So if the USA defaults August 2nd, what will happen?

[Littlee300]

Everyone outside the US will laugh at you, for one.

Definitely not. If the US in major trouble Japan and China will most likely prop the US up.
_________________________________________________________________________________________
Crazy republicans will push for impeachment. Police officers will be laid off. Riots, etc.

Edit: For the oblivious here is a easy to understand but not very informative comic on the debt ceiling problem.
http://havoconthehill.com/

 

[zehydra]

It's going to hurt the global economy more than anything else, which of course will backlash against us and hurt us economically.

Basically, I'd be worried if I was European

 

[CthulhuMessiah]

Game over, man. Game over!

 

[zehydra]

It's not like other countries can just come and collect by force. So, probably nothing. They can refuse to trade with us, but then we won't be trading with them, so they'll have to try and trade with others, but they can't because they'll also trade with us and. . . you see where I'm going?

Essentially: Loss of confidence. Then, nothing.

Except other countries aren't the only ones doing business with the US. There are a LOT of private investments in the US.

 

[Dirzzit]

Here's what will actually happen:

1.Interest rates will go up (credit card, mortgage)
2.Countries will stop trading with the US (It's like not paying your rent)
3.The stock market could possibly crash
4.Banks will seize everything they can to prevent getting hurt

Contrary to everyone's beliefs in this thread, This will FUCK THE US UP. Remember what happened to Greece? It will be worse, A lot worse.

 

[Kopikatsu]

People will come to New Zealand >

Are you kiddin'? I wanted to move to New Zealand, but I was told that you need a referral or some kind of BS. SUCH MADNESS.

 

[RhombusHatesYou]

On the other hand, those of us living in Australia will continue to be mostly unaffected

Right up until the point that the Chinese industrial sector drops off from lack of export markets and they stop buying up everything Australia digs up to sell them. China's domestic market can't support their economy and if their major export markets go into the toilet that's all their 'new economy' gone with it, taking our resources backed prosperity with it.

 

[Filiecs]

I for one will be pissed off at the rich republicans who refuse to take a 1% tax increase to save the economy. Even more so than I am now.

 

[DudeistBelieve]

Thing I'm mostly worried about is just losing my job over this bullshit. My degree is mostly worthless anyway.

The only thing I don't like about Obama is that he's always preaching this compromise bullshit. I'm just like.... Fuck, ask them nicely once and when that fails just say fuck 'em and start rail roading shit in. Wasted his oppurtunity when he was in control of the government.

First world nations can't default. Stop listening to the fear-mongering bullshit that a certain part of your media likes to propagate.

You're wrong, as evidenced by the default of Greece, Spain, Portugal, and Ireland which has contributed to the almost complete meltdown of their economies.

Basically, the government doesn't take in enough money for all the programs it runs. So to make up for the gap in revenues and what is actually required, they issue what are called bonds. For the most part, these are only worth between 50 and a couple hundred dollars and are mostly bought by your average citizen. Now there are also a type that are worth much more than that and are bought up by other countries for the most part. Now, if we were to default on our loans this would make the US's credit score go down, thus showing potential investers that the US is a less than secure investment, thus driving up the interest rates we pay to those countries that have purchased the bonds. So really, it means the the government will either not have as much money because other entities aren't buying our bonds, or the government is having pay even more in interest due to the lowered credit rating.

There are other things at work, but that is a basic explanation of why a default would be bad.

The funny thing is....a country like china who invests in us....Cant really do much about it. They get paid what we pay them and they can't tell us THE INTEREST RATE IS UP MORE MONEY PER YEAR THANK YOU....because they cant harm us or take anything away...Besides most of the money for bonds is domestic

Woooo! We're to big to fail! SUCK IT CHINA!!!!

 

[Thaluikhain]

On the other hand, those of us living in Australia will continue to be mostly unaffected

Right up until the point that the Chinese industrial sector drops off from lack of export markets and they stop buying up everything Australia digs up to sell them. China's domestic market can't support their economy and if their major export markets go into the toilet that's all their 'new economy' gone with it, taking our resources backed prosperity with it.

Big if, though. It'd take quite a major upset for that to happen. I'd expect them to take a hit, but not one they couldn't survive.

Cap: do not taunt happy fun ball

 

[Kopikatsu]

Thing I'm mostly worried about is just losing my job over this bullshit. My degree is mostly worthless anyway.

The only thing I don't like about Obama is that he's always preaching this compromise bullshit. I'm just like.... Fuck, ask them nicely once and when that fails just say fuck 'em and start rail roading shit in. Wasted his oppurtunity when he was in control of the government.

First world nations can't default. Stop listening to the fear-mongering bullshit that a certain part of your media likes to propagate.

You're wrong, as evidenced by the default of Greece, Spain, Portugal, and Ireland which has contributed to the almost complete meltdown of their economies.

