US gubmint shutdown + default + subprime sequel?

[rory_20_uk]

In the UK there was a massive outcry when large postoffices that contained little more than open space to line up waiting for the tills. Most of these have been replaced with small counters in shops. They do the same job in a lot less space.

Some have claimed the network must remain in place as some elderly can not use computers - rather than solutions to the problem, keep everything the way it is...

There are few things that have to be sent through the post. Most of the rest is either historically sent through the post or people think it would be nice to have sent in the post. The former category can be sent via email. The latter can be sent at what the item costs to send.

I can send a 30kg parcel anywhere in the UK. It will be picked up from my doorstep at a set point. I purchase it online and print the label myself. This service costs £5. Not bad, I think. I've sent 400g through Royal Mail having to go to a post office and the rest of the hassle for roughly the same cost.

[Centurion1]

usps handles passports as well and also other paperwork. like selective service

[Beskar]

Vince Cable made a few comments on this:
http://www.bbc.co.uk/news/business-14267091

[Philippus Flavius Homovallumus]

In the UK there was a massive outcry when large postoffices that contained little more than open space to line up waiting for the tills. Most of these have been replaced with small counters in shops. They do the same job in a lot less space.

Some have claimed the network must remain in place as some elderly can not use computers - rather than solutions to the problem, keep everything the way it is...

There are few things that have to be sent through the post. Most of the rest is either historically sent through the post or people think it would be nice to have sent in the post. The former category can be sent via email. The latter can be sent at what the item costs to send.

I can send a 30kg parcel anywhere in the UK. It will be picked up from my doorstep at a set point. I purchase it online and print the label myself. This service costs £5. Not bad, I think. I've sent 400g through Royal Mail having to go to a post office and the rest of the hassle for roughly the same cost.

That doesn't cover government post, does it?

[Lemur]

Looks like a compromise is not happening, and it's down to brinksmanship. Sad, really. A little perspective:

[Papewaio]

From the interview I saw on the news today... the Speaker of the House sounds like he wants his airtime.

Is he running for president?

I want the US to get their heads around this. To pay up. To keep their AAA credit rating, to not rock the boat of the world economy (although on news of this the Aussie dollar seems to have gone up not down).

I for one would like to see my government back in surplus in the next two years, despite paying $25 a ton on carbon and raising the tax free threshold to $18k. USA playing silly buggers is not , is not going to win any friends. If anything it's going to go down worse then invading Iraq. Sure push up petrol prices and kill a dictator. The implosion of the GFC was bad, but primarily the blame lies with corporations (lack of oversight by the gov isn't good, but isn't the to blame). A self created GFC II over party politics one will go down like a turd in a pool. Problem being this pool is the world economy and the long term damage will be:

AAA rating will dip making interest rates on loans to the US go up. The consequence is that it will be even harder to service debt.
Today the FX is primarily about swapping US currency. Shake that confidence and another (EU or Chinese) will take steadily over, it won't be immediate, but over time oil, gold and other contracts will be moved across.
What does a currency that is less in demand do? Well like any commodity to sell the same amount it dips in value or the contraction will have to remove more cash from the system. Essentially it amounts to the same thing. It becomes harder for the US to service overseas debts as the value of the currency goes down.
Part of the power of power is confidence. Markets run on confidence. To much brinkmanship even if it doesn't go over the brink is going to put a dent in the US economy as investors start to rethink their portfolios. Once this trend starts, it will become a long term strategy. China may not sell up its bonds, but it may slow down how many it buys. This again will have a knock on effect on the US governments budget.

I wonder how much it would cost to make an iPhone in the US?

[drone]

Aside from shotguns/ammo/canned foods, where should I put my money if the default happens? Gold is already expensive enough as is. I'm assuming we are in for rampant inflation, right?

[Lemur]

No idea. I only do long-term investing, never play the market. That's for people with far more disposable attention and energy than I have.

A good point about why a default (and the resulting recession) may be good politics for the GOP:

If in fact the debt limit is not raised well beyond the August 2 target date, and the economy suffers the severe blow that experts, Democratic politicians, and most Republican politicians believe is likely to happen -- the dissenting Republican politicians such as Michele Bachmann, Steve King, and Louie Gohmert (and other insiders) will not, in fact, admit that they were wrong about it. Instead, they will blame Barack Obama for implementing the debt limit badly. And they will do so no matter how he implemented it [...]

