Thread: Vote IS US default a 'good' thing?

Originally Posted by Thormaturge

The party is over.

no, it's not. I suspect some are playing the newswire for political and cynical reasons.

this shouldn't even be "labeled" default by the rating agency unless the coupon payments on Treasury issues are suspended which I doubt it will, but again who the fuck knows for sure.

Originally Posted by OhOh

Surely they are a debtor nation, a failed state. They have, at present, the ability to print more money but all that does is devalue the $ even more.

a debtor nation is not necessarily a bad thing. This is often a characterization that is simplified in the press or by the "amateur financiers" and politicians out there.

Originally Posted by OhOh

They have, at present, the ability to print more money but all that does is devalue the $ even more.

only because they are "financing" world growth, and in case you didn't notice, globalization has made a lot of people richer in almost every country, but like everything it comes at a cost. When everyone has more USD to spend, it becomes worthless and things become much more expensive.

Originally Posted by Thormaturge

The whole of the US is going to pay higher interest as a consequence.

says who ? I seriously doubt it, demand for US treasury is extremely strong so they can get away with very low interest rates

Does anyone think that President Obama is going to just sit there while the power of the US collapses? He doesn’t have to do so. There are presidential directives and executive orders in place, put there by George W. Bush himself, that President Obama can invoke to declare a national emergency, suspend the debt ceiling limit, and continue to issue Treasury debt. This is exactly what would happen.
Paul Craig Roberts: The Unintended Consequences of Debt Ceiling Intransigence : Information Clearing House: ICH

There won't be a default- Obama will just suspend the debt limit by executive decree, and they can fight it out at the next elections. As the quoted article says- "A Congress that is willing to destroy its remaining power over a debt ceiling increase that is less than a Federal Reserve loan to one US bank is a Congress moved to folly by Republican intransigence."

Originally Posted by Butterfly

Originally Posted by Thormaturge

The whole of the US is going to pay higher interest as a consequence.

says who ? I seriously doubt it, demand for US treasury is extremely strong so they can get away with very low interest rates

So is the demand for gold now.

Moody's et. al.

I was watching Republicans today talking about how the likely interest increase would be affordable.

Originally Posted by sabang

There are presidential directives and executive orders in place, put there by George W. Bush himself, that President Obama can invoke to declare a national emergency, suspend the debt ceiling limit, and continue to issue Treasury debt. This is exactly what would happen.

Obama has declared that he won't use that nuclear option, but he might have no choice

it's a corrida between Obama and Congress, guess who is going to win

Originally Posted by Thormaturge

Originally Posted by socal

Originally Posted by Thormaturge

Higher interest rates equate to greater unemployment, more foreclosures, and more control of the economy returning to Wall Street. The middle class will be the ones to suffer.

For the wealthier members of the community it means higher investment income and consequently more money in the bank which they will do nothing with.

The best thing for the US is to default and let the old system crash and burn. Short term pain, long term gain. That is what Asia did in 1997 and now they are ahead of the game. And the bankers in Asia got shafted too.

After the 1997 crash, Thailands economy already started to improve in 1999.

-By 2001, Thailand's economy had recovered. The increasing tax revenues allowed the country to balance its budget and repay its debts to the IMF in 2003, four years ahead of schedule. The Thai baht continued to appreciate to 29 Baht to the Dollar in October 2010.

=The South Korean Won, meanwhile, weakened to more than 1,700 per dollar from around 800. Despite an initial sharp economic slowdown and numerous corporate bankruptcies, South Korea has managed to triple its per capita GDP in dollar terms since 1997. Indeed, it resumed its role as the world's fastest-growing economy—since 1960, per capita GDP has grown from $80 in nominal terms to more than $21,000 as of 2007

The problem I see with this is that the USA and Thailand have entirely different economies.

Thailand was able to recover because its markets, especially the USA, were still willing to buy its produce. If the USA fails I do not see there being a large customer willing to buy its products, but more likely a large predator wanting to buy up the entire country at bargain basement prices.

An American default would be a gift to the Chinese.

You are right, in a way, but prolonging the problem does not make it go away. The US should have had a real recession in 2001, that would have corrected some imbalances. Instead they dropped interest rates which created the housing bubble.

The part you are right about is that there was still something that resembled a real producing economy in Thailand after the financial crash. Not so for the US. The US is just a ponzi scheme waiting to collapse. The longer they prop it up, the worse the pain is going to be.

