[Pops]

So any doom preparation necessary in case the debt deal doesn't materialize?

Obviously people who get gov checks might put a little something by...

But what are the odds of that favorite of doomer scenarios, the collapse of the system? The full faith and credit hooie all goes out the window - they have a bond auction and nobody shows?

I mean the gov is in effect buying groceries on the credit card (like a lot of regular folks) so what happens if the card is declined?

[ritter]

Having a bit of cash on hand and a freshly stocked pantry is always a good idea, default or no. Especially for those of us in earthquake country!

[Livewire713]

So any doom preparation necessary in case the debt deal doesn't materialize?

Obviously people who get gov checks might put a little something by...

But what are the odds of that favorite of doomer scenarios, the collapse of the system? The full faith and credit hooie all goes out the window - they have a bond auction and nobody shows?

I mean the gov is in effect buying groceries on the credit card (like a lot of regular folks) so what happens if the card is declined?

If interest rate do go up that is going to push a lot of people off the financial cliff. Hopefully all those oil producing countries continue to take our paper. The addict needs to be slowly weaned off its addiction.

[AdTheNad]

But what are the odds of that favorite of doomer scenarios, the collapse of the system? The full faith and credit hooie all goes out the window - they have a bond auction and nobody shows?

I was under the impression this is already happening, which is why the Fed buys so many bonds.

[Lore]

The Fed is buying bonds to add further liquidity to the system. The auctions have actually still been going well.

[Sixstrings]

But what are the odds of that favorite of doomer scenarios, the collapse of the system? The full faith and credit hooie all goes out the window - they have a bond auction and nobody shows?

I was under the impression this is already happening, which is why the Fed buys so many bonds.

There's still strong demand for bonds. I'm not really sure why the Fed buys bonds, which is in effect funding debt with printed money. Maybe they have to buy the bonds so that they can then loan a gazillion dollars at 0% to hedge funds and banksters. That's called the balance sheet.. with a bond on the books, they can leverage that baby who knows how many multiples.

Another "asset" on Fed books they can loan against is toxic debt. It's pretty amazing how accounting works eh, you can give a central bank a bucket of turds and they can turn it to gold leveraged twenty times over.

[Lore]

But what are the odds of that favorite of doomer scenarios, the collapse of the system? The full faith and credit hooie all goes out the window - they have a bond auction and nobody shows?

I was under the impression this is already happening, which is why the Fed buys so many bonds.

There's still strong demand for bonds. I'm not really sure why the Fed buys bonds, which is in effect funding debt with printed money. Maybe they have to buy the bonds so that they can then loan a gazillion dollars at 0% to hedge funds and banksters. That's called the balance sheet.. with a bond on the books, they can leverage that baby who knows how many multiples.

Do a search on "quantitative easing" and you'll see why.

[Plantagenet]

The Fed is buying bonds to add further liquidity to the system. The auctions have actually still been going well.

The auctions are going well because this is one of the principal ways the FED is injecting the massive quantity of dollars they are printing into the US monetary system. Even though QE2 is supposedly over, the printing presses are still spinning at the FED and printing unparalleled amounts of new money to keep BAU going.

I don't think these auctions will be able to continue after the August 2nd deadline, however. After all, even a US Treasury bond purchased by the FED with newly printed cash still must be accounted for by the US government as new US government debt----thereby busting the debt ceiling.

[Sixstrings]

Well if SS checks don't go out, I'll have some elderly relatives to check on. Make sure they have enough food to eat, and money for meds. If anyone has an elderly relative in a nursing home, after a week or so you'd need to check to see how long they can stay before they get tossed out.

All that's unthinkable of course.. SS checks *must* go out, doctors and healthcare providers have to get paid, and the troops and all the millions of gov workers *must* get their paychecks. That's like half of the economy, between gov checks and healthcare. And then all the small businesses that depend on nurses, retirees, and gov workers for customers, it all cascades. Screw around with that and we'll be in the Mother of All Deflationary Depressions.

Not to mention little things like the FAA.. without air traffic controllers commercial traffic has to be grounded. I saw on the news there's already a partial FAA shutdown because of some other bill Republicans have been holding up.

