U.S. Banks Urge Congress on Debt-Limit Deal

[Zr1Trader]

Money=Debt in our current economic structure.

It ends with Money/Debt rising in a parabolic manner until too much money is chasing too few goods.

Bottom line this structure works for so long until it doesn't . Ultimately we will have to go back to the old structure(gold standard) once this current structure collapses.

 

[macroman]

investment banks in trouble. discussion would not be complete without mentioning aus grown desert flower "babcock & Brown wind"



it is gone with the wind all the B's of borrowed money with it.

 

[macroman]

this scenario is underestimated at this point:
elections soon. obama has not done anything distinguishable yet.

gift to masses, and making himself real president, will be to scare away looters - investment bankers&co. As these guys realised he is for real, started beeing nice.

or they are bluffing everyone away from long positions

my crystall ball saying it is for real at this point.

Buy more insurance please !

else this could really get volatile !

 

[Random.Capital]

Quote from macroman:

obama has not done anything distinguishable yet.

He doesn't have to. As long as he avoids annoying his base, all he has to do is keep facilitating internecine warfare inside the GOP and he'll split the vote enough to get a second term.

 

[Runningbear]

Letting the US default would be political suicide for all currently serving politicians on both sides. They would literally get spat on in the streets for doing something so destructive to the nation.

Debt problems aside, a default would collapse the worldwide economy for 25 years.

 

[Random.Capital]

Quote from Runningbear:

Letting the US default would be political suicide for all currently serving politicians on both sides.

I don't believe so. All the President has to say is "it's either default or fire the troops and cut your social security payments in half".

I strongly strongly suspect American voters would gladly choose default over "austerity".

 

[Runningbear]

Default is still austerity. It's austerity with 18% interest rates and a dollar worth 20% of its current value.

A lot of the traders here are too young to remember what happened when Argentina defaulted in 98. The dow fell 515 points in a single day.

And that's just some tin pot country that has very little economic significance. Imagine the world's reserve currency suddenly no longer being recognised as a store of value.

Default would have unintended and far reaching consequences. It would instantly bankrupt most americans with credit card debt. Mortgage payments would double. It would cause 90% of banks to collapse as their cash flow dried up. Any funds held in banks would evaporate. Most people's savings would vanish.

There would riots in every city across the country. It would make the great depression look like a holiday. 50% unemployment would be a new reality.

 

[Random.Capital]

Quote from Runningbear:

Default is still austerity.

It's possible it plays out like that. It's also very possible it doesn't, as despite everything, the US has a remarkable economy that will look even better than the competition in the face of globalized "austerity". For all the angst, the US is (almost) nothing like Argentina.

I doubt very much the US will have a problem refinancing, recapitalizing after a default, if for no other reason than a US default would cascade into a generalized default by everyone else.

It's all relative...

 

[dtan1e]

Quote from jem:

they are most likely major shareholders (we do not really know who owns the Fed, a private corp) in the Federal Reserve System.

If the u.s. were to change the status quo with respect to paying interest on our bonds... most outcomes would not be favorable for the owners of the Fed.

The first thing people would wonder... is why the hell is the u.s. paying interest on bonds when we could just be printing the money?

The bond arrangement has lead to serious inflation anyway.

that is a very good point, taking out the middle man (Fed), when you don't have to pay the middle man, its cheaper for everyone