Skip to content
 
If you can read this, either the style sheet didn't load or you have an older browser that doesn't support style sheets. Try clearing your browser cache and refreshing the page.

(Slate)   So what actually WILL happen if the government defaults? Massive unemployment? No credit? Depleted savings? Bank runs? Dogs and cats living together? Mass hysteria?   (slate.com) divider line
    More: Scary, credit history, mass hysterias, money market funds, saves, federal government, unemployment, capitols  
•       •       •

33931 clicks; posted to Main » on 24 Jul 2011 at 4:05 PM (7 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



729 Comments     (+0 »)
 


Oldest | « | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | » | Newest | Show all

 
2011-07-24 12:50:54 PM  
Well... that article did a great job at scaring the shiat out of me.
 
2011-07-24 12:57:42 PM  
Well, since the BANK$ would get farked, I'll bet we don't default.
 
2011-07-24 12:59:00 PM  
No sweat, Everyone knows how understanding and easy-going banks are, Remember the last time you were late on a loan or a mortgage payment? Remember when the bank said, "No problem. Just pay us back whenever you feel like it. Or don't. We don't care!" It will be just like that.

Meanwhile, back on planet Earth . . . .
 
2011-07-24 12:59:58 PM  
img43.imageshack.usView Full Size
 
2011-07-24 01:02:12 PM  
We are not going to default.
This is just another frenzy whipped up by the media in an attempt to scare the behoobies out of everyone.
It is a poker game and the Republicans are taking it to the wire, but not beyond.
 
2011-07-24 01:09:11 PM  

cehlen: We are not going to default.
This is just another frenzy whipped up by the media in an attempt to scare the behoobies out of everyone.
It is a poker game and the Republicans are taking it to the wire, but not beyond.


So much this. I'd actually respect those assholes more if the manned up and did it. But they won't, because they want to get reelected sometime in the next 300 years. Pussies. At least the terrorists actually believe in what they say.
 
2011-07-24 01:11:28 PM  
There will be a deal. It goes down to the wire like this all the time. The GOP just called the president's bluff because there's an election next year.
 
2011-07-24 01:16:27 PM  
what bluff?
 
2011-07-24 01:16:56 PM  
We probably won't default, but 44% of government spending disappears overnight. I'm sure nobody depends on that though, so we'll be good.
 
2011-07-24 01:18:34 PM  

SpeshilEdjukashin: There will be a deal. It goes down to the wire like this all the time. The GOP just called the president's bluff because there's an election next year.


When was the last time we were threatened with default by the party that controlled the House?
 
2011-07-24 01:18:49 PM  
So this is what a U.S. debt default would look like. The private sector would collapse. Unemployment would quickly surpass 20 percent. The government would shrink, but it would remain the employer of last resort

...and the tea party would be dancing in the streets! well....right up to the point where they get lynched by an angry mob of suddenly unemployed people who have nowhere to go and nothing to lose.
 
2011-07-24 01:19:51 PM  
i.imgur.comView Full Size
 
2011-07-24 01:23:24 PM  

Weaver95: ...and the tea party would be dancing in the streets!


Are you kidding? The first farking thing the Tea Party would be doing is biatching and moaning that their social security check didn't arrive or that they were laid off from their 3rd grade teaching job because the federal grant fell through or that their job provided for by defense contracts was terminated.

Tea Party: cut government spending...on everyone else.
 
2011-07-24 01:24:49 PM  
i.imgur.comView Full Size


/yes, M Antoinette didn't mean this phrase exactly
 
2011-07-24 01:26:09 PM  
I don't know about you guys, but if there is a default, I plan on going to the local senior home and pimp slapping them all for voting for the teabaggers.
 
2011-07-24 01:26:48 PM  

Sudo_Make_Me_A_Sandwich: Are you kidding? The first farking thing the Tea Party would be doing is biatching and moaning that their social security check didn't arrive


Funny, i just saw a tea party family member who complained endlessly about "Entitlements,' just complain that their medicare copay go up from $0 to $200 dollars on an particular visit.
 
