand above popularism. I seriously don't know what's going to happen now. I really think that we're going to see some serious shit in the coming years. You'll see an enboldened tea party. Sooner or later you'll see a really left/socialist group (which, btw, is what Keyenes was afraid of happening) emerging. You might see a centrist uprising.

Anyway, best case scenario is that the entire world is going to go through a lost decade. Low inflation/deflation. Rock bottom interest rates (IF investors don't lose hope in the US's credibility. Again, this is best case scenario). Low consumer confidence. Low business spending.

We're actually hurting our ability to lower the deb-to-GDP ratio too. *shrug* so everyone loses.



NJ5 on 01 August 2011

So Obama and congress leaders finally made a deal which hasn't been voted on yet, "cutting" around $2 trillion (i.e. spending $200 billion less per year than previously planned, which still means spending will increase).

This is not the $4 trillion that S&P was calling for, so will the U.S. get downgraded?



My Mario Kart Wii friend code: 2707-1866-0957

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HappySqurriel on 01 August 2011
NJ5 said:

So Obama and congress leaders finally made a deal which hasn't been voted on yet, "cutting" around $2 trillion (i.e. spending $200 billion less per year than previously planned, which still means spending will increase).

This is not the $4 trillion that S&P was calling for, so will the U.S. get downgraded?


You forgot to mention that a small increase in interest rates on government debt will soon erase all of these so-called cuts, and interest rates will likely increase by far more than that in the not too distant future ...



NJ5 on 01 August 2011
HappySqurriel said:
NJ5 said:

So Obama and congress leaders finally made a deal which hasn't been voted on yet, "cutting" around $2 trillion (i.e. spending $200 billion less per year than previously planned, which still means spending will increase).

This is not the $4 trillion that S&P was calling for, so will the U.S. get downgraded?


You forgot to mention that a small increase in interest rates on government debt will soon erase all of these so-called cuts, and interest rates will likely increase by far more than that in the not too distant future ...


Yeah, they're so low that they don't really have anywhere to go but up (although Japan did manage to maintain low interest rates for a veeeery long time).



My Mario Kart Wii friend code: 2707-1866-0957

silicon on 01 August 2011

err... not sure if anyone pointed this out but it's not really a bet that America will collapse. It's basically insurance for his current American investments.

If he benefits from the short, most likely all his other American investments will lose money but he doesn't lose as much as he would have otherwise.



Kasz216 on 01 August 2011
Akvod said:
badgenome said:
Akvod said:
badgenome said:
Akvod said:


The Democrats never dragged out a debt ceiling debate until 2 days before the treasury runs out of money.

This is madness. The damage is already done, whether we raise the debt ceiling or not. If our legislative branch is going to put the world economy at risk until (?) the last minute, who knows if they're going to do it again in the future.

Firstly, the treasury cannot run out of money unless it chooses to. And if having billions of dollars flowing in every single day is "running out of money", then I only wish I could run out of money. Second, I would argue that the Democrats are doing exactly that, just as much as the Republicans. After all, it's the Republican House which has produced two bills, both of which were immediately killed by the Senate without even taking them up for debate. Maybe there are good reasons not to "rush" a balanced budget amendment through like this, but the second bill was pronounced dead on arrival even before Boehner had to tack on a BBA, and that despite the fact that it was remarkably similar to Reid's own bill - aside from the fact that Boehner's bill has, you know, actual cuts (to the extent we are even talking about cuts, since these are all actually only reductions in the growth of spending) instead of bullshit accounting tricks. Reid couldn't even muster a substantive reason as to why, unless you count "EWWWW IT SMELLS LIEK TEH T PARTY!!111" as substantive (which you might).

If you really think the damage done by these dickheads squabbling over the debt ceiling is worse than that done by the debt itself... I really don't know what to say to that. That's pretty out there.

The treasury is running out of money... that's a fact. Unless you're proposing that the platinum coin idea is a viable one. Still doesn't change the fact that we're trying to avoid having to resort to extreme measure to pay our obligations.

A balanced budget adment is completely out of the question. It's not a matter of "rushing" it. It's simply radical.

The squabling is ultimately due to the Republicans. The President initially wanted to just have a debt ceiling raise, no strings attached. Just like all the other times. The Republicans are the ones that actually tied this to the deficit. Not the Democrats. The Republicans wanted to use this as an opportunity to enact spending cuts.

