McWTK - What will happen if the USA defaults?

[mcmurray]

Hopefully the economic nerds can chime in and school me.

Will this have worldwide ramifications?

Should I empty my bank account now and buy gold?

[Shady7/8]

buy oil

[emrys74]

Obama will be selling the white house and moving here
avant_trailer_park.jpg

And the secret service will be replaced by these guys
TrailerParkBoys.jpg

[Blazon]

here's what economist Saul Eslake thinks:

US trigger for GFC 2.0

note; go to the half way mark to hear the impact on Australia.

[Barfridge]

(I'm pretending to be an expert after somebody else explained things to me)
The main problem is that many investment companies will only hold AAA rated bonds. So if the US defaults, their credit rating will most likely drop, and all these investment companies will no longer be able to hold US bonds. This will lead to a mass sell-off, a drop in the US dollar and further badness.

As somebody going there next year for a holiday, I say bring it on
(no, not really, that kind of thing can't be good for anybody)

[emrys74]

well the stronger our $ gets the harder it is for local maufacturing to sell over seas.

I dont see how our $ being so strong at the moment is real good as the average bloke other than on holidays is not in a position to profit from it.

Im still kind of more interested in china buying up mineral rich deposits in Africa and south America it may take a few years to get it going but when they do we'll be screwed.

[Scoundrel]

China will bypass the ACS module in US satellites a-la Modern Warfare 2 and invade the US.

[emrys74]

China will bypass the ACS module in US satellites a-la Modern Warfare 2 and invade the US.

Better watch out for Lieutenant General Shepherd then.

[Mckenzie]

I dont see how our $ being so strong at the moment is real good as the average bloke other than on holidays is not in a position to profit from it.

You need to buy more bits for your bike.

[Blazon]

what is the debt ceiling
http://abcnews.go.com/entertainment/...aylist=5878136

[Scott52]

They won't default ... it's all part of the drama of political point scoring. The same thing happened in 1995. They actually went past the deadline and some public servants got paid a bit late.

Remember most American citizens have guns ... they're armed to the teeth! If the Feds default the politicians will be the first in the cross hairs.

[Scott52]

Hopefully the economic nerds can chime in and school me.

Will this have worldwide ramifications?

Should I empty my bank account now and buy gold?

Dig a shelter, line with concrete, stock up on food, water, weapons and a plentiful supply of ammunition ... then wait!

[emrys74]

You need to buy more bits for your bike.

True detroit triumph have been good to me.

[Gippo]

Read this in full.

ETFs for a US Default

The last paragraph is sound advice.

Personally – I’ve seen friends default on their loan. The banks have dragged it out since 2009 and they still have their home, despite repeated threats of foreclosure.

I see a potential US default in the same way. Lots of BS and last minute deals to try to lessen the impact. Regardless, if the US does default it will not be a surprise to anyone and therefore should theoretically be starting to be priced in already?

Then what will the downgrade be - BBB?

That said markets are a jittery beast and will scamper – making for great buying

[Rider]

I am very interested in this topic. I am suprised that there isnt more discusion about it.

[Wedge]

The "big 3" rating companies are American/European based and supposedly always give higher ratings then what may actually be the case (Article on this topic). In fact a Beijing rating agency has recently dropped the US rating to A LINKY from A+. American rating companies are believed to be waiting it out some but will soon downgrade too from AAA down.

Oh and no-one can/will invade America... The gun laws there make sure of that.. Every house/suburb will need to be taken bit by bit. If you have ever been over there, check out the gun section of the major shopping centres, there's enough stock there to run your own little war. From camouflage nets/clothing and sandbags to high powered rifles.

[falcon]

(I'm pretending to be an expert after somebody else explained things to me)
The main problem is that many investment companies will only hold AAA rated bonds. So if the US defaults, their credit rating will most likely drop, and all these investment companies will no longer be able to hold US bonds. This will lead to a mass sell-off, a drop in the US dollar and further badness.

Got it in one. What the further badness bit entails is, of course, speculation.

[ReCon]

From memory Moodys and S&P's will likely drop the US credit rating shortly. This will likely trigger a bond selloff which seems to be bad. However , on a charting level , the bond yield has reached a longterm double bottom which means a pretty good buying opportunity with relatively low risks of the yield going lower.

This COULD attract investment from a more varied market with an appetite for lower risk, and increasing yields. This might give GOLD a kick in the balls after a stellar run and bring needed flow into the Govt coffers.

On another note , much of the debt is private and corporate responsible , with approx 6 trill being Govt debt. Much of this is owed to the Reserve anyway , with o/seas debt being a relatively low amount % wise.

Therefore , we could wonder if this little deal has an ulterior motive , mainly to drop the USD to increase more investment so to stimulate the economy , or possibly to get some of the BIG private equity funds out of some sort of shit that they have got them selves into. [mates rates].

I am also curious as to why the old Burnie Madoff adventure has gone silent after the first GFC? Maybe it will expose some big names that want to remain in the shadows for 'suspect' dealings....

Market wise , it appears that with volatility being rife but with 2 years of very low volumes , most players are seemingly trading around waiting for the next GFC instalment. This dropping of the US rating accompanied with the Euro zone issues might trigger what everyone just wants to get over and done with so that the equalisation process can finally get started.

[Spiff]

Will this have worldwide ramifications?

yes

Should I empty my bank account now and buy gold?

only in part. hedge and diversify.

in response to your original question, you would need a magic 8-ball. nobody can really predict with certainty what's going to happen or if and when it will happen. to some extent, if one even argues that it won't happen, then will it be that the US would rather see the 'destruction' of the USD at the expense of the US financial system? food for thought.

[spudda]

Oh and no-one can/will invade America... The gun laws there make sure of that.. Every house/suburb will need to be taken bit by bit. If you have ever been over there, check out the gun section of the major shopping centres, there's enough stock there to run your own little war. From camouflage nets/clothing and sandbags to high powered rifles.

45hiroshima_a-bomb.jpg

Problem solved! No pesky houses to search and clear.