Still no Deal with the shutdown in the United States ,
Debt Ceiling to be raised by 17th October or it is being reported as a possible Default. (CNN and lots of others)
Maybe a deal will be done but maybe not , even if there is a deal done , could this cause a default down the road?
If there is a major default soon then what are the consequences for Irish Banks, lending and property prices?
Any clue anyone?
The US won’t default until another country takes the “reserve currency” crown, they’ll raise the debt limit again.
No impact whatsoever. This is one of the biggest non stories of the year. Pure political kabuki. The Federal Government "shutdown’ is a pure administration political scam. They only close high public visibility Fed offices or stop high political leverage Fed payments. Its all for show. Absolutely everything else goes on as normal. 80% of the Fed workers are still working and most non public leverage payments are being made. So just like the last time. The “shutdown” could continue for the next six months and the vast majority of people would notice damn all difference. It has about as much impact on ordinary life in the US as if the Eurocrats in Brussels went on strike would have on Ireland. All those getting handouts would scream bloody murder but the vast majority who dont would notice no difference in their lives.
They pull the same sort of scams at the state level. The state gov pull front line workers from very public places like the DMV due to “budget crisis”, causing huge lines and delays for the public. The moment the Governor gets his big tax increase within a day or two the lines miraculously disappear as all the front desk works suddenly reappear again. This is purely a Dem administration thing, both at state and Fed level. When the Reps are in charge there are the same sort of balls ups but they usually do engage in the same kind of blatant media fraud.
The “Debt Ceiling” is also pure political kabuki. No meaning in the real world. The US missed bond payments back in the late 70’s and that did not cause the end of the world. And as so much of short T Bills over the last few years were bought by the Feds in the first place most of the new debt will just be rolling over old Fed owned debt so just an accounting slight of hand. They could juggle a few months of rollovers before they would have to start getting really creative, Which they would if they had to.
So basically a manufactured story. The real story is how they ran up 7T in debt during a period when the multiplier was less than 1. Which in pure Keynesian terms means that ever dollar of debt raised to stimulate the economy actually reduced economic activity by a few cents. You wont see Robert Peston or the BBC bang on about that story. Which is actually the single biggest political and financial scandal of the last five years.
How did the run up 7T in five years?
The increase in the national debt since 2009 was between 6T and 7T, depending on how you do the numbers. Most of it was due to deficit of well over 1T a year. The rest due to increase in assumed liabilities ranging from Fannie M and Freddy M, Student loans etc. Pretty much all the annual deficit had a negative multiplier effect until earlier this year when the core economy finally made some kind of real recovery. Mainly due to the end of personal debt pay down. And the massive energy production boom - no thanks to the Administration as hydrocarbons are evil it seems.
No impact of default yet we must worry about debt? Also i think you mean a multiplier of zero in the last paragraph
arf, what a load of rubbish. Japan’s been doing “that” for a decade; without the deficits then you’d have just had lower growth, higher unemployment, and a deeper depression - probably global to boot.
The actual “single biggest political and financial scandal of the last five years” has been the enormous amplification of the disparity between the western world’s rich and not-rich; and how the poorer (not rich) sectors of society have been hoodwinked into going along with this by the lies pedalled by neo-liberal, hard-money, bond-vigilante-inventing frauds… who (surprise!) tend to be members of the rentier sector.
Says the Pin’s token GOP supporter.
Question: Do you agree that the Republican party has been taken over by high grade loons?
What’s happening in Washington is normal October politics running back several decades. You will be hard pressed to list the differences between both parties, the only real difference is the pork barrel spending otherwise their sponsors are the same. Meanwhile due to the optics of the debt ceiling Obamas “free trade” deal is ignored and where did all the money go?
The out of control debt is still a non story, at least from a practical political point of view. Its been an “end of the world” crisis since Gramm Rudman in the mid 80’s. Which actually kind of worked, for a while.
All the debt does is blow more bubbles. We are having an almighty commercial real estate construction bubble at the moment and had a spike bubble at the beginning of the year in domestic real estate. Now pretty much over.
I think the multiplier is up to 1.04 at the moment. A long way from the 1.6 / 1.7 over the previous decade or so. So the effect of the increase it debt is to just about stay ahead of real inflation. For the sum spent.