Uh... no. Even leaving aside the fact that American fiscal policy has long boiled down to, "Fire up the presses, boys!" - which risks inflation, sure, but you've long argued that we're facing deflation, not inflation, no? - failing a debt ceiling deal, we can still easily meet our real obligations with the money that continues to come in on a daily basis.

I mean, I know you're this diehard believer in Keynesian nonsense who hangs onto the every utterance of Paul Krugabe like it's the fucking Gospel, but in what way is a balanced budget amendment (especially one with so many exemptions for defense and entitlements as the Republicans' worthless attempt at one) more "radical" than this ruinous deficit spending? When so many Democrats agree that spending needs to be cut, to the point that even Obama professes to not want a clean debt ceiling raise anymore, what on Earth is the argument against agreeing to cuts now? Given the similarities between the Reid and Boehner bills, Reid's entire reason for killing Boehner's bill boils down to, "I don't wanna!" That doesn't exactly jibe with his stance that we're facing ahhhhhhhh, financial armageddon! If anything, not only are the Democrats playing politics with the situation just as much as the Republicans, they're playing an even stupider game here.

There is a legal limit to how much paper money the treasury can print. Like I said, unless you're seriously considering that the Platinum coin idea is a good option.

This isn't a matter of Keyenesian, Monetarism, etc anymore. Like I said, the damage is already fucking done. Enjoy it. Economist or not, you should think it's stupid to use the debt ceiling and our debt obligations as a bargaining chip (hostage is a better word).

Alexander Hamilton is fucking crying in his grave. Representatives were supposed to be the best of us, the ones that stand above popularism. I seriously don't know what's going to happen now. I really think that we're going to see some serious shit in the coming years. You'll see an enboldened tea party. Sooner or later you'll see a really left/socialist group (which, btw, is what Keyenes was afraid of happening) emerging. You might see a centrist uprising.

Anyway, best case scenario is that the entire world is going to go through a lost decade. Low inflation/deflation. Rock bottom interest rates (IF investors don't lose hope in the US's credibility. Again, this is best case scenario). Low consumer confidence. Low business spending.

We're actually hurting our ability to lower the deb-to-GDP ratio too. *shrug* so everyone loses.


Explain how the damage was done.

Like, explain why this is the fault of the Debt ceiling almost not getting raised. 

Versus the much more conservative outlooks of rating agencies after the failings of euro goves deficit spending, in most recent cases, Italy and Spain, and the general realization that the US is headed that way pretty hard with spending being waaaay over earnings and earning unlikely to increase any time due to the fact that the stimulus failed and GDP growth is horribly stagnant.

This was coming anyway, the debt ceiling just gave congress a "need to do something" attitude.

Without it.... the "damage" would of been done anyway... just probably a lot less uncerimoniously.

Why else do you think the US needs 4 trillion in cuts before being downgraded.  (A number that's actually going to seem too small once the CBO recalculates growth outlook.)



HappySqurriel on 01 August 2011
NJ5 said:
HappySqurriel said:
NJ5 said:

So Obama and congress leaders finally made a deal which hasn't been voted on yet, "cutting" around $2 trillion (i.e. spending $200 billion less per year than previously planned, which still means spending will increase).

This is not the $4 trillion that S&P was calling for, so will the U.S. get downgraded?


You forgot to mention that a small increase in interest rates on government debt will soon erase all of these so-called cuts, and interest rates will likely increase by far more than that in the not too distant future ...


Yeah, they're so low that they don't really have anywhere to go but up (although Japan did manage to maintain low interest rates for a veeeery long time).


Japan has a lot of things working in its favour though, primarily that it is an export driven nation with most of its debt held domestically ...

My concern for the United States is that right now every 1% increase in interest rates translates into an 8% increase in the deficit, in the near future this could be a 10% to 12% increase, and interest rates can increase 5% to 10% and still be considered historically average. The US government may be able to maintain interest rates at low levels for quite some time but (on the current path) they will eventually hit a point where the high deficit and high debt levels requires higher interest rates to maintain them, which creates a nasty feedback loop because these higher interest rates translate into a higher deficit and debt level.

While I doubt this point will be reached in the next 18 months, unless something changes the US will probably be in crisis long before you're in the 2016 election cycle; and possibly before you're in the 2014 mid-term elections.