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 Post subject: Re: Why the U.S. Could Use a Strategic Default
PostPosted: Sat Jul 23, 2011 1:16 pm 

Joined: Mon Feb 07, 2011 6:33 pm
Posts: 1150
Location: Illinois
I agree that the Repubs will likely take the brunt of it if there is a default. The only thing that I can think of that would possibly save them from that is potentially turning the blame on Obama/Sec Treas for "choosing" to default. From what I've read, there is enough revenue to pay the interest, but without an increase in the ceiling, they will have to choose what to fund and what not to fund.

I don't think they'd win that public opinion battle, but who knows?


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 Post subject: Re: Why the U.S. Could Use a Strategic Default
PostPosted: Sat Jul 23, 2011 3:52 pm 
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It's sad that it has come down to public opinion. The public is up to their eyeballs in debt and can't manage their own affairs. I see no reason why public opinion should matter when it comes to managing the country's financial affairs. That's why the founding fathers did not provide for national referendum elections.

But you're right, if they collectively screw up a blame game will ensue and I'm sure the republicans will try to blame Obama just as the administration tries to blame republicans in Congress.

My point is that I think Obama holds a lot better cards. He could probably declare a state of emergency until such time as Congress acts to increase revenue or raise the debt ceiling and continue to spend under the existing budget with impunity. In other words, not default but rather resort to extraordinary measures to continue financing. He can't increase revenue in the near term by increasing taxes but he can authorize the continuation of Treasury sales. It will be up to investors to set the rates on the securities under the obvious cloud they would have over them. But based on current yields, I don't think there would be much of a penalty placed.

We'll know shortly though.


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 Post subject: Re: Why the U.S. Could Use a Strategic Default
PostPosted: Sat Jul 23, 2011 5:05 pm 

Joined: Mon Feb 07, 2011 6:33 pm
Posts: 1150
Location: Illinois
I would hope the president could do that. Though I don't claim to be a constitutional law scholar. All studying constitutional law has taught me is that skilled lawyers and judges can twist just about anything into the categories of "constitutional" or "unconstitutional" as they desire.


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 Post subject: Re: Why the U.S. Could Use a Strategic Default
PostPosted: Sat Jul 23, 2011 5:10 pm 
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bpgui wrote:
I would hope the president could do that. Though I don't claim to be a constitutional law scholar. All studying constitutional law has taught me is that skilled lawyers and judges can twist just about anything into the categories of "constitutional" or "unconstitutional" as they desire.


Yes. But the administration has a lot of emergency powers. It would be very hard for any lawyer to go into court and argue that the Constitutional route is to default. As a lawyer you know how reluctant any court is to order a contract not be fulfilled. And, you've undoubtedly studied the Constitution a lot more than me. But I think one of its most valuable traits is its flexibility.


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 Post subject: Re: Why the U.S. Could Use a Strategic Default
PostPosted: Sat Jul 23, 2011 7:38 pm 

Joined: Mon Feb 07, 2011 6:33 pm
Posts: 1150
Location: Illinois
DoingHomework wrote:
Yes. But the administration has a lot of emergency powers. It would be very hard for any lawyer to go into court and argue that the Constitutional route is to default. As a lawyer you know how reluctant any court is to order a contract not be fulfilled. And, you've undoubtedly studied the Constitution a lot more than me. But I think one of its most valuable traits is its flexibility.

True. I also think the court argument would be an after the fact argument as to whether what was done was legal or not.


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 Post subject: Re: Why the U.S. Could Use a Strategic Default
PostPosted: Thu Jul 28, 2011 4:28 pm 
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So I've been reading about the 14th Amendment and the Perry v. US decision.

It would seem that congress lacks the constitutional authority to fail to pay government bonds. It would be for courts to decide, which would take years, but the entire debt ceiling law may not be constitutional if it endangers the integrity of US debt, which it is clearly doing at this point.

So, we're a week almost since this discussion and these nincompoops (sp?) still can't do their job!


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 Post subject: Re: Why the U.S. Could Use a Strategic Default
PostPosted: Wed Aug 03, 2011 4:00 am 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1780
Location: Ottawa, Canada
kombat wrote:
I'm absolutely positive that they will raise the debt ceiling, not default, and will not make any significant changes to anything.

They will kick the can down the road and let their grandkids worry about fixing things in the long-term.

Quote me on it.


Toldja so. ;)


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 Post subject: Re: Why the U.S. Could Use a Strategic Default
PostPosted: Wed Aug 03, 2011 5:52 am 

Joined: Mon Feb 07, 2011 6:33 pm
Posts: 1150
Location: Illinois
kombat wrote:
kombat wrote:
I'm absolutely positive that they will raise the debt ceiling, not default, and will not make any significant changes to anything.

