WHAT HAPPENS IF NATIONAL DEBT LIMIT BREACHED

The most important issue facing the U.S. today is dealing with the national debt limit. Its ceiling is being reached. It must be paid. Failure to do so will, not may, result in economic disaster the likes of apparently not comprehended by Congressional Republicans nor the American people.

Default will make 1929 pale in comparison.

There have been a number of articles written this past week setting forth the consequences of a default. One of the best is that published in the New York Times 1/13 titled “The U.S. May Finally Breach The Debt Ceiling. Here’s Why That Would Be Very Bad.”

I am analyzing the problem in a two fold fashion, as the New York Times did.

Just approaching the debt limit can hurt the economy. It happened in 2011. Congressional Republicans and Obama engaged in a standoff. It was resolved just in time to actually avoid hitting the limit.

The result nevertheless had dire consequences. Coming close rattled investors, consumers and business owners. Stock prices plunged. Markets became volatile. It took the economy a half year to recover.

Interest rates rose. Mortgage rates jumped substantially. Home buying died.

The S&P downgraded the U.S.’ credit rating for the first time.

Consumer confidence and small business optimism plunged.

Note, all these things occurred where no default occurred. One came close, but only close.

The economy will have far worse consequences if the U.S. fails to pay the debt and a breach occurs.

Investors would demand higher interest rates on U.S. borrowing. Interest payments would rise dramatically.

The stock market would nose dive. Employee invest plans drop dramatically.

International bond markets would destabilize. U.S. Treasury bonds would no longer be seen as one of the safest investments in the world.

The U.S. would not be able to pay the salaries of federal employees.

Social Security checks would not go out.

Ten percent of the American economy would be killed immediately.

Three million jobs would be lost.

A 30 year mortgage would increase by an additional $130,000.

And finally, the national debt. Republicans are preaching how high it is and they intend to reduce it. Well, a default in meeting the pay the nation’s one year of bills would automatically result in $850 billion being added on to the national debt.

Congressional Republicans are balancing an economic nuclear bomb on their fingertips by playing the game they are. I cannot help but wonder if they actually know what they are doing.

Last night not Tom Brady’s time. The Cowboys beat the Bucs 31-14.

Brady did not play his usual game. One of the worst playoff games in his 23 year career.

Brady is 46. Time to pack it in. Retire.

He will still be recognized as the greatest professional quarterback in history. Perhaps the greatest professional pro football player ever.

Syracuse lost to Miami last night 82-78. Too bad. It would have been Syracuse’s biggest win of the season. Miami is ranked #17.

Syracuse fell short in the last minute of the game. Mintz made a “freshman mistake” and what might have been a win became a sure loss.

Such is life!

The South continues to fight the Civil War. Assholes one and all.

Martin Luther King Jr. is a federal holiday. Mississippi and Louisiana cannot let go their Confederate spirit. They celebrate the same day honoring Robert E. Lee. Both States refer to the day as King-Lee Day.

Virginia did the same till 2000. Arizona till 2018.

An icon and diva of the American and Italian cinema died yesterday. Gina Lollobrigida. She was 95.

On this day in 1961, President Eisenhower delivered his farewell address. In it, he warned against the “military-industrial complex.”

Over the years, his words have gone unheeded. Now, the complex is too big to control. We’re stuck with it.

Enjoy your day!

 

 

 

9 comments on “WHAT HAPPENS IF NATIONAL DEBT LIMIT BREACHED

  1. Perhaps those investors you talk about SHOULD be rattled and perhaps many of hose same investors should lose their financial shirts. Many of these “investors” vote republican, knowing all along this is what the Republican Congressmen said they would do.

    Maybe then these “investors” will be more responsible with their votes and wipe Republicans off the map for good!

    • Well “Steve” I don’t think that wishing the “investor” clazz be more responsible for their individual votes is something I should be careful about. Nor am I stupid enough to think they will ever change without some personal pain.

      What I am more worried about is you thinking you know what you are talking about.

      • So “Annie” what you seem to desire is for all Republicans to go away and have us completely controlled by Democrats? I believe people from both parties have some good ideas and some bad ideas. Balance between the two is helpful. I look at California as example of government run also exclusively by one party ( Democrats now) and see how a state that I lived in for 20 years in the 70’s and 80’s was become a place I could not live in. And things will get worse there as much of the $ that the tech people paid in taxes will not be there in next few years. In most cases, the government is a very ineffective provider of services. While I understand many other people do not agree with this, many others do.

  2. Your opinions are what I am most afraid of, and that’s what I said.

    Your post above about Republicans balancing out Democrats, at least in the last several decades, is not reality, rather total political hogwash. Let’s not forget that Regan left us with a terrible recession that Bush couldn’t fix. Clinton on the other had did and left us with a surplus. Bush followed that with Bank frauds and eventually a collapse of the financial system and huge deficits. Obama fixed that and then Trump took us into a whole new world of confusion and problems, say nothing of embarrazzment.

    Oh yeah, trickle down? – NEVER worked.

    Quit twisting reality to say what YOU want and wake up! Republicians have only taken successes and ruined that for the last 40 years.

    BTW – “government is a very ineffective provider of services” is just another one of your lazy “liberatarian” take on reality. Disagree? Just look at highways across America! Government is a necessity and one that is doing a pretty good job, most of the time.

    • Steve – you just don’t get it do you? “Registering” as a Democrat is nothing but a political move (azzuming you are’t lying about that to be cute). NOT VOTING Republican is what counts, right now.

      Republicans have been ruining America for many years now (since Nixon, at least). Blindly supporting their positions and ideas, then voting them into power is a continuing nightmere.

      We should each be pro America, NOT pro one party or another, ignoring the consequences! STOP being sooooo political!

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