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Lehman wasn't that big, but its leverage was deeply exposed/exposing
You want another Lehman-type candidate? Google criminal fugitive Marc Rich's Glencore offering shares than could bring in $11B. Leverage that 35 to 1, and if Glencore collapses, we got another Lehman tripwire and world-wide financial catastrophe. There's no way to prevent it.
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If it had collapsed, you can be goddammed sure that financial reform would have been geared toward making sure such a debacle never happened again, rather than pawning our future GDP to prop up the insolvent losers whose incompetence and fraud were the proximate cause of the Panic of 2008.
No, I'm saying the US can cut current costs to avoid going into bankruptcy. The government could still pay its debts while cutting when and how it wants. Comparing to an individual's finances, it's like switching to a cheaper phone and buying generic groceries.
Defaulting would pretty much mean every cut possible would have to be made. Again with the comparison, this is like having the phone and electricity cut off.
Similar effects, but defaulting would be magnitude's more serious and much less controlled.
@WH think you're putting words in my mouth.
Just because I've been diagnosed with cancer doesn't mean I want to play russian roulette.
I assume you are talking about cutting discretionary spending as opposed to mandated expenses...they could cut discretionary spending 100% and it still wouldn't be enough to avoid eventually raising the debt ceiling.
"the US can cut current costs to avoid going into bankruptcy"
no it can't. It has to raise the debt limit just to make interest payments on federal debt, which are MUCH BIGGER than the few $10Bs in the recent spending reduction deal.
The Chicken Little routine. Never went out of style.
Eh, you can call me a fear monger all you want but I'm just going off of what those who know more on the subject have said.
We have a long term debt problem and thats obvious. That doesn't mean I want a financial collapse. I want to find a way to solve things as smoothly as possible.
I don't think you realize the level of cuts they would need to undertake to avoid default with our low tax rates and down economy at the moment. And of course, government cuts would lead to lower taxes collected compounding the problem.
Yeah right. THe same people would have still maintained the highest level of influence. Making poor people poorer isn't giong to solve this.
Yep. Monthly interest expense on our debt is about $35 billion. No way the government can just shut down $35 billion worth of operations on a moment's notice to switch all that revenue to debt service.
Last edited by coyotes_geek; 05-17-2011 at 04:07 PM. Reason: i was redundant again
Letting rich folks/firms fall on their face might have, though.
They could revise the budget to reduce mandated expenses as well. And they would if they had to. Drop some medicare benefits, drastically reduce SS payments, gut the space program and military research. They could do it.
Nah, I'm aware. I think it's possible to avoid default without raising the debt ceiling. I don't think it's likely. And I wouldn't want to see the draconian, hard-line cuts across all spending necessary for it to happen (in so short a time-frame at least).
I've been saying since 2004 that the upper level Bush tax-cuts needed to go (and loophooles needed closing) to go with spending reductions.
The point was that not-raising-the-debt-ceiling does not equal default.
I'm not so sure of that. Most of the people in Congress are much more insulated from financial crisis than your average citizen.
The only tax increase I see as acceptable is one that hits everyone. No deductibles. Until the working poor also have a "dog in the fight" when it comes to the government raising revenue, we have too many wolves voting on what to have for dinner.
He's a lib .
I think the "no deductibles" idea could have traction. After all, I would think the rich make use of deductibles/loopholes as much as the poor do.
Yes, we need to get rid of preferential treatment in the tax codes.
They'd not have been insulated from the level of human misery and real scarcity that accompany a debt-deflation spiral.
why not start privatising govt assets? do you have any?
I wonder sometimes... at a certain level of income, how much interaction does one really need with the "common man"? How much scarcity would they have experienced?
Oh sure, the number in their bank account might have dipped considerably, but would it have been enough to prevent them from doing anything other than taking one less vacation per year? *shrug* I don't know.
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