They will kick the can down the road and let their grandkids worry about fixing things in the long-term.

Quote me on it.


Toldja so. ;)

Toldya so works best when we are disagreeing with you :)


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 Post subject: Re: Why the U.S. Could Use a Strategic Default
PostPosted: Wed Aug 03, 2011 6:34 am 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1780
Location: Ottawa, Canada
bpgui wrote:
Toldya so works best when we are disagreeing with you :)


True, true. :)

I'm just in awe at how utterly and completely your representatives failed you. They've committed to a pittance in cuts. $2.1 trillion over 10 years. That's a measly $210 billion per year. Meanwhile, they raised the debt ceiling by the same $2+ trillion, and will take on that same amount of new debt in just one year.

Seriously? $2.1 trillion in cuts over 10 years, and over $2 trillion in new debt in just one year? And that's a victory?

It's appalling. They haven't solved anything! All they've done is kicked the can down the road.

The American people should be outraged.


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 Post subject: Re: Why the U.S. Could Use a Strategic Default
PostPosted: Wed Aug 03, 2011 7:34 am 
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kombat wrote:
I'm just in awe at how utterly and completely your representatives failed you. They've committed to a pittance in cuts. $2.1 trillion over 10 years. That's a measly $210 billion per year. Meanwhile, they raised the debt ceiling by the same $2+ trillion, and will take on that same amount of new debt in just one year.

Seriously? $2.1 trillion in cuts over 10 years, and over $2 trillion in new debt in just one year? And that's a victory?

It's appalling. They haven't solved anything! All they've done is kicked the can down the road.

The American people should be outraged.


Go ahead. Rub it in. We're all stupid. We still think we are a world leader. We still respect our elected leaders. (Ok, maybe not that last one so much).

Any space left in Canada?

Incidentally, I found a cool app on google that lets you plot all sorts of publicly available data. I was looking at all sorts of things last night regarding the economies of US, Canada, Brazil, Japan, Greece, etc. You'll be happy to know that the US economy tanking is dragging Canada down as well. It's not making the headlines, and the impact is not so severe. But that data shows it. I'll try to post links later. I was looking for attractive places to invest in the world. It's not obvious where they are right now!


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 Post subject: Re: Why the U.S. Could Use a Strategic Default
PostPosted: Wed Aug 03, 2011 10:28 am 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1780
Location: Ottawa, Canada
DoingHomework wrote:
Any space left in Canada?


Tons. Although our "tons" are a nice, round 1,000 kg, not 2,240 pounds or whatever yours are. ;)

DoingHomework wrote:
the US economy tanking is dragging Canada down as well.


Indeed, it's true. The US is our largest trading partner, so we're feeling the impact of the sharp drop in demand. In addition, the Canadian dollar is near all-time-highs against the US dollar, which is hurting our manufacturing and export sectors. Finally, artificially low interest rates and lax lending laws have created our own home-grown version of a housing bubble (though not nearly as severe as the US's was/is).

The only thing propping up our economy is commodities. Canada is very resource-rich. Our oil, natural gas, gold, uranium, nickel, copper, and other exports are enjoying historically high prices, which is all that is keeping us from wallowing in the same economic mud the US is currently mired in.


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 Post subject: Re: Why the U.S. Could Use a Strategic Default
PostPosted: Wed Aug 03, 2011 12:40 pm 
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kombat wrote:
DoingHomework wrote:
Any space left in Canada?


Tons. Although our "tons" are a nice, round 1,000 kg, not 2,240 pounds or whatever yours are. ;)


Spent my entire career using SI units. I honestly don't even know what our ton is. It's 1000 kg to me and is in any case enough to smash my toes. That's all I really need to know.

DoingHomework wrote:
the US economy tanking is dragging Canada down as well.


Indeed, it's true. The US is our largest trading partner, so we're feeling the impact of the sharp drop in demand. In addition, the Canadian dollar is near all-time-highs against the US dollar, which is hurting our manufacturing and export sectors. Finally, artificially low interest rates and lax lending laws have created our own home-grown version of a housing bubble (though not nearly as severe as the US's was/is).

The only thing propping up our economy is commodities. Canada is very resource-rich. Our oil, natural gas, gold, uranium, nickel, copper, and other exports are enjoying historically high prices, which is all that is keeping us from wallowing in the same economic mud the US is currently mired in.[/quote]

Yes, but we can always kick up a war to get a nice boom going. (That hasn't worked well for the last decade or so though.)

Anyway, Canada is too cold!


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 Post subject: Re: Why the U.S. Could Use a Strategic Default
PostPosted: Wed Aug 03, 2011 12:41 pm 
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kombat wrote:
DoingHomework wrote:
Any space left in Canada?