What's more, and this is only slightly less obvious and slightly less certain, they will almost certainly not be penalized within the GOP for being wrong. Indeed, what's far more likely is that if, as virtually all economists and budget experts currently insist, failure to raise the debt limit causes economic disaster, the likely effect within the GOP will be to enhance the prospects of those who claim that the experts don't know what they're talking about -- and any post-limit disaster will be considered yet another sign that the experts don't know what they're talking about.

So really there's no downside for the GOP, and no reason they should accept any compromise. Driving America's economy into the ditch will only help them re-take the White House and the Senate.

[Beskar]

Looks like a compromise is not happening, and it's down to brinksmanship. Sad, really. A little perspective:

That reminds me of that website ages ago which said "Can you fix the economy?" and there was lots of different options and laws, and realistic things.

I remember me, Louis, HoreTore and a few others fixing the economy by 2014 because we repealed the Bush tax cuts and removed perks of the Mega-rich, while at the same time expanding pensions, healthcare, R&D (also increase in Nasa funding) and infrastructure investment (like american autobahns). So safeguarding and creating an awesome america for everyone.

Then other forum users (republican minded) wanted to decrease taxes (!) and increase military spending, etc and killed the nation by 2012.

[gaelic cowboy]

What's more, and this is only slightly less obvious and slightly less certain, they will almost certainly not be penalized within the GOP for being wrong. Indeed, what's far more likely is that if, as virtually all economists and budget experts currently insist, failure to raise the debt limit causes economic disaster, the likely effect within the GOP will be to enhance the prospects of those who claim that the experts don't know what they're talking about -- and any post-limit disaster will be considered yet another sign that the experts don't know what they're talking about. [/ind]So really there's no downside for the GOP, and no reason they should accept any compromise. Driving America's economy into the ditch will only help them re-take the White House and the Senate.

It's almost Orwellian, no I take that back it is Orwellian.

Do these fellas have cotton wool in there ears or summit.

[Husar]

Well, sending things to the government electronically is nice, and I'd like to do it, but concerning ELENA(electronic transmission of your tax sheets etc.) has been dumped here over concerns of data security and our customs had their system hacked etc. it may be a nice thing for the future, but if it isn't done well and secure you might find your whole financial data on some hacker's site someday. It would also require you to have it all in electronical form on your compter and I'm not sure how safe exactly home firewalls are, our customs used one(wanted to save money...) when they got hacked...

[Tellos Athenaios]

Yeah that game is dead easy. Slap a VAT on the American economy problem 33% solved. Slash and burn the tax cut laws, job done. But that is apparently socialist sound financial policy. So it's like cheating, really.

[Samurai Waki]

You know... I was getting worked up about this; then I decided that no matter how angry I was going to get, the only thing I could really do is piss and moan, and get on with my day. So, whatever, if it's economic armageddon if this thing doesn't go through, guess I'll just smoke a cigar... drink a few tumblers of bourbon, and get on with life in one fashion or another-- I even did the responsible thing and told my Congressman to get off his and start working with his opposition, but I digress. Either way, even if I lose my job, or get a pay cut, or a tax increase... I'll still probably be better off than most other people in the world.

[ICantSpellDawg]

Good observation, Lemur. I also fail to see the downside for the GOP. We are prepared to shoot this hostage, im surprised. On the one hand, the failure of the united states will be in the hands of a democrat, on the other, spending will be cut by 44 percent. America will be radically redefined and there was no other way to do it. Give us what we want or prepare for an end to life as we know it. Or not, and they were lying to us, in which case we are stronger for it. It is a triple win and I don't even have kids yet! quadruple win!

[Philippus Flavius Homovallumus]

Good observation, Lemur. I also fail to see the downside for the GOP. We are prepared to shoot this hostage, im surprised. On the one hand, the failure of the united states will be in the hands of a democrat, on the other, spending will be cut by 44 percent. America will be radically redefined and there was no other way to do it. Give us what we want or prepare for an end to life as we know it. Or not, and they were lying to us, in which case we are stronger for it. It is a triple win and I don't even have kids yet! quadruple win!

You are detached from reality, many Americans will be driven into poverty if spending is cut by 44%, and it will be the fault of the Republicans. Failure to agree to closing tax loopholes is madness at this juncture. America will not be "radically redefined" unless you your defintion of that is "bankrupt" which I suppose would be "radical".

Further, deliberately failing to service a debt is immoral, I'm surprised the "Christian" Republicans would do so for purely political reasons.

