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www.politicususa.com/en/gop-...mic-evil
excerpt. . .
In the first place, it has never happened before. This would be the first time in United States’ history that the U.S. would default on its loan obligations. The debt is not just numbers; it is real money that has been lent with real expectations of returned payment. The debt is owed to multi-national banks, foreign countries, and the public itself through treasuries. If an individual defaults on a loan, the debt does not disappear. Instead, the bank takes the loss. If the United States goes into default, much of the world will suddenly face the prospect of losing about $14 trillion dollars. The results will be catastrophic.
Former Treasury Secretary Lawrence Summers warned of serious consequences of a default in July 2011, including: (a) higher borrowing costs for the U.S. government (as much as 1% or $150 billion/year in additional interest costs) and (b) the equivalent of bank runs on the money and other financial markets, potentially as severe as September 2008. Bank failures and a potential bank run, curbed by government intervention, were a major catalyst of the Global Financial Crisis that caused the Great Recession.
Many of the world’s largest banks, which are still hardly on solid footing after the 2008 financial crisis, would go bankrupt due to their exposure to the United States. Credit for simple things like houses and car loans will become completely unavailable as a result. Most large companies use short-term credit to make their payrolls. That credit would disappear, and as a result, many workers would have to start going — yes — without a paycheck. There is a very real possibility that people would go to their local bank or ATM and not be able to withdraw cash from their account.
Hyperinflation will ensue as the United States dollar becomes basically worthless. The “full faith and credit” of the United States is the only thing holding up the value of the dollar, so when that credit is gone, it is hard to imagine the dollar’s surviving with it.
Falling home values: Mortgage interest rates would climb, bringing new home sales to record lows and possibly causing the still-fragile recovery in the housing market to completely collapse.
Resulting Panic in world financial markets: If the U.S. is no longer a haven, maybe nowhere else is either. Remember the financial markets in New York on Oct. 10, 2008? U.S. stocks sank, capping the worst week ever for the Standard & Poor’s 500 Index, on concern the escalating credit crises will snuff out consumer spending.
excerpt. . .
In the first place, it has never happened before. This would be the first time in United States’ history that the U.S. would default on its loan obligations. The debt is not just numbers; it is real money that has been lent with real expectations of returned payment. The debt is owed to multi-national banks, foreign countries, and the public itself through treasuries. If an individual defaults on a loan, the debt does not disappear. Instead, the bank takes the loss. If the United States goes into default, much of the world will suddenly face the prospect of losing about $14 trillion dollars. The results will be catastrophic.
Former Treasury Secretary Lawrence Summers warned of serious consequences of a default in July 2011, including: (a) higher borrowing costs for the U.S. government (as much as 1% or $150 billion/year in additional interest costs) and (b) the equivalent of bank runs on the money and other financial markets, potentially as severe as September 2008. Bank failures and a potential bank run, curbed by government intervention, were a major catalyst of the Global Financial Crisis that caused the Great Recession.
Many of the world’s largest banks, which are still hardly on solid footing after the 2008 financial crisis, would go bankrupt due to their exposure to the United States. Credit for simple things like houses and car loans will become completely unavailable as a result. Most large companies use short-term credit to make their payrolls. That credit would disappear, and as a result, many workers would have to start going — yes — without a paycheck. There is a very real possibility that people would go to their local bank or ATM and not be able to withdraw cash from their account.
Hyperinflation will ensue as the United States dollar becomes basically worthless. The “full faith and credit” of the United States is the only thing holding up the value of the dollar, so when that credit is gone, it is hard to imagine the dollar’s surviving with it.
Falling home values: Mortgage interest rates would climb, bringing new home sales to record lows and possibly causing the still-fragile recovery in the housing market to completely collapse.
Resulting Panic in world financial markets: If the U.S. is no longer a haven, maybe nowhere else is either. Remember the financial markets in New York on Oct. 10, 2008? U.S. stocks sank, capping the worst week ever for the Standard & Poor’s 500 Index, on concern the escalating credit crises will snuff out consumer spending.
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