[quote=Butterfly;1830709]

Originally Posted by OhOh

Surely they are a debtor nation, a failed state. They have, at present, the ability to print more money but all that does is devalue the $ even more.

a debtor nation is not necessarily a bad thing. This is often a characterization that is simplified in the press or by the "amateur financiers" and politicians out there.

Fuck you it isn't a bad thing. It is the politicians and amateurs like you that say its a "good thing".

Originally Posted by OhOh

They have, at present, the ability to print more money but all that does is devalue the $ even more.

only because they are "financing" world growth, and in case you didn't notice, globalization has made a lot of people richer in almost every country, but like everything it comes at a cost. When everyone has more USD to spend, it becomes worthless and things become much more expensive.

They are not financing anything, they are the debtor. Amateur is an understatement for you but I understand how peoples minds get so fucked if they listen to the mainstream BS about economics. China is vendor financing the US plain and simple.

The US writes checks for all of the stuff they buy from China, but China doesn't cash the checks.

Originally Posted by Butterfly

Originally Posted by Thormaturge

The whole of the US is going to pay higher interest as a consequence.

says who ? I seriously doubt it, demand for US treasury is extremely strong so they can get away with very low interest rates

Strong alright.

This debt ceiling saga is playing out to be just another huge US Media hype.....again. As has been stated, right or wrong, they will not let it default. The US arrogance will simply not let it happen. Personally I think it should default. Let the US make corrections, adjust spending, cut BS out that needs cutting and reset. Show the world that the US government has a bunch of waffling pussy's at the helm.

Now what comes from this will be fun to watch. I am not on board with the "Buy Gold". Wasn't it back in the very early 80's where gold fell like a rock in a deep pond? Be sad day for those buying at $1600+ a troy oz now. I do think the signs are there that we will head into a 2nd recession(or a continuance of the first) call it as you want.

The US economy is flat and lifeless right now. I think the latest GDP report confirms it. One thing this will do is cramp all the "Get Rich" quick scammers. I think I will stick with my long term investments strategy. I have plenty of time anyway. For those up in years and depending on it now to live, it could be a painful chain of events.

Pull up a chair, The drama is about to start........

Make all those billionaires who made their money off the country help out.

Originally Posted by socal

Thats all fine and dandy, just a question....Where would you put $500,000 to invest today.

If I had $500K free cash I would not invest in anything but going off and having a good time in life while I have all my faculties to do so. With $500k spread out in CD's you can have some good fun. Why put $500K at risk?

On the flipside, I guess it all depends on how much money one needs to satisfy his wants and needs.

Its a good question and right now I would keep all my $$ liquid until the muddy water settles down.

Originally Posted by socal

I doubt you where on board with gold in the 70's either at $35 or $55 or $155 or $255 or $455.

No I was not, My Uncle and Dad were. They also took a large hit when it tanked in 1980. I played the high flying tech run from 1993 thru 1999 and got out way way ahead.

Right now no investing makes any sense to me. Even day/weekly trading as I do is tremendously hard. Seems the only way to make any $$ is jump on the legal pyramid game of IPO's, then bail out. In fact, If had $500K free, I'd wait for Facebook IPO, dump all of it there for 48 hrs and walk......Just kidding..But I am morbidly curious how it would go.

Originally Posted by JPPR2

If I had $500K free cash I would not invest in anything but going off and having a good time in life while I have all my faculties to do so. With $500k spread out in CD's you can have some good fun. Why put $500K at risk?

With low interest rates, $500K isn't enough to do that anymore, sadly- I think about 6x that is a decent number, though- that would get you at least 100K per year even in the safest (and most modest) of investments.

Originally Posted by FailSafe

Originally Posted by JPPR2

If I had $500K free cash I would not invest in anything but going off and having a good time in life while I have all my faculties to do so. With $500k spread out in CD's you can have some good fun. Why put $500K at risk?

With low interest rates, $500K isn't enough to do that anymore, sadly- I think about 6x that is a decent number, though- that would get you at least 100K per year even in the safest (and most modest) of investments.

