If the U.S. defaults, what do you think will happen?

[Nixie]

As was said, if it were a business it would be forced to live within its means. The government cannot bail out the government like it has so many other things. Someone needs to pull back on the reigns.

As a dry joke, maybe Egypt will tell Obama to leave the US.

People can easily revolt. If that happens, everyone hold onto your hat. I don't want to make more jobs with the ways the government says I have to do things. Far as I'm concerned, we have already defaulted in a sense. My state still hasn't even sent my tax refund yet since April.

How many times have each of us driven past a government crew working on the roads where six men are just standing around while one person is working? Everyone has all these government vehicles to drive around all day. The gov needs to be run like a business. Busing is one of the biggest jokes I have ever seen. It is just not too big to fix.

Tell them all their salaries and benefits, along with their retirements, are at risk before anything else and they will make this work.
Don't threaten social security checks: threaten your own check first. Don't threaten workplaces: threaten their offices first. People used to serve this country for free. Now people spend millions to get elected. Something wrong with the entire system.
Telling youth they will never see a social security check while taking money out of their checks for it is fraud. Fix it, don't just keep throwing water into a sinking boat. Let them do what is right or let it default, as there are those that can fix this. They may not be Congress or the Senate, but there are those that can fix this without them.

Economically, it would be a worse disaster than one could imagine. However, it would be much better down the road than where they are now heading.

Socially, I cannot but guess.

Politically, it may bring about a new government that can fix things to where they need to be over the next twenty years or so.

Globally, Iran will step up to try and help destabilize and take over as much as possible. China may well lose out, too, as our buying will slow which will also slow their factories where we have sent most our jobs. World security would take a bad hit. Helping to care for the needy around the world would slow to devastating results, hoping other countries would step up and roll their sleeves up to help.

In decades to come, it will only keep getting worse if the overspending is not stopped.

We have a great country. People during and after WWII were on a mission. Many more people percentage-wise care only about themselves and theirs as compared to many years ago. We worked our way out of it before. People cared more about this great nation than they do now. I think this requires a different mindset, possibly brought about only by leadership focused on just that. Unfortunately, I do not see the leadership we currently need capable of bringing us back together in the crisis we are facing. Calling our Senators and Congresspeople sounds really good, but in reality they should already know what needs to be done and they should do it. The cuts should start with themselves.

Could not be farther from the truth (see bolded) Government is not business. Businesses do not have to uphold the welfare of all--if government was a business then those with wealth would be considered greater "shareholders" and have a greater say. People have never "served for free". In the early history, only the elite served. It is not adviseable to not pay your elected officials because then you either guarantee that only the wealthy can afford to serve or leave your policiticians even more open for bribery. Fixing things outside our electorial system means eliminating those systems of government that are in place. Iran? LOL Do you know anything about history? Where do you think Iran got lots of the "goodies" they use? Ever hear of the Shah of Iran? Did you know that US trained Iranian death squads for the Shah? Iran Contra Scandel ring any bells?

Not to be mean, but you aren't well informed.

 

[acd]

Don't get me wrong.. I am certainly not rooting for a revolt..
In fact, I'm afraid of that happening.
But I am a bit concerned that if things become desperate enough for people, violent civil unrest will ensue.
Things are already very difficult. And the gap between rich and middle class continues to widen... now couple that with interest rates skyrocketing (for a large percentage of people who have had no choice but to fall back on credit to get through rough times...) job loss, entitlements that some people depend entirely on being cut... etc. etc. I don't know. It's really not looking too good for the U.S.

 

[Nixie]

You are correct in many ways [MENTION=564]acd[/MENTION]
There are serious concerns about the shift in economic wealth. A majority of the problems began in the 80's with the deregulation of the savings and loan market which caused a massive shift in property holdings as well as artificially raising house prices. So if your property value shot up, then you could "borrow" against the "worth"--however, the "worth" wasn't real which has now bottomed out. It was of course, faulty lending by big business wanting to make lots of money off of interest and fees. Additionally, businesses were deregulated (again the Anti Christ Reagan) in markets which allowed companies to combine and combine until they became too big to fail. The "crisis" has been a long time in the making. The idea that we need "less government" is ridiculous considering these two big things have caused such economic havoc for our country and are basically a result of the government stepping back and saying--OK, run it yourself. Big business can not be deregulated.

 

[justeccentricnotinsane]

Financial markets are going to be key here, as are exports, imports, commodity pricing, the strength of the dollar and the interest the government is paying on debt.

The first thing that will happen is that the US credit rating will be cut. This means that investors will have less confidence in the US economy and will pull out of the dollar, so the dollar will get softer. That's bad for imports. And the US is an importer over an exporter (I think? Tell me if I'm wrong there). So imports will cost more money which will push up prices. The government will also have to pay back more on its debts, which will lead to a greater budget deficit and might entail more spending cuts and higher inflation (since fiscal stimulus will probably be necessary). This means that unemployment could rise and people's disposable income would also go down.

Commodities are prices more highly when the dollar is soft. So fuel will cost more as well metal for manufacturing. So that'll be a problem. There's also a wider financial market issue. Since the eurozone defaults, the financial markets have been volatile, which means that companies will be affected by choppy investment. The US is interlinked economically with countries all over the world and obviously has been affected by he eurozone (though not as much as the eurozone itself, obviously!)

