If US Defaults, Stocks Fall 30%, GDP 5%: Credit Suisse Published: Thursday, 28 Jul 2011 | 2:56 AM ET In the very unlikely event that the United States defaults on its debt obligations, the country's economy would contract by 5 percent and stocks would fall by nearly a third, according to Credit Suisse. If no budget deal is struck, but the U.S. does not default, Garthwaite predicts a bad time for stocks and the economy. âAs our economists point out, each month of no rise in the ceiling could easily take 0.5-1 percent off GDP. In this case, equity markets would drop by 10-15 percent, prompting Congress to find a solution, and bond yields would fall to 2.75 percent.â If that proved to be the case, investors would in Garthwaiteâs opinion need to get into defensive stocks and out of the dollar. http://www.cnbc.com/id/43907446
After reading this it seems the debt ceiling will be raised for another 50 years, seems the economy cant handle anything on its own and not raising the debt ceiling would be just another downfall for the economy. I think I am going to call my credit card company today and see if they can raise my credit limit to $25,000, figured I would start off small and ask for an increase in my credit limit at least once a year, hopefully they just raise it so I can keep on spending without hurting my overall credit score, what do you think?
U.S. will not default. Tax revenues are way, way higher than debt service payments - it's not even close. On the other hand, immediate austerity will be enforced - defense contractors and other various vendors will not get paid and will almost immediately begin laying off workers. This is the danger - not any stupid damn default or downgrade.
No doubt. All these `tards running around screaming US default! show just how poorly understood economics is. Although a downgrade would have some impact. But the US is not going to default, not this year. Not next year.
http://www.investopedia.com/terms/d/default2.asp those idiots in DC should learn the proper definition of default. interest on debt paid first. then everything else. cutting the payments or benefits is not a default
RIGHT! Odombo wants to claim default if the parasitic tit-suckers... who have been given and promised WAAAYYYYY more than they deserve and can be delivered... have to take LESS, in exchange for their vote. That's hardly "default". This entire debt business might be good... in the sense the world might come to realize what a lying, manipulative, self-serving POS Odumbo is.
RIGHT! Odombo wants to claim default if the parasitic tit-suckers... who have been given and promised WAAAYYYYY more than they deserve and can be delivered... have to take LESS, in exchange for their vote. That's hardly "default". This entire debt business might be good... in the sense the world might come to realize what a greedy, lying, manipulative, self-serving POS Odumbo is. Odumbo apparently hates white people. Hates business. Hates Americans. Would "side with Muslims" in a confrontation. What the Hell does any such man have business being POTUS?
No one knows what would happen, the media is making this sound like the biggest problem since the collapse of lehman, this is just hype to scare everyone so that they can get the debt ceiling raised! Seems no matter what, the debt ceiling will be raised, history shows that the debt ceiling has been raised on average at least once a year for the last 49 years!!!! So they arent going to stop now...the media hype on these debt ceiling talks the most pathetic I have ever seen! Since March 1962, the debt ceiling has been raised 74 times, according to the Congressional Research Service. Ten of those times have occurred since 2001.
If US does pay debt interest to its bond creditors but in turn does not pay to folks like defense contractors or social security benefits recipients, then that is a default of a kind. Like some one already mentioned, this would lead to further cost cutting, austerity measures and higher taxes etc. All this means slower or stagnant economy, many layoffs etc. which would further dampen the economic prospects. I am not sure on this, but no more debt issuing capability will also hamper Fed's chances of introducing anymore 'stimulus packages' to bail out or repair really beaten down sectors of the economy. Finally, it would be really pathetic if debt ceiling is not raised by the politicians in DC. It will create lots of chaos in the society and world financial circles.
BULLSHIT! Such chaos is what we need. No more "kicking the can down the road for convenience sake"...