2011-07-24 01:28:08 PM  
August 2 if the debt ceiling is not raised:

The Dow drops 2000 points in the first hour of trading. As the electronic controls kick in, the freefall slows but the Dow is shut down by noon, after falling 3000 points. The NASDAQ and S&P show similar drops and are closed to protect the market.

The President demands that House leadership stop playing games and pass a debt ceiling increase. Rich investors, out around 25% already, call Boehner and Cantor and explain it to them.

In the meantime, the ripple has caused worldwide economic markets to drop at least ten percent. On the bright side, anyone who shorted the dollar is doing pretty well, as it's fallen more than ten percent against every other world currency by 6pm.

The Dow opens the morning of August 3 and drops another 500 points. A hastily worked "compromise" is reached which will raise the debt ceiling for nine months.

The Tea Party Republicans try unsuccessfully to blame the economic turmoil on Obama.

The markets generally flounder and within two weeks have lost another 15%. Several of the mid-to-large banks make it known that unless they are given a bailout, they will probably close and leave it to FDIC to insure investor losses, which will push the debt so much closer to the ceiling that it no longer will be reached in nine months, but rather in nine weeks.

Two months out, the Dow is still below 7000 when the rating agencies downgrade US debt. Within a week, the key Treasury lending rate goes up by 200 basis points. Every floating rate held by every credit cardholder and mortgage holder does likewise. Google searches for the term "strategic foreclosure" skyrocket.

Four months out, the Dow is around 6200. Banks are starting to feel a massive pinch as hundreds of thousands of homeowners find it impossible to pay their mortgages, what with unemployment at around 14% and mortgage interest rates double what they were on August 1. Small banks fail. The FDIC must deplete its reserves and tap into tax receipts to pay depositors.

The US Congress "fixes" the problem with a minor increase to the debt ceiling and massive cuts to social safety net programs. The war in Afghanistan continues. Taxes are lowered even further on everyone including the super-rich (this will be called a "household stimulus for the middle class" but will include capital gains cuts and massive corporate tax cuts to "save workplaces". It won't work).

The retail industry then has the worst Christmas season since the end of World War 2. By January 1, 2012, unemployment is at 15.5%. The percent of mortgages in nonpaying status hits 30% as many people realize that it's really not worth it at this point and they'd rather have the six to twelve months of rent-free living before being evicted, so they might be able to save up enough for a security deposit on a rental property.

February 2012: personal bankruptcies hit the highest point since the "reform" of bankruptcy law. Many judges, realizing the futility of forcing the unemployed into a payment plan, begin the wholesale release of bankrupt Americans from their debts. Bank failures reach the level they were at the height of the recession.

March 2012: The United Nations decrees that the world is in a global depression.

__________________________________________


Alternative scenario:

Before August 1: a compromise is reached which reduces US deficits by several trillion dollars over several years. This includes both spending cuts and a return to pre-Bush tax rates. The debt ceiling is lifted through January of 2013. US credit is not devalued. Barack Obama is re-elected in November of 2012.


---------

So, which of those do YOU think the Republicans are going to be happier with?
 
2011-07-24 01:31:26 PM  
tea party: 'YES! we collapsed the US economy! we totally rock!'
average voter: 'are you insane!? why would you do that!?'
TP: 'um...because Obama.'
AV: 'obama? what about obama!?'
TP: 'well he's illegal.'
AV: 'illegal.'
TP: 'yup. plus there's that whole black thing. oh, and socialism. And he's muslim! so there's that.'
AV: 'ok, let me see if I've got this straight - you collapsed the US economy and by extension caused massive world wide economic disruptions because Obama is a black socialist muslim commie atheist?'
TP: [thinks about it for a moment] 'yup, I think you've got it covered. isn't it great! we sure showed him the whatfor, didn't we?'
AV: 'wal-mart is burning. And...I think the mob is getting ready to lynch my broker...'
TP: 'oh the cops will stop those riots. And where the hell is the fire department!? that blaze is getting close to my neighborhood.'
AV: 'um...the cops and firemen are actually leading the riots.'
TP: 'I don't know what you are talking about.'
AV: 'you gutted the economy. NOBODY is getting paid now. For anything.'
TP: 'but...I wanted to get my perscription meds from wal-mart!'
AV: 'good luck getting past the looters.'
TP: '...but that's not FAIR!'
 
