Republican mainstream flirts with brief debt default

[Cali_Democrat]

Republican mainstream flirts with brief default
By Tim Reid and Steven C. Johnson
WASHINGTON/NEW YORK | Tue Jun 7, 2011 11:01pm EDT

(Reuters) - An idea once confined to the fringe of the Republican party is seeping into its mainstream -- that a brief default might be an acceptable price to pay if it forces the White House to deal with runaway spending. An increasing number of Republicans do not believe the Obama administration's dire predictions of economic "catastrophe" if the debt limit is not increased. They argue a period of technical default can be managed without plunging markets into chaos.

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Many on Wall Street disagree. They fear even the briefest default would cause a steep climb in interest rates worldwide and a tumbling dollar, which would tip a fragile economy back into recession and cause financial market upheaval on a scale not seen since the collapse of Lehman Bros.

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"It's a very dangerous tactic," said Mirko Mikelic, who helps manage $17 billion at Fifth Third Asset Management. "I think you would see investors move away from the United States and move to other markets as they lose confidence in the financial system and our ability to keep our house in order."

Many Republicans doubt the August 2 deadline. They argue that if the borrowing cap is not raised by then, the Treasury will have sufficient revenues to service the nation's interest payments and, for a period of time, pay obligations such as Social Security and Medicare.

Read more...http://www.reuters.com/article/2011/06/08/us-usa-debt-skepticism-idUSTRE75700720110608

Any doubts that the Republicans want to plunge the economy into chaos? It's so obvious and it looks like they might get their way because they have the ability to reject any debt limit increase and there's nothing Obama can do about it. I hope you guys have some portfolio protection.