[ICantSpellDawg]

Right, we're all going into poverty. I don't buy the doomsday scenario. I want spending cuts of 20 to 30 percent of government. We could just steam roll out of iraq and afghanistan, slash federal employee wages, sell off land which the government owns. My personal credit is perfect, literally. I have no respect for the debt obligations incurreds hundreds of miles away by individuals who do not represent my interests. Don't bring religion into this. Floating a deficit of 44% to pay for crap we don't need on the backs of our children isn't the most ethical choice.

[ICantSpellDawg]

Additionally, credit markets will make it more expensive to borrow money. Maybe the money that we borrow will be geared toward spurring growth in excess of interest, transportation, creating public use internet networks, creating an educational system that works; rather than spending it on gaining the votes of poor people and the elderly who rely on the governments for handouts

[Lemur]

Good quote for the day: "America is the only country in the world that that has the luxury of creating an economic crisis when there isn’t one."

[Banquo's Ghost]

So, if I have read this aright:

The Republicans table a bill in Congress designed to embarrass the Democrats when rejected in the Senate, but the Congressional Budget Office sends it back because the sums are massively wrong. Next day, the Republicans (having taken their shoes and socks off this time, belatedly recognising that sums are hard) push the same bill forward only for their own party to scupper it and hang their leader out to dry.

Meanwhile the Democrats laugh themselves stupid (er) in the same way that someone going over a thousand metre waterfall laughs at the misfortune of the other fellow, because the other fellow is in the bow and somehow that's better.

I wonder how the head of the Chinese Sovereign Investment Funds explains that to the Party bosses.

[Adrian II]

So, if I have read this aright:

The Republicans table a bill in Congress designed to embarrass the Democrats when rejected in the Senate, but the Congressional Budget Office sends it back because the sums are massively wrong. Next day, the Republicans (having taken their shoes and socks off this time, belatedly recognising that sums are hard) push the same bill forward only for their own party to scupper it and hang their leader out to dry.

Meanwhile the Democrats laugh themselves stupid (er) in the same way that someone going over a thousand metre waterfall laughs at the misfortune of the other fellow, because the other fellow is in the bow and somehow that's better.

I wonder how the head of the Chinese Sovereign Investment Funds explains that to the Party bosses.

I guess that sums it up, unless another member knows more than we do.

I can see one - and only one - advantage to this episode: from now on American members on this board will have a hard time criticising the EU over its bumbling and indecisiveness.

But that's lame. Let me put it more productively: what unites politicians across the Atlantic seems to be a tendency to put one's own interest above that of the whole, which is a sure sign of a breakdown of societal trust.

I blame it on unfettered capitalism. Unfettered capitalists will probably blame it on the likes of me.

QED

AII

[phonicsmonkey]

A guy from Citibank was quoted saying something like "asking what happens after the US defaults is like asking what happens after you commit suicide"

and that's about it really.

the whole world is watching aghast as the US government turns the gun on itself and pulls the trigger.....but what they don't know is that its carcass is going to fall on them and crush them

[Tellos Athenaios]

I wonder how the head of the Chinese Sovereign Investment Funds explains that to the Party bosses.

Well that did not take long. More of the expected really: won't want to push the USA over the edge, but all the same would dearly love to vent a kick or two under the table.

[tibilicus]

So, if I have read this aright:

The Republicans table a bill in Congress designed to embarrass the Democrats when rejected in the Senate, but the Congressional Budget Office sends it back because the sums are massively wrong. Next day, the Republicans (having taken their shoes and socks off this time, belatedly recognising that sums are hard) push the same bill forward only for their own party to scupper it and hang their leader out to dry.

Meanwhile the Democrats laugh themselves stupid (er) in the same way that someone going over a thousand metre waterfall laughs at the misfortune of the other fellow, because the other fellow is in the bow and somehow that's better.

I wonder how the head of the Chinese Sovereign Investment Funds explains that to the Party bosses.

Sums up my thoughts pretty much.

Does anyone know realistically when all doom is certain? With 4 days to go and the complete disarray of the GOP it seems like there is no light at the end of the tunnel. I'm not pro Obama but if anyone holds him to account over the GOP they're fools. Essentially controlling not even a whole branch of the federal government, the GOP is holding the country hostage. Not like a cool calm headed hostage taker either more a downbeat desperate kind of man who doesn't even know what his next actions will be himself.

It's really sad to see a party which once championed the American people being held to ransom by the nutters in its rank and file who have such a small proportion of seats in the lower chamber and yet wield such apparent out of proportion power. All this clarifies what I've thought for a while, US politics is really quite ill and perhaps this event might be the tough medicine it needs to make the lawmakers realise its the people of the nation they're meant to serve, not just those who they owe their election too.

