93 replies to this topic

[Kisseena]

It's been 13 days now, right?

How much longer do you guys think it's going to take?

[SteveT]

Well, if they don't resolve things by the 17th, it's a major calamity.  Unless you ask a member of the Tea Party, so I wouldn't count on it ending before the 2014 primaries.

[Selena]

This is a big thing for people in this area -- the government shutdown has pretty much just killed the entire Alaskan fishing season. Nobody was able to get commercial fishing permits because the people who issue the permits were deemed "non-essential." The prime fishing season, where you get the money catches, only lasts a couple weeks. After that, the window is closed. Now it's effectively too late for them to get permits and get out there in time.

 

Meaning:

 

1) All the local fishers are out of work, and since they can only work during limited seasons, this means they probably won't have enough money to make it through the year unless they get other jobs.

 

2) The whole processing chain -- plants that clean and ship the fish, fishmongers who sell the stuff, grocery stores who get the lower end cuts, everything -- takes a major hit.

 

3) All the wild Alaskan seafood you buy is going to be super expensive due to limited supply for the rest of the year.

 

I mean, the fish and crabs are happy about it, but....

 

 

 

 

They keep talking about how they're coming closer to an agreement, but I don't know. If it happens, it will be at the 11th hour. But I still don't think it's going to happen. I think we're going to default, and that it will be a downward spiral from there. If they "resolve" things, it will only be done long after the damage has already taken its toll on things.

[Kisseena]

So what does it mean if we default?

Are we all gonna die?

Edited by Kisseena, 13 October 2013 - 11:05 PM.

[Jezzer]

So what does it mean if we default?

Are we all gonna die?

 

Might wish we do because it will not be pretty or easy, it could very possibly lead to another global depression like the world witnessed in the 1930s.

 

I am fairly certain that my parents and I will be out of job not to long after the US defaults as we are all government employees.  I highly doubt after the US defaults that the federal government will be able to secure additional funds in time to fund states for FY2015.  Indiana already has it's funds for FY2014...but FY2015, which starts on July 1st, 2014, will probably see many state employees out of a job.

Edited by Jezzer, 14 October 2013 - 10:09 AM.

[Jasi]

The biggest problem with defaulting is that it means that America is no longer a secure investment and we won't be able to get loans from other countries for our various projects.

 

So loans are a bit of a fact of life. If everyone had to save up all $500,000 before they bought a house, hardly anyone could afford to do it. Scale that up to, for example, overhauling the highway system or implementing high-speed rail, which costs billions, and similarly, if the US had to wait until it had the whole lump sum to be able to do it, nothing would ever get done, or at least we'd have to plan for things like 40 years in advance, which is impractical for many reasons. 

 

So governments all over the world regularly take out loans from banks or from other countries in order to pay for these projects. The US has never had problems getting people to loan them money, because the US has never failed to pay back a loan, and people think of the US as a stable country that isn't going to go bankrupt anytime soon.

 

So if we do fail to pay back loans and we do go bankrupt, that trashes all of that, and it makes it much harder for the US to get loans, since people aren't sure if we'll pay them back, or if we'll just default to prove a political point. And in the cases where the US does get a loan, the collateral (not sure if such a thing actually exists in country-to-country loans but you get it) and the interest rate will be much higher, thus costing us more money in the long run. The Tea Party, and other extremist Republicans who are holding the country hostage, claim that their central belief that holds their political group together is "fiscal responsibility". Ironically, the decision to let us default on our loans is incredibly fiscally irresponsible. If you have a mortgage and a car loan and you decide not to pay that in the name of fiscal responsibility, people are going to slap you upside the head and say "How is that responsible?! Paying your bills needs to be pretty high up on your priority list!" Similarly, it's completely absurd that the Tea Party is suggesting that this is the right decision.

Edited by Jasi, 14 October 2013 - 12:18 PM.

[Selena]

Government Shutdown: There's no budget plan, so we can't run the government until we figure out what to do with our money.

Debt Default: We no longer have money.