Basically, the government doesn't take in enough money for all the programs it runs. So to make up for the gap in revenues and what is actually required, they issue what are called bonds. For the most part, these are only worth between 50 and a couple hundred dollars and are mostly bought by your average citizen. Now there are also a type that are worth much more than that and are bought up by other countries for the most part. Now, if we were to default on our loans this would make the US's credit score go down, thus showing potential investers that the US is a less than secure investment, thus driving up the interest rates we pay to those countries that have purchased the bonds. So really, it means the the government will either not have as much money because other entities aren't buying our bonds, or the government is having pay even more in interest due to the lowered credit rating.

There are other things at work, but that is a basic explanation of why a default would be bad.

The funny thing is....a country like china who invests in us....Cant really do much about it. They get paid what we pay them and they can't tell us THE INTEREST RATE IS UP MORE MONEY PER YEAR THANK YOU....because they cant harm us or take anything away...Besides most of the money for bonds is domestic

Woooo! We're to big to fail! SUCK IT CHINA!!!!

...I think people are vastly overestimating the US's military strength.

We had the strongest military in the world...once upon a time. If another major first world country wanted to take something from us, I'm pretty sure that they could nowadays.

 

[peruvianskys]

Basically, the government doesn't take in enough money for all the programs it runs. So to make up for the gap in revenues and what is actually required, they issue what are called bonds. For the most part, these are only worth between 50 and a couple hundred dollars and are mostly bought by your average citizen. Now there are also a type that are worth much more than that and are bought up by other countries for the most part. Now, if we were to default on our loans this would make the US's credit score go down, thus showing potential investers that the US is a less than secure investment, thus driving up the interest rates we pay to those countries that have purchased the bonds. So really, it means the the government will either not have as much money because other entities aren't buying our bonds, or the government is having pay even more in interest due to the lowered credit rating.

There are other things at work, but that is a basic explanation of why a default would be bad.

Okay this is the only really accurate explanation of what would actually happen. It wouldn't be the end of the world but it would be pretty bad for America's economy, and what's bad for the American economy is bad for the world. What some people don't understand is that both parties, like someone else here said, really want to raise the ceiling; it's not like the republicans want the country to default. It's just a bargaining chip. The republicans feel disenfranchised and powerless so they're using their votes in order to get concession they've wanted for a while. The default almost certainly won't happen, and even if it did, the Supreme Court would probably just call up the 14th amendment and declare the ceiling raised themselves if they agree on it. Although the court is fairly conservative, it's still fairly likely that it would be raised either way.

 

[RoonMian]

...I think people are vastly overestimating the US's military strength.

We had the strongest military in the world...once upon a time. If another major first world country wanted to take something from us, I'm pretty sure that they could.

I think the USA still has the most powerful military in the world. The russian army has been decaying for twenty years now and the chinese army has more manpower but lacks in technology.

Or what did you mean by "major first world country"? Do you mean the big economic players? The G8 states? The biggest economical powers in the G8 (besides the USA) are Japan and Germany. I don't know about Japan but the german army couldn't invade a hippie community

 

[Kryzantine]

Don't worry, its very unlikely to happen. Both parties, and everyone even remotely in a leadership position, want to raise the debt ceiling. Republicans are wasteing time trying to A) pressure Democrats into conceding on a number of points before they, "Give" them a debt ceiling increase they both want. That way they can B) More believably blame Democrats for increasing the overall debt. It's basically like a guy with a bomb on his vest threatening to blow everyone up if he doesn't get a million dollars, and the fact that hes not crazy enough to sacrifice his life doesn't change the fact that no one else can be sure of that fact. So rather then risk him in fact being crazy, they give in to his demands. Except somehow, the guy threatening everyone gets to blame the other guy not just for losing the million dollars, but also for letting a crazy person with a bomb in in the first place.

The worst part is that Obama probably could all but guarantee his re-election right now. All he would have to do is frame the debate in such a way that he is giving into certain fringe right wingers and not raising the ceiling, and then pointing to the right wingers when the economy collapses. Everyone would see Obama giving into the right, and the rights ideologies ruining the country. The problem of course is that Obama doesn't want the economy to collapse because, well, he lives here.

The problem is the time the debt ceiling is extended. Republicans want this debate to come up again during the election cycle so they can blame Obama for doing things month-by-month, and Democrats want the debt ceiling to last until after the election, for obvious reasons. And frankly, the last week has been Republicans hugging themselves and Democrats hugging the White House, blaming each other for the chaos they're about to put this country into and hoping the people side with them the next election.

 

[peruvianskys]

Right up until the point that the Chinese industrial sector drops off from lack of export markets and they stop buying up everything Australia digs up to sell them. China's domestic market can't support their economy and if their major export markets go into the toilet that's all their 'new economy' gone with it, taking our resources backed prosperity with it.

