topic Re: US debt ceiling. in Community Spirit

US debt ceiling.

the_bob_delusion — Wed, 16 Oct 2013 10:11:48 GMT

can someone explain it to me in simple terms. I'm really dense when it comes to global economy.

Re: US debt ceiling.

acacia_pycnantha — Wed, 16 Oct 2013 10:22:56 GMT

Hi Bob. I think it goes something like this.

The USA has a debt ceiling of about $17.6 trillion and even so, they need to borrow more but cannot lift the legislated ceiling limit without the approval of US Congress. Their Republican party (along with the so-called tea party), the right wing of politics will continue to block passage of the necessary legislation unless,

Unless big changes (de-funding changes) are made to pres Obama's healthcare bill which was recently passed into law.

They also want other guarantees or reduced govt spending.

it amounts to rich Republicans blocking a Bill which would provide affordable health care to the poor.

Clear now?

thought not. 😉

Re: US debt ceiling.

acacia_pycnantha — Wed, 16 Oct 2013 10:26:27 GMT

Of course, if the USA reduced their military spending (foriegn wars and threats of more to come) and if they had a fair income tax system, then they wouldn't have nearly as big a debt in the first place.

Re: US debt ceiling.

icyfroth — Wed, 16 Oct 2013 10:28:02 GMT

Looks like no-one has a clue, Bob

Here's what I've got out of it:

Mr Obama wants to borrow more money to fund his healthcare reforms.

The Tea Party and the Republicans don't want to be in it. Too much debt already.

China and Japan are getting nervous because they are huge lenders to the US and are scared of the US defaulting.

The US is in danger of getting it's AAA credit rating downgraded.

If the US can't resolve it's finances it looks grim for the rest of us.

Greece is facing it's 3rd bailout.

Not happy Jan!

Re: US debt ceiling.

acacia_pycnantha — Wed, 16 Oct 2013 10:30:06 GMT

if the Congressional impasse persists into tomorrow, then the US will not be able to service (make repayments on) their existing debts, running the risk of plunging many of the worlds' countries into recession.

Re: US debt ceiling.

kopenhagen5 — Wed, 16 Oct 2013 10:34:22 GMT

Thursday (17 October) is a critical day for the markets, because if the US government does not manage to increase the debt ceiling, then the chances of a default by the US government increase. With a fractious Congress, a debt ceiling crisis may not be resolved by Thursday. So far markets are not even factoring in such a possibility, but if this happens, the world markets are in for a lot of turbulence.

The US Treasury has a debt ceiling of $16.7 trillion, which it hit on May 19, 2013, and since then the US government has been using various methods to make payments and issue debt papers. Lawmakers need to arrive at an agreement and hike this ceiling if the US government has to pay salaries. If the debt ceiling is not increased by October 17, then the US could default on these payments and interest commitments. The Economist says that even though the US Treasury has $30 billion in cash, it will still struggle to make large payments, which are coming up. On October 23, $12 billion in payments are coming up for Social Security and $6 billion as interest payout on its debt on 31 October. Apart from this, it will need another $67 billion to pay salaries of bureaucrats and soldiers. Citigroup on the other hand believes that the real deadline for a settlement is 1 November.

Most market experts believe that a quick resolution is difficult and if the US defaults technically or delays payments, then the markets would question the political stability and dollar's status as a reserve currency. According to Robert V DiClemente at Citi Global Ecoonmics Research, says: "If US creditworthiness and political stability are questioned because of sequential technical defaults stemming from political dysfunction, global investors may want to shift to alternative currencies." Also if a debt ceiling is not raised and budget cuts continue, then the US could be headed for a prolonged period of economic weakness, which would have a cascading effect across the globe. Other turmoil in the currency markets, the great rotation to US bonds, which had started some time early this year, may also come under pressure as unwinding may begin in a relatively tighter liquidity conditions.

Re: US debt ceiling.

the_bob_delusion — Wed, 16 Oct 2013 10:37:53 GMT

@icyfroth wrote:
Looks like no-one has a clue, Bob

Here's what I've got out of it:

Mr Obama wants to borrow more money to fund his healthcare reforms.

The Tea Party and the Republicans don't want to be in it. Too much debt already.

China and Japan are getting nervous because they are huge lenders to the US and are scared of the US defaulting.

The US is in danger of getting it's AAA credit rating downgraded.

If the US can't resolve it's finances it looks grim for the rest of us.

Greece is facing it's 3rd bailout.

Not happy Jan!

that's a reasonable explanation. I didn't realise China and Japan lends them that much money. So it's a self imposed debt limit is it?

I didn't realise countries had credit ratings.

So how does their finances affect ours?

Re: US debt ceiling.

acacia_pycnantha — Wed, 16 Oct 2013 10:46:01 GMT

It's not a very reasonable explanation at all. It's only a part of the story. (see above my previous posts and kopenhagen's if you want reason)

Re: US debt ceiling.

cherry*135 — Wed, 16 Oct 2013 10:49:01 GMT

The US caused the global financial crisis in 2008, bob.