 

Well, okay, not exactly. We'll have money from taxes and stuff. But not enough to run everything. Debt is more or less tied into every aspect of government finance (which is true for most countries). We exist because we borrow, and we borrow more to pay back the other stuff we've borrowed. If we default, it may be difficult or impossible to acquire new loans from foreign investors. The biggest ones being China and -- in a nice little twist of revenge for us having dropped nukes on them -- Japan. Neither of whom are very happy.

 

Because the government's out of loaned money, they have to decide what should be funding and what they'll have to do without. Which means a prolonged shutdown of many services. Other things it will mean for commoners:

 

1. Another Recession, or Possible Depression. Because of economic instability, and because banks will seize up, companies will probably fire employees to "keep costs down." Or at least not hire any more. People will bail out of the stock market (which is already volatile and propped up on easily-splintered stilts). The whole thing will snowball into another deep economic crisis. If you can remember what happened during the Crash of '08, it will be like that again. Most likely. Maybe worse if things really get out of control. But maybe not so bad. It's hard to predict, but the outlook isn't good. Another recession is probably guaranteed. It's just the severity that's up in the air.

 

2. Retirement Savings Go Up in Smoke. Like the last crash. Any money that real grown-ups have stashed away in retirement funds will lose a sizable portion of their value. Meaning anyone near retirement age is SOL. My parents lost about half of their retirement funds in the last crisis, as an example.

 

3. Banks Have Heart Attacks. You probably won't be able to get any loans unless you have REALLY good credit. Which will probably include student loans, since that's relevant to many people here. Banks won't want to part with money. 1) Because they probably won't get it back if the economy goes tits up, and 2) Because banks have to reserve enough money to make sure existing clients can still withdraw funds.

 

4. The US Dollar Loses Value. How bad? Won't be able to tell until things are already happening. But during the last crisis, the dollar dropped down to Canadian dollar values. Psh, Canadians. Bad news if you want to go overseas to buy shiny things -- worse news for foreign trade. Another economic hit.

 

5. Social Security and Medicare Run Out of Moolah. It might last a month or two, but it won't be long before these programs are out of funds. Unless somebody can wizard up a short-term solution. Screw you, old people!

 

 

Of course, the US still technically has money after October 17th. So it won't default at midnight like the shutdown.

 

But it will have trouble paying off existing debt, and by that point, something will have to give. And then they'll actually default when they can't scrounge enough funds together to make ends meet. Which they won't be able to, because the government is still shut down and in disarray. It's the perfect storm!

 

 

 

 

 

 

 

 

....Basically, it could easily result in economic doomsday! A thousand different factors would come together to ruin the economy. Which means no jobs and money for you!

[Egann]

The problem is basically that with the TARP bailout the government absorbed all the bad debt by issuing more of it's own, so toxic subprime mortgage loans became toxic government bonds. Still every bit as toxic, though.

 

I'm just eyeballing these figures, but the debt per person is about $53,000, which is twice your ordinary working citizen's annual wage. When you factor in that not everybody works and that those who are cannot put 100% of their work into the debt, this roughly translates to 5-8 years of 15% inflation to pay off the debt, and that 15% is an overall average. Because of how debt works, the final interest rates will have to be higher than the initial ones. My rough eyeball says 20% inflation at the end of seven years will pay off the debt. And it will require some draconian measures to bring that back down to a friendly 3-7% 

 

So...roughly three doubling times. By 2025 a hamburger will cost about $100. That's what fixing the debt will take.

 

EDIT: I don't necessarily think our politicians will do this so much as try to "fix it enough" which roughly translates to half that long in the deep fryer and about a third of the debt will persist. Pick your poison: insane taxes, inflation, or default. Can't avoid all three.

Edited by Egann, 14 October 2013 - 01:01 PM.

[Selena]

They "say" they're getting closer to a deal.... in the Senate. But they've suspiciously said nothing about the House, which is infinitely more temperamental about things. I'd say the outlook is now even worse for things getting a temporary fix by the 17th. And even then they're just pushing the date back until the start of next year, which means we'll be right back where we are now. Supposedly we'll still have a week or two before finances start hitting the danger zone (duh-duh-duh-duh-DUH-HIIIIGHWAAAAY-TOOO-THEEE-- sorry).