Good point - China may be pseudo-communist but they rely heavily on free markets overseas to provide incentive for people purchasing their products. A bad economy overseas means a failed economy in China and, more broadly, a bad US economy means a bad worldwide economy - although the flipside is that America has its finger in so many international pies, so to speak, that a completely internal failure of American markets is hard to imagine (this debt ceiling being a half-assed exception). All countries reinforce each other to the point that it's hard to really say with certainty if this country brought down this one or vice-versa.

 

[aussiesniper]

I haven't gotten a clear answer from anyone, it ranges from "It won't be so bad" to "Apocalyptic" can someone explain exactly what's gonna happen?

ugh... I really hate our Dumb and Dumber two party system... Free election my ass.

Well, the US. Govt will have to cut spending if they default, to pay back their debts. This will cause damage to the economy by reducing Aggregate Demand.

Aggregate demand is the measure of how much demand these is in the market (i.e. people, business and such buying stuff). When Aggregate demand is high, the economy grows, so that it can produce enough to meet demand. However, if the US govt. all of a sudden cuts spending in a big way, then they will be less demand (Around $1,000,000,000,000 to $2,000,000,000,000 less), which cuts Aggregate Demand in a big way.

If AD goes down, then businesses (the people who actually make the stuff that the market demands) will have fewer customers, and probably have to sack a large number of people. Those people then can't buy any more stuff, and AD goes down again.

This cycle repeats until something stops it (like a damn good stimulus package*), or until the situation just can't get much worse (think 30% unemployment, like the depression).

*The US Govt. stimulus package didn't work as well as expected, because the banks that got bailed out just took the money and didn't spend (banks spend money by investing) it, meaning no increase in AD.

 

[The Gnome King]

...I think people are vastly overestimating the US's military strength.

We had the strongest military in the world...once upon a time. If another major first world country wanted to take something from us, I'm pretty sure that they could nowadays.

Do some research; I think you are vastly underestimating the US military's strength. We still spend more on our military than any other country; in fact:

The United States spends 7 times more on the military than any other nation on the planet does. In fact, U.S. military spending is greater than the military spending of China, Russia, Japan, India, and the rest of NATO combined.

---> http://www.liveleak.com/view?i=594_1310199627 (Though you can find this information in many places on the web.)

SEVEN times as much. As much as China, Russia, Japan, India, and NATO combined. Think on that.

#1 - it's part of the reason we're in this debt mess and
#2 - it pretty much guarantees that no other country is going to mess with us in a strictly military sense; we still have the conventional military power to blow them out of the water.

We still, very much, have the strongest military in the world. Who else do you even think comes close?

Again... this isn't necessarily a good thing; but I wouldn't worry about any country taking anything from us by force. Terrorism is a far greater threat now than invasion by a foreign power.

Oh, and to fix this problem requires a two prong approach - people don't like to hear it but yes, we need to increase revenue/raise taxes. They're as low as they've been in decades and it is NOT increasing jobs; it's actually just harming government services. Bring taxes back to Clinton-era levels. Remember the 90's? They were pretty good, economically; we had a surplus, not a debt. Bush decided to "give back" all those "excess dollars" to Americans and, well, we saw how that worked out.

The other end of the prong is to work on entitlement programs; I favor means testing for social security and Medicare, personally, because I don't think the wealthy need the help. I also favor decreasing the size of our military; we could cut spending in half and we would still be spending more than any other country in the WORLD on our military budget.

Viola; raise revenue and cut spending - problem solved without hurting the poor or neediest people.

 

[Vault101]

havnt we been having trouble with that for a while?

out AD campagns havnt been working

ESPECIALLY that spin off campaign from that abomination of a movie

ohh look an Aborigianie kid!...yeah because aboriginaies have magical powers, if you happen to be stressed an aboriginal kid will break into your apartment and give you some sand, then youll be teleported to outback Australia..agghhhh!

"We're gonna go walkabout!...here's some sand!"

True...on the other hand "Were the bloody hell are you?" suddenly becomes amusing again when watching news reports about some of the nations the ad was supposed to attract people from.

Unfortunate and terrible in the short term, but maybe good in the long term, as long as they can see that it was Bush's fiscally irresponsible governement and not Obama's that caused this. Obama was left with a huge mess to clean. It was already too late by that time.

It's been argued that the problem was manageable, but that he's mishandled it into something worse, though I don't know if that's true.

yeah I find it silly that people were getting their knickers in a twist over that...honestly it wasnt that bad

its kind of like those who say that Waltzing Matilda should never be the aussie anthem (not that I really care eather way) because "its about a guy who steals a sheep and kills himself rather than be caught!!"

1. thats beside the pount/Idea of why we would want it as an anthem

2. other countries dont give a shit

 

[Cecilthedarkknight_234]

honestly, at this point in time we can't do any thing. This is our fault for electing this rich ... ya know what there isn't a point in cussing either.. it's just nice to know that the future of so many people rest in the hands of so few... heh.