Damage from Defaulting on Debt Would Be Irrevocable, Geithner Tells Bennet

[TomCADem]

Source: Bloomberg

U.S. Treasury Secretary Timothy F. Geithner said a default arising from failing to raise the debt limit could cause “irrevocable damage” to the economy, risk a “double-dip” recession and increase unemployment.

“Default would not only increase borrowing costs for the federal government, but also for families, businesses and local governments -- reducing investment and job creation throughout the economy,” Geithner said in a letter dated yesterday to Senator Michael Bennet, a Colorado Democrat.

Failing to raise the $14.29 trillion debt ceiling would “force the United States to default” on obligations such as payments to service members, citizens, investors and businesses, Geithner wrote. “This would be an unprecedented event in American history. A default would inflict catastrophic, far- reaching damage on our nation’s economy, significantly reducing growth and increasing unemployment.”

The U.S. is scheduled to reach the debt limit May 16 and can keep borrowing until about Aug. 2 by taking steps that include declaring a “debt-issuance suspension period” under the statute governing the Civil Service Retirement and Disability Fund, Geithner said May 2. That would allow the U.S. to redeem existing Treasury securities held by that fund as investments.


Read more: http://www.bloomberg.com/news/2011-05-14/damage-from-defaulting-on-debt-would-be-irrevocable-geithner-tells-bennet.html

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I personally think that some Republicans want to see a default and the resulting harm to the U.S. economy, because they believe that this will help their chances to win the Presidency in 2012. Remember, Republicans have proven willing to vote against their own policies simply to inflict political harm against President Obama. Also, the corporate media generally gives them a free pass, and hails such destructive efforts as good politics.

[andym]

1. The GOP could finally "prove" that government is the "problem"

by their own twisted logic.

[plumbob]

2. What a stupid man. Default would have no effect on future borrowing

costs for the government, because no one would lend us a dime after failing to pay back $14 TRILLION dollars. And with demand for debt down by $14 trillion, and the amount available to loan down by $14 trillion, it seems it would be close to neutral on net rates for non-governmental borrowers.

Fact is, if I owe a guy $100, I have a problem. He might decide to break an arm in return for writing off the $100 or $1000 or similar piddling amount.

As soon as someone owes you a million, they also own part of you. They have to worry that your health will hold up enough to pay back the million or billion or trillion. They don't want to write it off, so they will work with slow pay, delayed pay, alternate pay, reduced interest pay and the myriad of other deadbeat strategies that banks use on people they owe.

MAD was our official government position vis a vis the Soviets for a long time. About time to tell our Republican brethren that if they want the ceiling lifted, they need to agree to tax increases on incomes over $1 million, and an absolute minimum tax of 20% on pre-dividend earnings on corporations.

About time they felt some heat.

[JDPriestly]

6. plumbob, Please inform yourself about your rights as a debtor, about bankruptcy laws

and the power of Congress to enact bankruptcy laws?

Even if you owe someone $100, the person to whom you owe the money can be convicted of assault if he breaks your arm when you don't pay it.

Please.

[plumbob]

8. Oh, I know the law, all right. I teach seniors in high school on several social studies

courses, like economics and government.

But I grew up in a corrupt little town where the local sheriff once helped the local bootlegger to chase away the Chicago mob to preserve local interests. This whole area is in the middle of Amarillo, El Paso, Fort Worth and Del Rio, and was once the only "wet" location inside that area.

The only liquor wholesaler here was also a bootlegger to the rest of the dry part of the state.

You can read more about him here: http://www.amazon.com/PINKIE-Don-Walter-Gray-Hedgpeth/dp/B000RC36ZC/ref=sr_1_2?ie=UTF8&s=books&qid=1305405510&sr=8-2

This is also the town home to Friday Night Lights http://www.amazon.com/Friday-Night-Lights-Mass-Market/dp/030681529X/ref=sr_1_1?s=books&ie=UTF8&qid=1305405628&sr=1-1

And to the "Kiss and Kill" murder which resulted in the first use of the temporary insanity plea: http://www.texasmonthly.com/2006-02-01/webextra5.php

Link to the book: http://www.amazon.com/Washed-Blood-Shelton/dp/097775586X/ref=sr_1_1?s=books&ie=UTF8&qid=1305405840&sr=1-1

And our own serial killers:

Johnny Meadows: http://www.skcentral.com/articles.php?article_id=266

Michael Eugene Sharp: http://books.google.com/books?id=K8SQNnzzPqQC&pg=PA142&lpg=PA142&dq=michael+eugene+sharp&source=bl&ots=lcQjSiG3cD&sig=pCc7gsA497U97C9CQAmrlxmvFeo&hl=en&ei=rl18Tf35GuGJ0QGe7bHVAw&sa=X&oi=book_result&ct=result&resnum=6&ved=0CDoQ6AEwBTgK#v=onepage&q=michael%20eugene%20sharp&f=false

In 1988, Newsweek named Odessa the murder capital of the US with 29.8 homicides per 100,000 population, and in 1990, Places Rated Almanac named Odessa the second worst place to live in the USA.