 

But, again, I don't sense any urgency from anyone in office. Just showboating-that-looks-like-urgency.

 

 

 

 

 

 

Why has nobody made a dramatically dreary "Terrible Fate" style countdown timer for this whole thing? Come on, internet!

 

Ugh, how many hours are left until the deadline?

 

I think it was 50-something last time I looked at CNN. Here. For tomorrow.

 

 

[Oberon Storm]

Social Security is seperate from the budget. If anything a default kind of helps Social Securiy.

[Selena]

That's true for when you're planning out a budget (like with the government shutdown -- SS wasn't a factor). But money is money. And if the US doesn't have any, then SS payments stop.
 

 
4. Social Security payments halt
The current projection for the government to run out of money to pay its daily bills is Oct. 17. Economists believe, though, that the Treasury would have enough money on hand to pay its $12 billion Social Security payment due that day, as well as another one on Oct. 25.
That may not be the case come Nov. 1, though, when there's a $25 billion payment due, meaning that checks may not get issued past that date.
Nov. 15 stands as a larger date overall when the Treasury won't be able to make a $30 billion debt payment.
"We strongly suspect the current impasse over spending and the debt ceiling will have been resolved well before then," Capital Economics said in a report. "There is also a chance if the shutdown was still in effect at that point then the Treasury, perhaps with the Federal Reserve's help, would be able to avoid a default somehow. But in a worst case scenario, this is the date to watch."
 

 
http://www.nbcnews.c...rios-8C11366851
 
But as it says, that's a worst case scenario.

The US has a trillion dollar difference between what it makes and what it spends. So...

[Sir Deimos]

So that's when the looting starts. I'll have my sack and my fire on hand.

[Selena]

"House GOP offers its own plan with blackjack and hookers. And healthcare changes."


Hahaha we're fucked.

[Oberon Storm]

http://www.reuters.c...N0HY0XP20131008

If anything happens to Social Security everyone should throw an absolute shit fit. There is no reason for any trouble with Social Security because those payouts are not paid from the general budget.

[SteveT]

No, but the general budget is paid from Social Security.  Gooooo Congress.

[Selena]

So. The House was gonna vote on a thing today, but the Republicans are in a quiet civil war between the Standard GOP and the Tea Party. So they just decided not to vote. Meaning there's only one day left until the Treasurer's recommended "pass it now or die" date. And who knows how many days until the risk of actually defaulting becomes a reality.

 

Meanwhile, Fitch has set our credit outlook to negative, which means that if things continue to go downhill, we'll be downgraded. One of the credit lords downgraded us a while back -- so this would make 2/3 credit lords to demote us down to a AA rating.

 

 

Various right wing congressmen were on CNN earlier saying they want a complete revision of various huge issues before they vote on anything. It's pretty rare to see Wolf Blitzer get frustrated to the point of almost getting angry, so that was fascinating. But it also means that if the Tea Party hardliners continue to fight with the rest of the right wing, we're... not going to get anything done for a long while. Their demands would have been more helpful if they'd been made several months ago. Back when we actually had time to work things through. Not knee-jerk demands with only 24 hours to go. You can't reform all of Social Security in a couple hours.

 

So, with no end to this in sight, that means that the government has to start picking and choosing which services to keep operational. They can keep paying the debt off.... if they cut other services. Some of which are already off-duty due to the shutdown, but they'll have to be even steeper than that to avoid default.

 

Should be frighteningly fun to see how they manage to juggle funds, especially with expectations for a stock market sell-off and a potential credit downgrade on the line.

[Egann]

At this point I expect there's enough exhaustion and dissent in both parties that the legislature will pass whatever bills hit the floor to be voted on. Which is why we see things *not* being voted on. Party higher-ups (particularly republican) think the worst "Armageddon" can do is cause them to lose a few contested legislature seats, and frankly that's not worth passing a budget which doesn't fit party lines or upsets the status quo.

