Trump wants to put the US through bankruptcy. WTF? How does that make America great?
http://talkingpointsmemo.com/edblog/this-is-astounding
So many stories in presidential politics, in all politics, are more sound and fury than substance. This one isn't. It's hard to overstate how big a deal it is. Donald Trump caught a lot of grief during the primaries for putting several of his companies through bankruptcies during his career. He's also made a point of arguing that he'd bring his brand of "deal-making" to the presidency. It now seems like both of those things may have been way more significant than maybe anyone realized.
On CNBC this morning Trump suggested that one strategy he'll use for reducing the national debt is having bond holders accept "haircuts". To be clear what that means, he'll try to get people who own US Treasury bonds and are owned X to accept X/2, or some reduced amount of what they are owed.
That's called defaulting on a debt obligation.
In other words, he wants to put the US through something like bankruptcy. Now, to be clear, in the world of business this is not at all uncommon. In a bankruptcy proceeding almost everyone takes a haircut. Many lose everything. You were owed $7 million and you have to accept $2 million. It often happens in simple business negotiations too. Things aren't going great. Debt has to be restructured to help the company survive. A creditor thinks they might lose everything so they'll accept 50 cents on the dollar.
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