2011-07-24 01:32:49 PM  
i.imgur.comView Full Size
 
2011-07-24 01:34:56 PM  
Some of Obama's pet projects won't get funded. People on the dole will still get paid, as will the military.
 
wee
2011-07-24 01:36:34 PM  

dahmers love zombie: Barack Obama is re-elected in November of 2012.


And that's the problem. It's turned into a political game. Rather than think about ways to fix the goddam problem, each side if figuring out how to smear the other side as much as they can in hopes of looking good come election time. It's despicable.
 
2011-07-24 01:36:35 PM  

Weaver95: tea party: 'YES! we collapsed the US economy! we totally rock!'
average voter: 'are you insane!? why would you do that!?'
TP: 'um...because Obama.'
AV: 'obama? what about obama!?'
TP: 'well he's illegal.'
AV: 'illegal.'
TP: 'yup. plus there's that whole black thing. oh, and socialism. And he's muslim! so there's that.'
AV: 'ok, let me see if I've got this straight - you collapsed the US economy and by extension caused massive world wide economic disruptions because Obama is a black socialist muslim commie atheist?'
TP: [thinks about it for a moment] 'yup, I think you've got it covered. isn't it great! we sure showed him the whatfor, didn't we?'
AV: 'wal-mart is burning. And...I think the mob is getting ready to lynch my broker...'
TP: 'oh the cops will stop those riots. And where the hell is the fire department!? that blaze is getting close to my neighborhood.'
AV: 'um...the cops and firemen are actually leading the riots.'
TP: 'I don't know what you are talking about.'
AV: 'you gutted the economy. NOBODY is getting paid now. For anything.'
TP: 'but...I wanted to get my perscription meds from wal-mart!'
AV: 'good luck getting past the looters.'
TP: '...but that's not FAIR!'


1.bp.blogspot.comView Full Size
 
2011-07-24 01:37:49 PM  

IronTom: Some of Obama's pet projects won't get funded. People on the dole will still get paid, as will the military.


if the US defaults, nobody is getting paid. it would basically destroy the middle class.
 
2011-07-24 01:41:22 PM  

IronTom: Some of Obama's pet projects won't get funded. People on the dole will still get paid, as will the military.


Please, lay out how you would allocate government revenue in the event of a default. Show your work.
 
2011-07-24 01:42:05 PM  

Weaver95: IronTom: Some of Obama's pet projects won't get funded. People on the dole will still get paid, as will the military.

if the US defaults, nobody is getting paid. it would basically destroy the middle class.


Goes against the whole, slow boiling of the frog, thing.
 
2011-07-24 01:43:42 PM  
This thread is making me even more nervous. Somebody tell me it will be okay.
 
2011-07-24 01:44:02 PM  

Sudo_Make_Me_A_Sandwich: Are you kidding? The first farking thing the Tea Party would be doing is biatching and moaning that their social security check didn't arrive


This. Teabaggers really don't understand where the money comes from or even how basic cause and effect works (as evidenced by their idiotic rhetoric like, "keep the governments hands off our Medicare.") It's all a big game to them until something happens that affects them personally.
 
2011-07-24 01:48:09 PM  

dahmers love zombie: So, which of those do YOU think the Republicans are going to be happier with?


That really should be an easier question to answer than it actually is.
 
2011-07-24 01:49:22 PM  

dahmers love zombie: So, which of those do YOU think the Republicans are going to be happier with?


The first one, definitely. It didn't have Obama getting re-elected.
 
2011-07-24 01:50:52 PM  

Weaver95: IronTom: Some of Obama's pet projects won't get funded. People on the dole will still get paid, as will the military.

if the US defaults, nobody is getting paid. it would basically destroy the middle class.


Yep. As someone who lives by a military base and where most people around here are paid by the federal government,it wont be pretty.
 
2011-07-24 01:52:38 PM  

FishyFred: This thread is making me even more nervous. Somebody tell me it will be okay.


the tea party has said from the start that they will go to any lengths to destroy Obama. I thought that was just election year rhetoric, but now i'm starting to wonder if they really mean it. they might actually BE crazy enough to destroy the US economy just to bring down Obama.
 