Pure affluent middle class Occupy’ish drivel…
Wandering somewhat off topic …
In fact, it’s actually 7 billion (7,000,000,000,000), as the currently fashionable ‘billion’ (1,000,000,000) is actually a milliard (a thousand million), while the term trillion is inaccurately used to describe a billion. The American’s have dropped the intermediate “ards” and squashed down the names.
Million 1,000,000
Milliard 1,000,000,000
Billion 1,000,000,000,000 (i.e. a bi-illion)
Billiard 1,000,000,000,000,000
Trillion 1,000,000,000,000,000,000 (i.e. a tri-illion)
Trilliard 1,000,000,000,000,000,000,000
and so on.
I really don’t get the American “devaluation” of the numbering system and its very recent use here (possibly a case of more sloppy journalism) … the European continentals still use the above numbering. If you listen to our German friends talk in their native tongue you’ll hear regular mention of “Milliarde”.
Either way, it’s still a massive amount of money to run up as debt and an damning indictment of the failure of US administrations to get their budgetary act together.
Blue Horseshoe
And indeed successive congresses to get their taxation act together…
Federal tax rates in the US are ruinously low (for the state)…
Not the token GOP’er. If nothing else that shows how utterly one sided this site is when it comes to foreign politics. About 90% of the posts here on the US reflect current Dem Party talking points. In reality around 35% of the US is registered Dem and the GOP currently run the majority of state and local government. Which congress reflects. As the US is a coalition-in-party style system then the parties will always tend towards around 50/50, except during major political shifts. The last one was in the mid 30’s.
I am a New Deal Democrat. FDR and the Tugwells Brain Trust are my type of politics. Which means I have complete contempt for the current general of 68 New Left Civil Right Dems who hijacked the party back in the 1980’s. Its the Dem part that is run by complete loons. An unholy alliance of Tammy Hall big city machines, public sector unions, the profession administrative class, the grievance and “rights” industries , and affluent middle class who need cheap servants (Mexican illegals). Add the most blatant FF style populism with not an iota of civic responsibility and you have the current Dem Party.
The nearest I come to the GOP is the GOP of Earl Warren. Who used to win both the Dem and Rep open primaries back in the 40’s. The modern GOP has some real nutcases but is an island of sanity compared with the people currently running the Dem Party. Especially at the state and local level. Pelosi is their poster child at the Fed level, Ammiano at the state / local level. No sane person would want to vote for a party that has people like Ammiano running around.
Eire? Where’s that then?
You obviously have not paid US tax…My marginal rate is around 60%.
The problem is the same as Ireland. Too many freeloaders at lower incomes. 40 years ago those in the lower half made some contribution to income tax. So they actually cared about increased spending as they were paying for it. They saw the direct and personal effect of taxation in every pay packet. The 50% who now dont pay any fed income tax, and the 47% who get some kind of handout or other, are the real reason why there will be no reform anytime soon and the system in this cycle will be run to destruction.
The only question now is whether Medicare or SS will destroy the economy first. Both programs which the Boomers could have seriously reformed back in the 70’s and 80’s but decided that they would rather keep the (small) amount of money it would have cost them at the time, spend it, and just free load of the next generation. Medicare makes the HSE look like a paragon of financial prudence and organizational efficiency. In the most basic terms I have to pay 2% of my gross income to pay for the exceptionally expensive health insurance of the wealthiest cohort. Most of which is then spent (at vastly inflated costs) on the two richest quintiles on essentially pointless procedures in the last two weeks of life.
Shutdown Medicare (and Medicaid), get the government out of medical insurance, remove the company tax deduction (which is why medical insurance is linked to jobs) and the whole mess would soon sort itself out. But the AARP will never ever allow that. So runing to destruction it is going to be.
The BBC pretty much gave up on the UK billion in the early 90’s. Before that they used to use the term thousand million. So that is good enough for me.
What is really impressive is that the Japanese have just run up their first quadrillion (US) in debt.
Not sure where you get that. Do you earn 400k and, er, pay 20% state on top of that? Even with FICA.
taxes.about.com/od/Federal-Incom … x-Year.htm
Anyway, if your effective rate is much about 20some% you should fire your accountant.
For the rest? Libertarian teenage wishy-washiness…
+1
What is his suggestion for replacing medicare/medicaid
There was uncertainty when the words were invented-and most European countries have moved between meanings a couple of times. There was a battle of meanings in the Uk recently and the government finally caved in in the 1970’s to about confusion. The other European countries are protected by their “foreign” languages.