The current financial crisis (2008)started in the US housing market in 2007. The crisis spread across the world and
severely damaged the economies of many countries, including the US, and reached a new level in September 2008 as a number of prominent US-based financial institutions, including AIG and Lehman Brothers, collapsed.

Re: US debt ceiling.

cherry*135 — Wed, 16 Oct 2013 10:52:54 GMT

In a financial crisis the US buys a lot less products from China, China stops manufacturing so much stuff therefore doesn't need to buy as much coal from Aust... and so it goes on.

Re: US debt ceiling.

the_bob_delusion — Wed, 16 Oct 2013 10:55:08 GMT

so wouldn't it make sense to allow US to borrow more money? or Lend them more?

Re: US debt ceiling.

the_bob_delusion — Wed, 16 Oct 2013 10:58:28 GMT

sorry, that was a stupid question. Why would you lend money to people that can't pay you back. So why are countries lending money to US if they aren't paying it back?

Re: US debt ceiling.

acacia_pycnantha — Wed, 16 Oct 2013 10:59:11 GMT

The US govt Needs to borrow more money. and that's the bottom line. The Republicans and the Tea party are blocking the necessary legislation by tying their aquiescence to a de-funding of Mr Obama's health care Bill.

Re: US debt ceiling.

poddster — Wed, 16 Oct 2013 11:09:39 GMT

It is closer to reality that the US has been sprung using a magic cheque book and it look like the chickens are coming home to roost For a further explanation of what a magic cheque is I refer you to Salvadore Dali and the explanation of how it works by Robert Newman http://www.youtube.com/watch?v=xAr9nx8mjCY

Re: US debt ceiling.

jimmy*part4 — Wed, 16 Oct 2013 11:13:15 GMT

@acacia_pycnantha wrote:
Of course, if the USA reduced their military spending (foriegn wars and threats of more to come) and if they had a fair income tax system, then they wouldn't have nearly as big a debt in the first place.

That's right! Mind our own business and when problems pop up with dictators murdering tens of thousands of people, spilling into neighbouring countries to take over them, murdering tens of thousands of those people....

I'm ALL for it! And when people start saying, "where is the US? Why aren't they helping us?"...I'll just hold up a stiff finger! They hate us anyway....and so do a lot here too (Australia). It's time we worry about ourselves. There are more than a few countries better off than us....let THEM deal with it! Lets see how all the complainers like how things turn out then.

And while were at it....cut off all aid. Like....why are we giving billions to Egypt?

I say we should fire all of congress, let the Governers fill in while we get new ones. I could get us debt free in just a couple years.

it amounts to rich Republicans blocking a Bill which would provide affordable health care to the poor.

Pfft....you think your boat people are a problem. We have hundreds of millions of illegals here ALL milking the system. They all work off the books, have kid after kid, with no plan or means to take care of them. Everyone already gets health care....they just go to the emergency room. No one is EVER turned away, which is why the illegals stroll across the border from as far as south America.

If Canada's medical system is soo good, why aren't they going there? We are not Canada or Australia and don't want those medical plans. I started flat broke and poor, but almost always had medical insurance....how?? I worked for it!!!

The illegals are breaking our medical system and if we are supposed to take care of them...call it what it is....a new LARGE tax.

And what about the rest of the world....why stop there....take all our money and get them insurance too!

Re: US debt ceiling.

icyfroth — Wed, 16 Oct 2013 11:14:11 GMT

@poddster wrote:
It is closer to reality that the US has been sprung using a magic cheque book and it look like the chickens are coming home to roost For a further explanation of what a magic cheque is I refer you to Salvadore Dali and the explanation of how it works by Robert Newman http://www.youtube.com/watch?v=xAr9nx8mjCY

totally.

Re: US debt ceiling.

jimmy*part4 — Wed, 16 Oct 2013 11:14:28 GMT

And not to worry...they will come to an agreement.

Have a nice day!

Re: US debt ceiling.

acacia_pycnantha — Wed, 16 Oct 2013 11:14:50 GMT

Yes, what with spending hugely on the military budget, not gathering enough income tax, and reducing the value of their $ in real terms by "quantitative easing", they have dug themselves into a big hole.

Re: US debt ceiling.

*crikey*mate* — Wed, 16 Oct 2013 11:27:55 GMT

So, tell me again why it's good when Australia gets into debt?

Re: US debt ceiling.

poddster — Wed, 16 Oct 2013 11:36:10 GMT

Unfortunately Labor were heading down the same path as far as irresponsible spending and living beyond the country's means. Labor , like the typical Yank ethos was to claim that the created a high standard of living so as to earn kudos from the misinformed and uneducated.

The money lenders love countries and people like that. and give the a AAA rating 🙂 Problem is a AAA rating is not negotiable tender but a mere symbolic icon that has zero tangible worth.

The American debt has allowed them to spruke that they are the "Land of the Free and the Home of the Brave", the problem that it has been and continues to be on credit.

At last there are some Americans who are questioning the validity of living maxed out on credit.

The countries tied to America's apron strings will feel the consequences and perhaps the too might learn from the experiences that are to come