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Who is to blame if the US defaults on its debt?

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  1. #1

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    Who is to blame if the US defaults on its debt?

    Only a few days left until the US could default on its debt.

    It may not sound that serious to miss a payment but they will end up with a bad credit rating and then the countries debt binge will suddenly become too expensive resulting in huge tax increases and massive public spending cuts.

    Who is too blame for this mess?


  2. #2

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    Well, obviously it is a completely manufactured psuedo-crisis. It is probably fair to blame the tea party Republicans who are using what should be a rubber-stamp process to hold the government hostage to their smaller government agenda. They shouldn't allow their political bickering to become a potential economic problem, and to his credit Barack has been more than accomodating.

    That said, in fairness there needs to be long-term structural reforms of social security and medicare and the tea partiers at least call attention to this issue. I was excited by the Gang of Six plan, personally, and it's doubtful whether that would have been promulgated had the TPs not existed. One hopes that a good ole' American compromise will be worked out that limits SS and Medicare benefits and ensures the programs are solvent for the next 75 or so years. If not, in 20-25 years the US will be no better off than Greece, Spain, or Portugal writ large.

    Last edited by Freetrader; 31-07-2011 at 12:37 AM.

  3. #3

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    It's easy putting the blame on someone...but it's definitely not Obama's fault as he inherited a virtually bankrupt USA when started his job. Think of all the money saved if Bush never went to war... (especially in Iraq)


  4. #4

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    Quote Originally Posted by East_coast:
    Who is too blame for this mess?
    The Democrats, according to the Republicans.


  5. #5

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    Just blame the US - Rep/Dem....qll of them have contributed to this "mess" and they should all be blamed for it (alternatively you can blame the bankers, since you should always blame the bankers)


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    "Some men from the South Carolina freshman delegation, a tight-knit group of conservatives, repaired to the House chapel on Thursday to pray about the situation. "

    The New York Times in Washington
    Jul 30, 2011

    Is it God's fault?

    Two key issues as I see it

    1) Societies debt based growth hoping to repay on projected future earnings (Bush Snr, Clinton, Bush Jnr & Obama)
    2) Dangerous tactics by Tea Party movement to highlight lack of fiscal responsibility

    Normally there is a left / right cyclical swing in politics where the
    - left subsidises employers with benefits for workers paid for with tax increases
    - right slashes benefits for people forcing employers to pay the costs (directly / indirectly) reducing taxes

    Unfortunately there has not been a tax / benefit slashing President for a very long time. Reagan slashed taxes and hoped growth would come and it did. All the rest since then seem to spend more without hiking up taxes to match.

  7. #7

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    But Dubya messed it up.

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    During the Clinton years Credit card debt among very low-income families grew by an astonishing 184 percent. But middle-class families were also hit hard—their credit card debt rose by 75 percent.

    Wasn't it just a transfer of public debt to personal debt by relaxing lending rules combined with tech advances allowing huge leap in productivity.

    When growth stopped debt mounted and the new technologies meant jobs could be transferred overseas. More national debt and tax cuts were used by Bush to continue the stimulation of the economy. Following an economic collapse more debt was used by Obama to stimulate the lifeless economy again.

    At some point debt levels (personal & national) need to be paid down.
    Last edited by East_coast; 31-07-2011 at 10:18 AM.

  9. #9

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    Quote Originally Posted by reprazent:
    It's easy putting the blame on someone...but it's definitely not Obama's fault as he inherited a virtually bankrupt USA when started his job. Think of all the money saved if Bush never went to war... (especially in Iraq)
    Agree that the current crisis is not Obama's fault as he has been pretty flexible. But it's not true that the US was virtually bankrupt when Obama took over, unless what is looking at committed future entitlement spending, which is what is driving the issue. Military spending is a relatively small part of the budget; it is entitlements that are causing the problems, and the government deficits since Obama took over have been much larger than during the Bush years due to the stimilus packages (many would blame the necessity for stimulus on the recession and the recession on Bush).

    If an understanding of the need for entittlement reform comes out of this crisis and is broadly accepted (and it is the Democrats who will have to accept this) then a positive outcome is still possible.

  10. #10

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    Quote Originally Posted by Mat:
    Just blame the US - Rep/Dem....qll of them have contributed to this "mess" and they should all be blamed for it (alternatively you can blame the bankers, since you should always blame the bankers)
    If everyone is to blame, then no one is to blame.
    East_coast likes this.

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