[Samurai Waki]

Makes you wonder-- if the 14th Amendment is the card Obama has up his sleeve. He needs the Congress to make a fool out of itself first, so he can legitimize the move... unconstitutional or not, the courts can fight that out later...

[Vladimir]

Makes you wonder-- if the 14th Amendment is the card Obama has up his sleeve. He needs the Congress to make a fool out of itself first, so he can legitimize the move... unconstitutional or not, the courts can fight that out later...

I hope that's his plan because he's leading from the back, way back, back with the logistic clerks and coffee machines. It would be nice to know he has a plan.

Banquo summed it up quite nicely. The whole process is embarrassing. The only party that wants to make much needed cuts started off blatantly political and now they can't manage themselves. The opposition doesn't want to play ball (maybe due to the farcical opening) and the chief executive is chillin' with his homies.

[drone]

At this point, the first bills the Treasury should not pay is the Congressional paychecks.

[Lemur]

It would be nice to know [Obama] has a plan.

Ah, the latest Republican meme, "Obama has no plan!" And yet multiple sources and published articles have revealed details* of the offers he was making to Boehner in private meetings. Enough details, in fact, to dismay the liberal base and make his left-wing allies in Congress get all snippy with him. Sounds like there were concrete offers on the table, which rather undermines the talking point du jour, "He has no plan!" Yawn.

This entire episode is a manufactured crisis. And I find republicans fulminating about debt now to have the stink of born-again virgins about them. Two trillion-dollar off-budget wars combined with tax cuts and a new giveaway to old people? Is the president republican? Yay! Oh, now the president is a democrat? HERESY! SOYLENT GREEN IS PEOPLE!

-edit-

* From one of many sources: "We did learn some intriguing details about the debt ceiling negotiations in recent days. Both President Barack Obama and House Speaker John Boehner were ready to anger their respective bases in order to work out a deal. To the dismay of many Democrats, President Obama was ready to support cuts in entitlement spending for Social Security, Medicare and Medicaid. He was ready to support what’s called 'means testing' – meaning that richer people would have to shell out more for health benefits under Medicare than poorer people. The president is also apparently ready to adopt a new cost-of-living increase formula that effectively would result in reduced Social Security and Medicare benefits. When I interviewed Independent Senator Bernie Sanders of Vermont the other day, he made it clear he hated those proposals."

[Beskar]

Makes you wonder-- if the 14th Amendment is the card Obama has up his sleeve. He needs the Congress to make a fool out of itself first, so he can legitimize the move... unconstitutional or not, the courts can fight that out later...

The Fourteenth Amendment (Amendment XIV) to the United States Constitution was adopted on July 9, 1868, as one of the Reconstruction Amendments.

Its Citizenship Clause provides a broad definition of citizenship that overruled the Dred Scott v. Sandford ruling by the Supreme Court (1857) holding that blacks could not be citizens of the United States.[1]

Its Due Process Clause prohibits state and local governments from depriving persons of life, liberty, or property without certain steps being taken to ensure fairness. This clause has been used to make most of the Bill of Rights applicable to the states, as well as to recognize substantive and procedural rights.

Its Equal Protection Clause requires each state to provide equal protection under the law to all people within its jurisdiction. This clause was the basis for Brown v. Board of Education (1954), the Supreme Court decision which precipitated the dismantling of racial segregation in the United States. In Reed v. Reed (1971), the Supreme Court for the first time ruled that laws arbitrarily requiring sex discrimination violated the Equal Protection Clause.

I don't get it.

[Lemur]

I don't get it.

One of the phrases in the 14th is that the debts of the United States shall not be questioned. You could take that to mean that debt must be serviced, no exceptions, and if congress won't do it, the executive must. Needless to say, this interpretation has never been tested in court.

Who knows? Congress has already abdicated its warmaking powers. Maybe they're incapable of handling the purse as well. Shades of Cato and the optimates. Fortunately, Obama is no Julius Caesar.

[Vladimir]

Lemur offering suggestions during meetings hardly constitutes a plan. "Being ready to support" is the same as preparing to move. He is the one who stormed out of these meetings* and neither he nor his mouthpieces have put forward a concrete budget proposal. Instead he is trying to scare old people by stating that we won't be able to pay social security while intoning what he may support.

He's great at speeches and rhetoric, but far from a leader with a concrete plan.

*I don't remember the date.