^ True,
But only a handful sit on that much free cash to put it in a safe haven. CD's and money markets will return some (very little with no risk) while you live. $500K in Thailand is ton of cash as we all know. Of course like anything you have to manage it. Some cant. They want the big house, fancy car(I shutter when I know people are paying $100,000 for a Mini Cooper which is barely worth $25K) and all the bells and whistles they left behind in the home country. Of course with that comes carrying debt and the stress/worry that is part of it. Been there and done that. Lesson learned. Cash is King!!!! I found it is far more satisfying driving a nice little truck, living in a modest place and absolutely no debt. This is why I do not care what the US does with the debt ceiling. It will have zero impact on me. My friends are in a far different boat.

I will however look for opportunities to make some play money in it. Just have to watch for it and keep it simple.

Originally Posted by socal

The part you are right about is that there was still something that resembled a real producing economy in Thailand after the financial crash. Not so for the US. The US is just a ponzi scheme waiting to collapse. The longer they prop it up, the worse the pain is going to be.

OK, so short the US and make your self a huge fortune. You might start a thread and post your trades, for all to see.

Easy money right?

Originally Posted by JPPR2

I found it is far more satisfying driving a nice little truck, living in a modest place and absolutely no debt.

Same here. Big places just gather dust anyway. Seeing as our politicians & so called fund managers can't take care of money, I just have to do it meself.

Originally Posted by JPPR2

I found it is far more satisfying driving a nice little truck, living in a modest place and absolutely no debt. This is why I do not care what the US does with the debt ceiling.

The one I drive is a 12 year old diesel. Cost 25,000 baht when purchased years ago (damn 1st class insurance is 7,000 baht/year). Still runs like a charm.

But I do care,………

Originally Posted by S Landreth

Originally Posted by JPPR2

I found it is far more satisfying driving a nice little truck, living in a modest place and absolutely no debt. This is why I do not care what the US does with the debt ceiling.

The one I drive is a 12 year old diesel. Cost 25,000 baht when purchased years ago (damn 1st class insurance is 7,000 baht/year). Still runs like a charm.

But I do care,………

Exactly. Gets you from Point A to Point B (Not to mention you've save a bundle on transportation costs...)

Originally Posted by Lancelot

Originally Posted by S Landreth

Originally Posted by JPPR2

I found it is far more satisfying driving a nice little truck, living in a modest place and absolutely no debt. This is why I do not care what the US does with the debt ceiling.

The one I drive is a 12 year old diesel. Cost 25,000 baht when purchased years ago (damn 1st class insurance is 7,000 baht/year). Still runs like a charm.

But I do care,………

Exactly. Gets you from Point A to Point B (Not to mention you've save a bundle on transportation costs...)

Amen. Seriously. I see people locked in dead stopped traffic in their 10 million baht Mercedes Benz or Porsche's and I just do not get it. Same to be said about US in their Ferrari's or one off Bentley's. I had my weekend vehicles but drove a 1984 Honda Accord with 310K miles on it back and forth to work. It has been in the family since 1984. A fully loaded beauty she is. 39 MPG. I still have the car and it is at a friends so when I travel back to the US I have a car.

Downtown BKK is like NYC or LA. There is no need to own a car at all. It is pointless.

Originally Posted by JPPR2

CD's and money markets will return some (very little with no risk) while you live.

actually CDs do carry some "significant" risks, you can't liquidate them before a certain date or else you lose the interests

they are also not covered by FDIC or the banks or the government, so if the banks issuing them go bankrupt, technically they can default on the capital and interests of the CDs, don't think it ever happened yet, but who knows these days

CDS are short term debt obligation, or bonds, and therefore will suffer from the same inherent risks of bonds, even though in a very limited term

Originally Posted by JPPR2

Amen. Seriously. I see people locked in dead stopped traffic in their 10 million baht Mercedes Benz or Porsche's and I just do not get it. Same to be said about US in their Ferrari's or one off Bentley's.

I see your point but the pleasure of driving a luxury car can't be discounted, it's really something else and you can't compare that as driving a truck or a Honda Jazz

Originally Posted by Butterfly

actually CDs do carry some "significant" risks, you can't liquidate them before a certain date or else you lose the interests

Inflation is a bigger risk. Try and find a CD now that will give the investor a meaningful real return. (adjusted for inflation)

CD/bonds have a place in an investor's portfolio; however, you will still need some equities for growth.

Originally Posted by Butterfly

actually CDs do carry some "significant" risks, you can't liquidate them before a certain date or else you lose the interests they are also not covered by FDIC or the banks or the government

Who told you that?

CDs in the US are FDIC insured up to 250K these days (up from 100K a few years ago).