US Approaching Insolvency, Fix To Be 'Painful': Fisher

The United States is on a fiscal path towards insolvency and policymakers are at a "tipping point," a Federal Reserve official said on Tuesday.

"If we continue down on the path on which the fiscal authorities put us, we will become insolvent, the question is when," Dallas Federal Reserve Bank President Richard Fisher said in a question and answer session after delivering a speech at the University of Frankfurt.

"The short-term negotiations are very important, I look at this as a tipping point."

But he added he was confident in the Americans' ability to take the right decisions and said the country would avoid insolvency.

Read more: http://www.cnbc.com/id/42209447

:shrug:

PB

and have to respond to that.

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It is far better for the U.S. to go into default than to tax Paris Hilton or Charlie Sheen or Warren Buffett an additional three cents or even {shudder} ten cents on every dollar they "earn" above $250,000. Why do you hate America? Are you so blind with class hatred that you would rather see the country solvent than to tax these worthies such an unconscionable amount? What if they leave the country because of the high taxes? What if they all move to France? Or England? We'd be the laughingstock of the world without our fabulously wealthy people!

with our current president, but i think next year the left will win so if they do it should go back up again.

... but that crying 5% makes the rules. Obama damn well better keep his word and put his foot down when these tax cuts come up for renewal.

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See the following NY times article http://economix.blogs.nytimes.com/2011/01/04/fearing-another-u-s-debt-default/
and my post below,

because we are living in different times.

Could you point me to some links/resources for that info?

http://economix.blogs.nytimes.com/2011/01/04/fearing-another-u-s-debt-default/

The 2 defaults were in 1782-1790 and 1933.

This is the paper the NY times referenced in the 1782-1790 default:
(It consists of charts of all sovereign nation defaults)
Link (pdf): http://www.princeton.edu/economics/seminar-schedule-by-prog/macro-s10/papers/Reinhardt-Chartbook.pdf

This paper briefly covers the 1782-1790 default:
"The Net Worth of the U.S. Federal Government 1784-1802":
Link (pdf): http://www.aeaweb.org/aer/data/may07/p07075_data.pdf

In the second 1933 default the US Government repudiated it's obligation to repay it's debt in gold,
forcing creditors to accept devalued dollars instead.

Here is a paper that discusses this:

"Is it better to forgive than to receive?
Repudiation of the gold indexation clause in long-term debt during the
great depression"
Link (pdf): http://faculty.chicagobooth.edu/finance/papers/repudiation11.pdf

Several cases concerning 1933 gold bond default went to the Supreme Court.
The court decided in favor of the government.
See: http://en.wikipedia.org/wiki/Gold_Clause_Cases

Note that in both defaults the creditors didn't receive nothing from the US Government they just received
something different than they were owed according to what their bond stated.

People think that defaults are really bad for the bond issuers but it's really the creditors, those that
are owed money that get the short end of the stick. Countries that default can often borrow money again
relatively quickly.

See the paper "Costs of Sovereign Default"
Link (pdf): http://www.bankofengland.co.uk/publications/fsr/fs_paper01.pdf

Most interesting.

Piratize the works.
Outsource the jobs.
Socialize the risk.
Privatize the reward.

Trickle Down, Baby!

Tax the fuck out of the rich. Ninety percent just like WWII.

They will rue the day they tried to kill Social Security with this Grover Norquist strategy.

It's past time for the very wealthy to share it.

Even if we taxed them at 80% their daily routines wouldn't change much, they'd simply lose a bit of the political power their money buys.

And that's what would pain them, the loss of this political power. It's all fine to live in a huge mansion, have servants that cater to your every whim, drive a very expensive car, and fly around the world on a lark to buy new shoes that you will wear once, but it would be unbearably painful in the extreme if a Senator or a Governor was too busy to take your call or play a round of golf with you and do those various small political favors and errands the extremely wealthy require.