 

At this point we all know the government's budget has spun out of control. It looks like the Tea Party just expended all their popularity to try to fix it and in classic Greek Tragic form, it made the problem worse and themselves look like idiots. And unfortunately this makes perfect sense because fixing the budget is not in either party's leadership's interest, therefore they'll use it to dispose of the Tea Party.

 

The wants of the parties outweigh the needs of the people. Isn't our government just fantastic?

Edited by Egann, 15 October 2013 - 09:55 PM.

[Selena]

 

(mood music)

[Crimson Lego]

So apparently they've reached a deal of some sort? http://www.bbc.co.uk...e-east-24557469

 

 

Republican and Democratic leaders of the US Senate have struck a cross-party deal to end a partial government shutdown and raise the US debt limit.

Their bill must also pass the House, where a small group of Republicans are expected to join Democrats to send the bill to President Barack Obama.

The bill extends the federal borrowing limit until 7 February and funds the government to 15 January.

It comes just a day before the deadline to raise the $16.7tn (£10.5tn) limit.

'Brink of disaster'

On the floor of the US Senate, Democratic leader Harry Reid called the legislation "historic", saying it would provide time for Congress to work toward a long-term budget agreement.

The plan would create a conference committee of Senate and House members tasked with drawing up a longer-term budget deal.

"Our country came to the brink of disaster," Mr Reid said. "This legislation ends a stand-off that ground the work of Washington to a halt."

Republican Senate Minority Leader Mitch McConnell, Mr Reid's negotiating partner, said he was "confident" the government would reopen and avoid default under the proposed bill.

The deal "is far less than many of us hoped for, quite frankly, but far better than what some had fought," he said.

"Now it's time for Republicans to unite behind other crucial goals."

Politicians, bankers and economists warned of global economic consequences unless an agreement to raise the US government's borrowing limit were reached.

The US Treasury has been using what it has called "extraordinary measures" to pay its bills since the nation reached its current debt limit in May.

Those methods will be exhausted by 17 October, US Treasury Secretary Jack Lew has said, leaving the US unable to meet all of its debt and other fiscal obligations if the limit is not raised.

It remains unclear whether the Senate bill can muster enough votes in the Republican-led House to pass before the 17 October deadline.

The House Democratic caucus may be joined by a smaller number of more moderate Republicans, analysts say.

'No winners here'

White House press secretary Jay Carney told reporters US President Barack Obama hopes both chambers of Congress "will move swiftly" to pass the Senate agreement.

Asked if the bill, which contained few concessions to Republicans, represented a win for the Obama administration, Mr Carney said "there were no winners here".

"The economy has suffered... The American people have paid a price for this."

Hardline conservatives triggered the budget warfare 16 days ago, forcing the first government shutdown in 17 years by demanding that Mr Obama gut his signature healthcare overhaul plan.

An estimated 700,000 of the 2.1 million-strong federal workforce were initially told to stay home, having been deemed "non-essential" staff.

Most national parks, museums, federal buildings and services were closed, while pension and military veterans' benefit cheques were delayed.

Although both parties have fared badly in opinion polls during the political stand-off, Republicans have taken the brunt of the blame from voters.

 

[Selena]

Weeeeeell..... not really.

 

The Senate has reached a deal. And it will probably pass in the Senate. But after that, it has to be passed in the House of Representatives -- and that's a whole 'nother war. The Senate is controlled by the Democrats. The House is controlled by the Republicans. You need to pass a bill through both chambers, so that's a big problem. They can't agree on anything.

 

The Senate has passed a number of 'end the shutdown' bills since this whole thing started, and the House has rejected every single one of them -- and vice versa. So there's no guarantee that this thing will go through, especially with the Republican civil war going on in the House (Tea Party Hardliners vs. Moderate Conservatives).

 

Also troubling is that the Senate said they'll vote on it "after dinner." Which takes us late into the evening for just ONE of the two big votes necessary, and a vote in the House always takes longer because there are more people in that one.

