A U.S. Default Seen as Catastrophe Dwarfing Lehman’s Fall
Source: Bloomberg News
Anyone who remembers the collapse of Lehman Brothers Holdings Inc. little more than five years ago knows what a global financial disaster is. A U.S. government default, just weeks away if Congress fails to raise the debt ceiling as it now threatens to do, will be an economic calamity like none the world has ever seen.
Failure by the worlds largest borrower to pay its debt -- unprecedented in modern history -- will devastate stock markets from Brazil to Zurich, halt a $5 trillion lending mechanism for investors who rely on Treasuries, blow up borrowing costs for billions of people and companies, ravage the dollar and throw the U.S. and world economies into a recession that probably would become a depression. Among the dozens of money managers, economists, bankers, traders and former government officials interviewed for this story, few view a U.S. default as anything but a financial apocalypse.
The $12 trillion of outstanding government debt is 23 times the $517 billion Lehman owed when it filed for bankruptcy on Sept. 15, 2008. As politicians butt heads over raising the debt ceiling, executives from Berkshire Hathaway Inc.s Warren Buffett to Goldman Sachs Group Inc.s Lloyd C. Blankfein have warned that going over the edge would be catastrophic.
If it were to occur -- and its a big if -- one would expect a series of legal triggers, potentially transmitting the default to many other markets, said Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., the worlds largest fixed-income manager. All this would add to the headwinds facing economic growth. It would also undermine the role of the U.S. in the world economy. . . .
Read more: http://www.businessweek.com/news/2013-10-06/a-u-dot-s-dot-default-seen-as-unprecedented-catastrophe-dwarfing-lehman
While few of us here trust Wall Street, this should be taken seriously - the Tea Party threatens to break the nation's and world's economies with its extortionist madness. As Paul Krugman writes in today's New York Times,
The federal government is shut down, were about to hit the debt ceiling (with disastrous economic consequences), and no resolution is in sight. How did this happen?
The main answer, which only the most pathologically balanced reporting can deny, is the radicalization of the Republican Party.
http://www.nytimes.com/2013/10/07/opinion/krugman-the-boehner-bunglers.html?hpw&_r=0
The blame is clear to all but Fox News acolytes, but hopefully some sanity will take place before this happens. If not, I don't think the consequences are being overstated.
Turbineguy
(37,364 posts)They're already foaming at the mouth in anticipation of shooting people.
docgee
(870 posts)ffr
(22,671 posts)20/20 proves them completely wrong, but Faux Noise tells them they were right. If only we had let the auto industry fail, the housing market collapse, along with the banks & airlines. Things would be so much better right now. But no, instead we have a black president.
According to them, "tomorrow" is always their 'end of days, world coming to an end' moment. Look over there! The sky is falling.
roguevalley
(40,656 posts)the burning tire around his neck.
KansDem
(28,498 posts)Who gets the multi-million dollar bonuses this time?
ffr
(22,671 posts)L0oniX
(31,493 posts)and it will not be just us either. I believe the other countries affected by this would gladly come over here and join us ...except they would be conveniently labelled as being terrorists and killed or jailed forever. What else can the people do? Starve? Watch your families starve? People out of work and out of money and no government support? People will turn into animals.
Hey ...how about we just cut to the chase here and starve our poor people and kick our grand parents out in the street, stop all welfare, Medicaid and SS. There ...problem solved! Oh but we can't do that so fast ...it has to be done slowly ...like bringing the pot of water with the frogs slowly to a boil.
HoosierCowboy
(561 posts)His spirit is alive in the Tea Party.
OBL wanted to bankrupt the U.S. by engaging it in an extensive no win conflict and then replace its influence with a Fundamental Islamic Caliphate.
The GOP would bankrupt it by obstruction and mis-governance, then replace it with Corporate Hegemony.
R. Daneel Olivaw
(12,606 posts)leadership arrested for sedition under the PATRIOT act as conspiring financial terrorists.
Let the POTUS and DOJ frame it as an act of war against the American people by threats of domestic origin.
Bring them to trial. Arrest, indict and incarcerate.
hedda_foil
(16,375 posts)And the teahadist wing of Congress they finance.
OnyxCollie
(9,958 posts)(2) In this directive:
~snip~
(b) "Catastrophic Emergency" means any incident, regardless of location, that results in extraordinary levels of mass casualties, damage, or disruption severely affecting the U.S. population, infrastructure, environment, economy, or government functions;
~snip~
Policy
(3) It is the policy of the United States to maintain a comprehensive and effective continuity capability composed of Continuity of Operations and Continuity of Government programs in order to ensure the preservation of our form of government under the Constitution and the continuing performance of National Essential Functions under all conditions.