The consequences are so serious that I think Obama will have to invoke the 14th Amendment. Either that or martial law.. but government won't just watch the country fall apart, that's a national emergency.

[Novus]

It is not unthinkable that SS checks won't go out. On August 5th $23billion in SS checks will have to go out. The Government will only have $20billion on hand. Someone is not getting their check.

[truecougarblue]

I will feel less wealthy when on paper I lose 1/2 of the value of the retirement accounts that I don't control.

I will feel more wealthy when my PM allocations that i do control double in value.

If the stores run out of food, etc. I'll use my food storage. If I'm lucky my company will go on hiatus and I'll get a nice break from my new veep who is a major A-hole.

[Pops]

I was thinking about a repeat of '08 where you pull a string and the whole thing unravels. Basically what six talked about somewhere, that a default causing those paragons of insight and virtue - the ratings agencies, to drop the USs rating and force lots of institutional bondholders to dump their holdings.

I think the only difference between today and '08 is the average guy has lost about a quarter of his net worth - certainly there hasn't been any change in the pinstripe casino has there? Another bank and credit lockup would be a very bad thing.

[EnergyUnlimited]

The consequences are so serious that I think Obama will have to invoke the 14th Amendment. Either that or martial law.. but government won't just watch the country fall apart, that's a national emergency.

And what if some prominent members of military brass challenged that and call for Obama's removal, unilateral default, general asset confiscation of anything what matters etc?

[Pops]

The consequences are so serious that I think Obama will have to invoke the 14th Amendment. Either that or martial law.. but government won't just watch the country fall apart, that's a national emergency.

And what if some prominent members of military brass challenged that and call for Obama's removal, unilateral default, general asset confiscation of anything what matters etc?

I think Barry is pragmatic to a fault and will give in rather than escalate. It is to his political advantage to appear the moderate.

As for a military coup, I'd give that a zero chance in the US, the mil is about the last honorable institution we have. I don't think even the most crackpot dittohead partier would stand for it.

[Cog]

Well if SS checks don't go out, I'll have some elderly relatives to check on. Make sure they have enough food to eat, and money for meds. If anyone has an elderly relative in a nursing home, after a week or so you'd need to check to see how long they can stay before they get tossed out.

Yeah now you are getting it. That is your job to take care of your relatives. Why are you trying to make it mine? Fairness? LOL

[AgentR11]

And what if some prominent members of military brass challenged that and call for Obama's removal, unilateral default, general asset confiscation of anything what matters etc?

That's just silly. The US Military is very particular in its ethos, it essentially divests itself of interest or concern as an organization, concerning matters like this. The party line would simply be, that such a decision is the province of the civilian leadership to decide whatever the heck they want to decide. Regardless, the military's chow lines will remain open, ships will remain at sea, and land forces deployed as they are ordered, pay or no pay, Bob the Enlistee will show up for work, and the military will insure that Bob doesn't starve to death, money or no money.

[basil_hayden]

Congress is pissing over what amounts to 1% of the budget.

Failure to act will do nothing except screw groups that borrow such as business and young people.

[EnergyUnlimited]

Congress is pissing over what amounts to 1% of the budget.

Failure to act will do nothing except screw groups that borrow such as business and young people.

They are pissing over something like $1 trillion.
Do you suggest US budget to be $100 trillions?

[AgentR11]

I gotta agree, they are pissing over real sh** this time. I suppose its an improvement. I think its gonna kinda hurt, like having work done on your teeth, without the anesthetic.

[basil_hayden]

Congress is pissing over what amounts to 1% of the budget.

Failure to act will do nothing except screw groups that borrow such as business and young people.

They are pissing over something like $1 trillion.
Do you suggest US budget to be $100 trillions?

It's something like a trillion over 10 years, or about 100 billion per year, from my understanding.

Or maybe more correctly stated, the difference between the Dem and Repub plans is about 1%, a total joke to be fighting over.

What's actually happening is that the Republicans are just trying to join Obama's continuous presidential campaign.