2011-07-24 01:53:59 PM  

FishyFred: This thread is making me even more nervous. Somebody tell me it will be okay.


Better get to stretching out the poophole. What's the biggest cylindrical object you have in your house?
 
2011-07-24 01:55:35 PM  

Gwendolyn: Weaver95: IronTom: Some of Obama's pet projects won't get funded. People on the dole will still get paid, as will the military.

if the US defaults, nobody is getting paid. it would basically destroy the middle class.

Yep. As someone who lives by a military base and where most people around here are paid by the federal government,it wont be pretty.


Oh please tell me there is a military junta on the horizon!
 
2011-07-24 01:58:04 PM  

FishyFred: This thread is making me even more nervous. Somebody tell me it will be okay.


No, it probably won't be. I don't have any confidence the ceiling will be raised. That will force those 44% cuts on August 2nd, with the SS checks due out the next day.
 
2011-07-24 01:59:23 PM  

Jamespoon: Oh please tell me there is a military junta on the horizon!


We might end up something like this.
 
2011-07-24 02:00:22 PM  

IronTom: Some of Obama's pet projects won't get funded. People on the dole will still get paid, as will the military.


I've always wondered. How does it feel to be the unpaid defender of spineless cowards? Does it eat away at your soul, or does the hate sustain you?
 
2011-07-24 02:00:46 PM  
Here's the line from the article that scared the sh*t out of me: "Private credit, moreover, would disappear from the U.S. economic system, confronting the Federal Reserve with an unpleasant choice. Either it could step in and provide an enormous amount of credit directly to households and firms (much like Gosbank, the Soviet Union's central bank), or it could stand by idly while GDP fell 20 to 30 percent-the magnitude of decline that we have seen in modern economies when credit suddenly dries up."

In other words, a default by the US Gov't on its debts would result in a massive shift of power from the US Gov't to the Federal Reserve, a private bank. The bank would then begin offering credit directly to consumers. This would be, in effect, entirely privatizing US Economic policy.

This is why I think it could happen. When in doubt, bet in favor of the bankers. When in doubt, bet in favor of large corporations (when they're going up against either regular citizens or governmental agencies). More power for a private bank = gonna happen.
 
2011-07-24 02:04:39 PM  
So what industry is going to collapse and then be bailed out?

I missed out on buying Ford or Goldman Sachs stock during the last two failures, I want to be on top of this one.
 
2011-07-24 02:04:42 PM  

GAT_00: FishyFred: This thread is making me even more nervous. Somebody tell me it will be okay.

No, it probably won't be. I don't have any confidence the ceiling will be raised. That will force those 44% cuts on August 2nd, with the SS checks due out the next day.


I think Obama will cave and make a deal with the republicans. Obama's problem is that he's sane. he can see what will happen if the US defaults and the harm it will do to the country. I don't think he's willing to let that sort of hardship happen, because he's basically just trying to do his job and NOT get the country into more trouble than is already. he also doesn't want to hurt the little people over a clash of ideologies.

So Obama will cave. he'll find a way to pacify the Republicans, and try to pick his next fight more carefully. Because he's not going to let the country implode.
 
2011-07-24 02:06:18 PM  
No worries, you can all just come up and live in Canada. We have plenty of jobs, everything is free and maple syrup is abundant.

No seriously USA, get your shiat in order. The rest of the world doesn't want to be dragged down the drain just because some partiers of the tea variety want to prove a point.
 
2011-07-24 02:06:38 PM  

Linoleum_Blownapart: I missed out on buying Ford GM and Chrysler or Goldman Sachs stock during the last two failures, I want to be on top of this one.

 
2011-07-24 02:07:05 PM  

Weaver95: Jamespoon: Oh please tell me there is a military junta on the horizon!

We might end up something like this.


Interesting. Honestly I'm actually secretly hoping for something more like this:

th07.deviantart.netView Full Size
 
2011-07-24 02:09:08 PM  

miss diminutive: No worries, you can all just come up and live in Canada. We have plenty of jobs, everything is free and maple syrup is abundant.

No seriously USA, get your shiat in order. The rest of the world doesn't want to be dragged down the drain just because some partiers of the tea variety want to prove a point.