Tons. Although our "tons" are a nice, round 1,000 kg, not 2,240 pounds or whatever yours are. ;)


Spent my entire career using SI units. I honestly don't even know what our ton is. It's 1000 kg to me and is in any case enough to smash my toes. That's all I really need to know.

DoingHomework wrote:
the US economy tanking is dragging Canada down as well.


Indeed, it's true. The US is our largest trading partner, so we're feeling the impact of the sharp drop in demand. In addition, the Canadian dollar is near all-time-highs against the US dollar, which is hurting our manufacturing and export sectors. Finally, artificially low interest rates and lax lending laws have created our own home-grown version of a housing bubble (though not nearly as severe as the US's was/is).

The only thing propping up our economy is commodities. Canada is very resource-rich. Our oil, natural gas, gold, uranium, nickel, copper, and other exports are enjoying historically high prices, which is all that is keeping us from wallowing in the same economic mud the US is currently mired in.[/quote]

Yes, but we can always kick up a war to get a nice boom going. (That hasn't worked well for the last decade or so though.)

Anyway, Canada is too cold!


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 Post subject: Re: Why the U.S. Could Use a Strategic Default
PostPosted: Wed Aug 03, 2011 3:41 pm 

Joined: Mon Feb 07, 2011 6:33 pm
Posts: 1150
Location: Illinois
DoingHomework wrote:
kombat wrote:
DoingHomework wrote:
Any space left in Canada?


Tons. Although our "tons" are a nice, round 1,000 kg, not 2,240 pounds or whatever yours are. ;)


Spent my entire career using SI units. I honestly don't even know what our ton is. It's 1000 kg to me and is in any case enough to smash my toes. That's all I really need to know.


http://en.wikipedia.org/wiki/Ton wrote:
In the United Kingdom, the ton is a unit of measure which, when it ceased to be legal for trade in 1985, was defined in British legislation as being a weight or mass equal to 2,240 pounds (1,016 kg) (avoirdupois pounds).[2] In the United States and Canada,[3] however, a ton is defined to be 2,000 pounds (907 kg). To avoid confusion, the former is more specifically referred to as a "long ton" and the latter, a "short ton"; neither should be confused with the metric ton (tonne), which is 1,000 kilograms (2,205 lb). While they do vary, a ton is generally one of the heaviest units of weight or mass referred to in colloquial speech.

1016 isn't a nice round number :) Though you're Canadian, so according to this, you use the same ton as we do.


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 Post subject: Re: Why the U.S. Could Use a Strategic Default
PostPosted: Wed Aug 03, 2011 8:08 pm 
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bpgui wrote:
DoingHomework wrote:
kombat wrote:

Tons. Although our "tons" are a nice, round 1,000 kg, not 2,240 pounds or whatever yours are. ;)


Spent my entire career using SI units. I honestly don't even know what our ton is. It's 1000 kg to me and is in any case enough to smash my toes. That's all I really need to know.


http://en.wikipedia.org/wiki/Ton wrote:
In the United Kingdom, the ton is a unit of measure which, when it ceased to be legal for trade in 1985, was defined in British legislation as being a weight or mass equal to 2,240 pounds (1,016 kg) (avoirdupois pounds).[2] In the United States and Canada,[3] however, a ton is defined to be 2,000 pounds (907 kg). To avoid confusion, the former is more specifically referred to as a "long ton" and the latter, a "short ton"; neither should be confused with the metric ton (tonne), which is 1,000 kilograms (2,205 lb). While they do vary, a ton is generally one of the heaviest units of weight or mass referred to in colloquial speech.

1016 isn't a nice round number :) Though you're Canadian, so according to this, you use the same ton as we do.


But...but...but, that's all wrong. a kg is a unit of mass and a lb is a unit of force. They are not the same and can't me made equivalent, not even by Congress or the Queen. I could take you to a place where a 1016 kg mass did not weigh 2240 pounds. Perhaps I'd be breaking the law. That's why tons are silly and not used for serious work. We use slugs as a unit of mass too.

I deal with large forces/masses all the time. The standard practice is to use kips (kilopounds) for forces if English units, kg for mass, MN (meganewtons) for large forces in SI. Tons are more of a nominal unit, like a 2x4.

But in the spirit of kombat dissin' us Americans, let's all remember that the Indiana legislature passe a law defining "pi" to be exactly 3 in that state. I'm wondering how many manufacturers of tires (or balls) have been prosecuted.And of course Kansas has forbidden evolution from occuring in their state...which explains a few things about their politics. (Or maybe I got that wrong, maybe it's juts teaching it that is forbidden...whatever.) We can be pretty dumb here, it's true.


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