Implementation Actions
(4) Continuity requirements shall be incorporated into daily operations of all executive departments and agencies. As a result of the asymmetric threat environment, adequate warning of potential emergencies that could pose a significant risk to the homeland might not be available, and therefore all continuity planning shall be based on the assumption that no such warning will be received. Emphasis will be placed upon geographic dispersion of leadership, staff, and infrastructure in order to increase survivability and maintain uninterrupted Government Functions. Risk management principles shall be applied to ensure that appropriate operational readiness decisions are based on the probability of an attack or other incident and its consequences.
(5) The following NEFs are the foundation for all continuity programs and capabilities and represent the overarching responsibilities of the Federal Government to lead and sustain the Nation during a crisis, and therefore sustaining the following NEFs shall be the primary focus of the Federal Government leadership during and in the aftermath of an emergency that adversely affects the performance of Government Functions:
(a) Ensuring the continued functioning of our form of government under the Constitution, including the functioning of the three separate branches of government;
(b) Providing leadership visible to the Nation and the world and maintaining the trust and confidence of the American people;
(c) Defending the Constitution of the United States against all enemies, foreign and domestic, and preventing or interdicting attacks against the United States or its people, property, or interests;
(d) Maintaining and fostering effective relationships with foreign nations;
(e) Protecting against threats to the homeland and bringing to justice perpetrators of crimes or attacks against the United States or its people, property, or interests;
(f) Providing rapid and effective response to and recovery from the domestic consequences of an attack or other incident;
(g) Protecting and stabilizing the Nation's economy and ensuring public confidence in its financial systems; and
(h) Providing for critical Federal Government services that address the national health, safety, and welfare needs of the United States.
(6) The President shall lead the activities of the Federal Government for ensuring constitutional government. In order to advise and assist the President in that function, the Assistant to the President for Homeland Security and Counterterrorism (APHS/CT) is hereby designated as the National Continuity Coordinator. The National Continuity Coordinator, in coordination with the Assistant to the President for National Security Affairs (APNSA), without exercising directive authority, shall coordinate the development and implementation of continuity policy for executive departments and agencies. The Continuity Policy Coordination Committee (CPCC), chaired by a Senior Director from the Homeland Security Council staff, designated by the National Continuity Coordinator, shall be the main day-to-day forum for such policy coordination.
...
I have not seen an Executive Order from Obama saying that he would not use NSPD 51. If the "Shock Doctrine" would be put into effect, that would be the time to do it.
L0oniX
(31,493 posts)Banksters and war criminals run free ...and they will do it again too.
snot
(10,530 posts)The US is NOT like Lehman. We are NOT insolvent. Our failure to pay our debts would not be because we don't have the financial wherewithal; it would be because we REFUSE.
"Let them fail" IS the right solution for a bankrupt entity, but that's not our situation. The teapartiers are destroying our good credit in order to indulge their public tantrum.
NoOneMan
(4,795 posts)Pleaaaaaaaase. I want to be fucked. It sounds sooooo scary!
apnu
(8,758 posts)History is repeating itself.
Before the great crash of '29, all the same signs happened. Markets ran wild, everybody and their brother was told to invest in those markets. Warning sign after warning sign foretold of the crash, Washington dithered and ignored the problem. A certain political class willingly supported and promoted the unbalanced system to the dismay of everybody else.
All the same things are happening again. Wild markets, over investment in those markets. Everything is plugged into one machine (the U.S. markets). Congress is paralyzed while the tea party has hijacked the plane and is gleefully crashing it into a mountain.
It happened before, it will happen again. Get ready folks.
Jessy169
(602 posts)Go over to zerohedge.com where you'll find thick concentrations of Tea Party goons, Paulbots and end-of-worlders. They are cheering the shutdown, praying for a default, and the common sentiment there is "bring down this rotton government and bring on the worldwide economic collapse." Several of the posters are lamenting that if world economic collapse is delayed too long, their prepper supplies might go bad and they'll have to go out buy replacements, etc...
I don't think it is a big exaggeration to suspect that about 30% (or so) of the adult U.S. population is hoping and praying in their most fervently demented moments for a complete and total collapse of American government and worldwide order. THAT is scary.
davidthegnome
(2,983 posts)So, basically, a bunch of entitled rich assholes are going to throw our economy, and potentially the world's economy, into the toilet again? Hmm. Principled stand indeed. These lunatics must be cheering for dooms day or something, because it's going to be damned hard to survive another great depression without the skills of our ancestors.
blkmusclmachine
(16,149 posts)LET HIM DIE!
LET HIM DIE!
WhoWoodaKnew
(847 posts)love their power so much. If they go too far, they'll just get canned at the next election and they value that paycheck and that power way too much. They may be stupid but they're not suicidal.
Nihil
(13,508 posts)That first paragraph looked like this:
> Anyone who remembers the collapse of Lehman Brothers Holdings Inc.
> little more than five years ago knows what a global financial disaster
> is the U.S. government