 

So I still don't think anything will go through today. Maybe, possibly, if they all agree to stay until midnight. Which they usually don't, especially since the debt issue isn't an immediate off-switch like the government shutdown was.

[Wolf O'Donnell]

So, with no end to this in sight, that means that the government has to start picking and choosing which services to keep operational. They can keep paying the debt off.... if they cut other services. Some of which are already off-duty due to the shutdown, but they'll have to be even steeper than that to avoid default.

 

Yeah, good luck with that. I hear the CDC was shut down... and that there's a cholera outbreak across the border in Mexico. Strange that. I would have thought the CDC was essential.

[Selena]

Well, as expected, the bill has passed in the Senate, with admittedly good numbers. Now it's off to the House before night's end. So... we'll see. They're all expecting the House to pass it too, and Boehner has more or less declared surrender. It'll all be up to those hardliners and what they want to do. There are no second chances tonight.

 

 

WHAT WILL HAPPEN NEXT.

[Selena]

 

The House actually did it. Shutdown's over, and the limit has been temporarily raised.

 

 

 

 

 

 

....But don't worry, I'm sure we'll be right back here in January.

[Egann]

You may triumph on the field of battle for a day, but against the interest you have accumulated on your bonds there is no victory.

[JRPomazon]

Congress Republicans are pissed, all that fuss and effort only to be outdone by their constituents in the Senate. At the very least, my facebook news feed will be ever so slightly less whiny about the government being shutdown.

 

But honestly, things are only going to get worse if both parties don't shape up. Democrats are only going to get away for so long for delaying this budget business and the Republicans need leaders who can actually get things done without having to result in shutting down the government. I feel as though this has been a complete waste of everyone's time regardless of political positions.

[Selena]

Yeah, the bill that was approved was not all that different from the bills they were trying to pass weeks ago -- so holding out for that long just screwed up the country for nothing. Not that any of them genuinely seem to mind.

 

Although it wasn't all a waste. I mean, we got things like:

 

* Government Shutdown Pick-Up Lines

 

and

 

* Government Shutdown Mean Girls

 

 

 

 

Apparently, though, some people in the House took defeat worse than others...!

 

[frogmonkeys]

so Adam has insurance thru my work, but because of obamacare he now has to pay his work to not get fined for not getting the insurance thru them that they now have to have/offer?! what? this makes no sense to me. kinda off subject of the shutdown. but wasn't it over obamacare?

[Jasi]

 

Apparently, though, some people in the House took defeat worse than others...!

 

 

 

Wait now...what was that? o_o

 

so Adam has insurance thru my work, but because of obamacare he now has to pay his work to not get fined for not getting the insurance thru them that they now have to have/offer?! what? this makes no sense to me. kinda off subject of the shutdown. but wasn't it over obamacare?

 

That doesn't sound right at all. As long as he has insurance through someone he shouldn't have to pay any fines. Nothing says you have to buy it through a specific avenue. You should double-check on that.

 

edit: my boyfriend is super smart; he says what you may be thinking of is that he's not available for a tax subsidy. If someone's work offers insurance that qualifies/meets some basic standard, and they choose not to get that insurance but instead use the marketplace, they are not eligible for a tax subsidy. Is that what you're thinking of? That's not exactly the same as having to pay extra.

Edited by Jasi, 17 October 2013 - 04:55 PM.

[frogmonkeys]

I have no clue. he just said that since he already has insurance he still has to pay to not have insurance thru his work. But I have been telling him they can't force him to get insurance thru his work because he already has insurance. sigh, truthfully this all just confuses me.


edit: he had tried to talk about it with me before and I was all well you already have insurance you don't need it thru your work. but he kept saying he's still going to have to pay for it even if he opts out of it at work. something about the plan his boss is getting. blah. I really should pay better attention.

Edited by frogmonkeys, 17 October 2013 - 06:10 PM.

[Selena]

 

Wait now...what was that? o_o

 

 

 

 

That.... was apparently the House stenographer have a breakdown after several weeks of stress! Or something! She just marched up to the podium during the last vote and started... yelling that stuff out. Until she was escorted off. Exit stage left.