Basically, the easiest way to look at it, is that economics (from a really inexperienced financial journalist point of view, please come and save me economists!) is all about confidence. Confidence among investors and consumers. The world and domestic economies depend a lot on how much people are willing to spend (from international investors to just someone going into the shops) and how risky people feel it is to borrow and lend.

 

[Nixie]

Well impending cuts in gov't spending and the debt crisis can impact in many ways. It becomes a vicious cycle. It has been a buyers market for awhile for durable goods as companies have had to get rid of excess inventory since consumer spending has slowed down. As inventories fall, companies will have less incentive to create new or buy products which impacts imports and manufacturing. In order to get returns for their companies, they will raise prices. As the durable good market gets smaller, this causes confidence to fall and jobs to dry up in the manufacturing area. If there is less money in the economy, interest rates rise. As interest rates rise, companies are less likely to borrow and less likely to hire. Consumer confidence falls and spending slows down. The consumable market is affected and food prices and such rise, again as companies respond to the idea that people are spending less or have less to spend--because they have a "profit margin" to protect. The increase in the gas prices doesn't help either as it contributes to the poor durable goods market (think washer, dryers, cars.) and has already increased shipping costs in the consumable goods market. It all kind of tends to feed into one another. Consumer spending is a third of our economy. Government spending is a third of our economy. Investing is another third. But yes, confidence does play a pretty large role in the process.

 

[Flavus Aquila]

I'll bet the conspiracy theorists have many things to say on this subject.

Their assumption, is a question of interest to me: how long ago was this situation foreseen? And is it intentional/deliberate? If so, to what end?

 

[just me]

I'll take my "uninformed self" over what I mostly see out there regarding this any time.

Leaving Iran out of the mix and back to running like a business should be run: maybe you misunderstand my intent. I will say it is good to see someone so passionate about something for a change. If a leader is open to bribes, he is but a moron and not a true leader and does not belong there with the title and honor. We have TOO MUCH GOVERNMENT and NOT ENOUGH MONEY.

 

[just me]

I'll bet the conspiracy theorists have many things to say on this subject.

Their assumption, is a question of interest to me: how long ago was this situation foreseen? And is it intentional/deliberate? If so, to what end?

We can only guess. I warned people in the steel industry over ten years ago this was coming when they started sending all our jobs overseas and ordering all our steel from overseas. Manufactured fittings in the US were replaced with Chinese fittings. It was happening on a broad scale in many different veins. They never said a word as if I was crazy. Makes me wonder if it is all on purpose at times, but I would at least like to think otherwise.

 

[Nixie]

Actually, we have too much government because we don't have enough investing.

 

[Nixie]

We can only guess. I warned people in the steel industry over ten years ago this was coming when they started sending all our jobs overseas and ordering all our steel from overseas. Manufactured fittings in the US were replaced with Chinese fittings. It was happening on a broad scale in many different veins. They never said a word as if I was crazy. Makes me wonder if it is all on purpose at times, but I would at least like to think otherwise.

Per Manufacturing:

Yes well, in many ways the US didn't remain competative enough in the manufacturing market to sustain the industries. It isn't about the cost of labor--companies and such always bitch about labor costs because it is the largest component of your variable costs. It is about the ability to manufacture a quality product within a certain criteria.

One thing to blame is the inferior quality of the products produced by American companies because they refused to streamline processes or invest in research and development to stay above the competition. It has been many years since America could claim to be an industry leader in any manufacturing process. Increasing globalization means that the US should have worked harder to be a better manufacturer. However, many companies barely spend anything in R and D (research and development)

Another thing to blame is the complacancy of consumers in general to appreciate a cheap, less durable good over a quality, high priced good.

Another thing to blame is the tendency of companies to be allowed to rape other "poorer" countries resources and environments in order to cut costs. No worries about air pollution regulation. No worries about a living wage. The government has done a crappy job of making these companies suffer for their immoral choices. I would have loved to see them taxed/tarrifed to death if they engaged in such activities. This would have prevented companies from wanting to engage in such behavior and reduced the "benefit" of shipping jobs to "china" or elsewhere.

 

[just me]

Actually, we have too much government because we don't have enough investing.

Everyone lost their butts that had their money invested a few years ago. I know. Our government cannot sustain itself by selling itself every day. No matter the reasons, we cannot afford to keep overspending the way we are overspending. It will be the next generations that suffer the most for it, and they are the ones that seem to be complacent about it.

The fittings I mentioned were better quality made in the US than that I see nowadays. Labor costs and unions do play a big part of the problem. The countries that do not care about environmental protection all for the mighty dollar are to blame, not us, for that. Funny how China had to clean up for the Olympics. They are a picture of what we will look like in the same timeframe: too many people in too small an area for too long.

We are already polluting our waters. We are a young nation and will catch up to the others over time. If we were two thousand years old it would show like it does over there. The Indians took good care of this place: we are destroying it.

America needs someone to tell them what to do.

One way or the other, whether in the public eye or behind closed doors, our government is defaulting. The spending spree must stop to turn things around. A bandaid is a bandaid.

Add the costs of natural disasters, terrorism, narcoterrorism, drug cartels, helping other countries in their times of need, and the sum of it all is far more than what we can possibly bring in. It is only a matter of time unless drastic changes are made. Everyone said we went to Iraq for the oil, but exactly where is it? Is it paying our expenses?