How about this deal. We'll give you back all the NHL teams we took away from you in exchange for you taking all our teabaggers. You can't put them in Nunavut for all we care.
 
2011-07-24 02:11:21 PM  

Weaver95: Jamespoon: Oh please tell me there is a military junta on the horizon!

We might end up something like this.


• The Islands: basically a federation of the Carribean - the islands and their people. I.e. also the Greater Miami area, heavily Cuban by now, and the Florida Keys. Could stretch all the way across the Caribbean Islands to include parts of Venezuela. Its capital would be Miami.


Central Florida has changed since this was written. Quite the mix of old New Englanders, Southerners, and Latin Americans.
 
2011-07-24 02:12:39 PM  

Weaver95: IronTom: Some of Obama's pet projects won't get funded. People on the dole will still get paid, as will the military.

if the US defaults, nobody is getting paid. it would basically destroy the middle class.


It didn't before

I would like to assume most of the middle class is not on the gvmt's payroll, but sadly most might be
 
2011-07-24 02:12:53 PM  

Party Boy: Weaver95: Jamespoon: Oh please tell me there is a military junta on the horizon!

We might end up something like this.

• The Islands: basically a federation of the Carribean - the islands and their people. I.e. also the Greater Miami area, heavily Cuban by now, and the Florida Keys. Could stretch all the way across the Caribbean Islands to include parts of Venezuela. Its capital would be Miami.

Central Florida has changed since this was written. Quite the mix of old New Englanders, Southerners, and Latin Americans.


well obviously things have changed somewhat since the book was originally written. That aside, the voting patterns from the last national election might be worth comparing with that map.
 
2011-07-24 02:12:58 PM  

Weaver95: So Obama will cave. he'll find a way to pacify the Republicans, and try to pick his next fight more carefully. Because he's not going to let the country implode.


This is part of the reason that he is literally the only major-party candidate I've ever voted for. He's a brilliant man, and a pragmatist. He's been trying to match the Republicans in their game of "wide-eyed stupid" and "stubborn to the death" to get a large, meaningful package together, but in the end he'll cave just to make sure the world doesn't end. Some of my progressive friends will be howling about democrats being spineless, but those of us in the sane middle will give a huge sigh of relief.
 
2011-07-24 02:14:05 PM  

IronTom: Weaver95: IronTom: Some of Obama's pet projects won't get funded. People on the dole will still get paid, as will the military.

if the US defaults, nobody is getting paid. it would basically destroy the middle class.

It didn't before

I would like to assume most of the middle class is not on the gvmt's payroll, but sadly most might be


um...what are you talking about? this has NEVER happened before.
 
2011-07-24 02:15:49 PM  

miss diminutive: No worries, you can all just come up and live in Canada. We have plenty of jobs, everything is free and maple syrup is abundant.

No seriously USA, get your shiat in order. The rest of the world doesn't want to be dragged down the drain just because some partiers of the tea variety want to prove a point.


I have a fiend with a standing offer of marriage if I ever get fed up and want to move to Canada with my kids. However he lives in Winnipeg. I'm just not sure anything the teaparty cooks up is worth that.
 
2011-07-24 02:16:04 PM  

WTF Indeed: miss diminutive: No worries, you can all just come up and live in Canada. We have plenty of jobs, everything is free and maple syrup is abundant.

No seriously USA, get your shiat in order. The rest of the world doesn't want to be dragged down the drain just because some partiers of the tea variety want to prove a point.

How about this deal. We'll give you back all the NHL teams we took away from you in exchange for you taking all our teabaggers. You can't put them in Nunavut for all we care.


Two franchises in exchange for millions of whiny, shortsighted douchebags? No deal.

Throw in Alaska and Hawaii and we'll talk.

/the freak states
 
Displayed 50 of 729 comments


Oldest | « | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | » | Newest | Show all



This thread is archived, and closed to new comments.

Continue Farking





On Twitter




In Other Media
Top Commented
Javascript is required to view headlines in widget.
  1. Links are submitted by members of the Fark community.

  2. When community members submit a link, they also write a custom headline for the story.

  3. Other Farkers comment on the links. This is the number of comments. Click here to read them.

  4. Click here to submit a link.

Report