Second highest unwed teen mother birth rate in Texas; highest rate of STDs in Texas; first AIDS death in Texas, and many many more achievements.

My own grandfather, an organizer for the IWW in the oilfields of the 1930s, was left for dead after being beaten with clubs by goons hired by what would become Diamond Shamrock.


Never has been much regard for laws or poor people here.

Old Odessa saying: What's right is not what is."

Thanks for your kind thought, however.

This town still has a population with only half over the age of 25 having a high school diploma.

[JDPriestly]

17. Good heavens! You need to move -- to someplace safe!

Start packing asap. Why in the world would anyone live in a place like that?

Why don't YOU run for sheriff and restore law and order?

[plumbob]

18. Well, it's got its own charm. Even recipe books get into it, with

sonofabitch stew, also called gentleman from Odessa stew.

http://www.barrypopik.com/index.php/texas/entry/gentleman_from_odessa_tx/

I actually was gone for nearly twenty years. I returned to teach high school. Best job I ever had, and the only one that didn't bore me to tears after a few years, like banking, insurance sales, and the oil business did.

Best way to get shot would be to run for sheriff against the old regime. The old guard here has made their pile with things as they are, and they're not about to allow any changes now. Even the local school board has hired a consultant to train them in voicing only one opinion in public so as to create the image of no dissent.

It has actually quieted down a bit in the last ten years. I no longer carry a pistol in the glove box, for example. Haven't seen a shooting here in person since 2002, when a woman and man had an altercation at Denny's over seating. She shot several times, and grazed the side of his face once. Sat down and drank coffee until the police came. The man had run off by then, so they cited her for discharging a firearm in the city limits.

Excellent Mexican food, really good barbeque, and some very good Thai food, as well.

[JDPriestly]

20. Sounds like what I saw in Alabama in the late 50s early 60s.

There was a place called Pritchard, Alabama. Another one called Chickasaw.

Lots of shootings that could not be solved.

[Name removed]

9. Deleted message

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[OKNancy]

3. I really don't think people are that stupid. If there is a default

with the resulting disaster, the Republicans would be blamed. They are the ones who are not voting to raise the debt ceiling.
If people don't get their Social Security checks, all hell will break loose.

[russspeakeasy]

7. The repubs don't get blamed. They blame.

[DCBob]

4. I think the Republicans are all bark and no bite on this one..

If the debt ceiling is hit and we begin to default on our debt reponsibities it will create an monumental financial crisis that will affect the bottom line of rich Republican donors, RW insiders and lobbyists, corporations and GOP congressman. There is no way they will allow that happen.

[sendero]

10. I agree..

... this is all bluff. They are just pushing Obama around BECAUSE HE IS SUCH A CHUMP THEY PROBABLY BELIEVE THEY CAN EXTRACT MAJOR CONCESSIONS, AND THEY ARE PROBABLY RIGHT.

In the end, even if Obama tells them to fuck off, they are not going to stop the raise of the debt ceiling, they aren't THAT DAMN STUPID.

[DCBob]

13. Obama is not a "chump".. he may make some concessions to make a deal.

but it will be ones he agrees with... not the ones the GOP demands.

[sendero]

16. Well..

...maybe not a chump, just a sellout, the net result is the same.

[MilesColtrane]

15. Yeah, a default would bring an honest-to-god economic collapse that couldn't be "bailed out".

[libodem]

5. pffft

Fuck him. Let's go on strike. Bail on the economy. Let them eat debt.

[libodem]

11. Why should the

Will of the people be held over a barrel
In order to raise the debt ceiling?
Why cut every program for the people
We have fought so hard for?

[naaman fletcher]

12. Isn't there a point...

where one who spends way too much needs to stop spending, not borrow more?

Screw it. I say hike income taxes 10%, cut the military 50% or more, and then let's live within our means.

[Uncle Joe]

14. The other night Jim Lehrer tried to nail Boehner to the question of which catastrophe

would be worse, raising the debt limit or defaulting on the debt?

Boehner; like the coward that he is, refused to answer.

Kudos to Lehrer for at least trying to get an honest answer from the man.

Thanks for the thread, TomCaDem

[muriel_volestrangler]

19. Isn't a refusal to raise the debt limit a vote against the budget the Republicans passed

just back on April 14th?

260 to 167 in the House, 81 to 19 in the Senate: http://content.usatoday.com/communities/onpolitics/post/2011/04/budget-deal-government-shutdown-john-boehner-republicans/1

That set government spending and revenue up to September, and so was an agreement to raise government debt above the current limit. Are they really that fickle that they want to do a flip-flop just a month later?

[Javaman]

21. I also believe there is a whole section of the right wing/tea party/libertarian

moron wing that actually believes nothing will happen if the debt ceiling isn't raised.

It reminds me of that scene in "Ghostbusters" when the guy from the EPA turns off the containment shield.