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The U.S. shutdown and the threat of default

Here's another representation in map form:

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Thanks guys.

That is interesting. So the whishy-washy liberal democrats make all of the money and prop up the fingers in the pork barrel republicans.

I think if I were a pinko democratic supporter of Obamacare I might just be asking all those Republican Senators and Representatives for my money back - keen as they seem to be on slimmed down government.
 
It's good to know that the Americans are in the karmic back pockets of the China and the Communist Party.

Jack
 
jackbarron said:
It's good to know that the Americans are in the karmic back pockets of the China and the Communist Party.

Jack
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What communist party?, China is a one party state with run by a party that calls itself a communist party but there is fvck all communism going on there.
 
The government shut down as it is being implemented is a farce. The national parks are closed, so the people that are impacted are the local businesses both in and surrounding the parks. Visitors to the parks are not impressed, many have spent many months planning their once in (a decade, lifetime) visit to the big parks and have had their plans frustrated thanks to the Tea Party.

Not me though - no National Parks were planned to be visited on this trip.

It is rather stupid when main highways that pass through a park eg Glen Canyon / Lake Powell and you see turnouts to the boat launch ramps blocked off and scenic turnouts partially blocked off as well. Also all the park maintained toilets (both regular and pit) have all been locked up and a notice of closure applied. Including the Disabled Person toilets.

The interesting thing is that all the furloughed employees will get their back pay for the time off work. So good score Tea Party

Most days the US Today newspaper has stories of the stupid consequences of this action.
 
A couple points on these scary-looking debt figures:

1. What the US owes creditors like China on a forward basis is the interest on the debt it holds. That's it. This interest is currently running under 2% per year, a level it has been at for some time. That works out to around $26bn/year in interest payments to China. The actual face value on the Treasury bonds, bills, and notes held by China or anyone else is effectively a cash equivalent. So China has the equivalent of a massive, $1.3tn dollar-denominated cash pile produced by a decades-long trade surplus caused by selling Shanking Poochie dolls, inflatable alligator christmas yard ornaments, and a trillion other things to the US in exchange for dollars. China chose to buy dollar-denominated bonds with some of that surplus. Consequently, China has a cash pile that could buy a very large amount of US goods and services. What it does not have is a particularly large claim on the forward revenues of the US Treasury, except for that $26bn/year, which not especially large in the grand scheme of things, and is not even keeping up with inflation. At the moment, China's holding US government debt is actually working in the United States' favor. Thank you China.

That brings me to:

2. The net interest on the US federal debt is currently 1.3% of GDP (p. 11). If you take the total federal debt held by the public (= everyone other than the US Government), the CBO places it at about 80% of the total. Inflation is running around 2%/year. So 1.3%-2% x 80% = -0.3% of GDP on an inflation-adjusted basis. In other words, inflation is currently eroding the value of the US Federal debt more rapidly than the interest payments on that debt make up for.


Anyone here think that's an especially bad position to be in? I don't.
 
How can the US owe the UK $130 billion? I thought we had only just finished repaying the money we borrowed from the US to help finance WW2, or am I reading that chart wrong?
 
thebiglebowski said:
How can the US owe the UK $130 billion? I thought we had only just finished repaying the money we borrowed from the US to help finance WW2, or am I reading that chart wrong?
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That probably just means they own that much in Gilts.

Indeed whenever you see OMG 11ENTY TRILLION IN DEBT!!!??!??? headlines remember you are frequently only seeing one half of the balance sheet rather than a net figure.
 
Fox News doesn't know yet quite how to tell its readers that the GOP's plan misfired, and that Republican leaders have no clear idea about how to get out of the mess they created. Terrible journalism, btw, it looks like the article was written under great time pressure.

They repeatedly talk of Obama "pushing back". What? How dare he?
 
Even less so when you literally control the supply of the currency in which the cash is held.
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Yeah, the failure by so many to grasp this simple fact would be a real source of laffs if it weren't so worrisome.

The Republicans constantly compare the US deficit to that of a household. Now, if a household needs to raise its debt ceiling, it must negotiate with its creditors to do so. Yet the US debt ceiling negotiations are entirely internal to the US government. No one is going to Beijing or Tokyo to beg the Chinese or Japanese to please lend the US more money; all these countries can do is nervously sit on the sidelines and beg the US to raise its debt ceiling.

In fact, I don't see how the Republicans can even make coherent sense of why they are negotiating with the US President about this at all, given that he's not a major creditor of the US. The very economic theory which compels them to negotiate with the US President over the debt limit cannot make sense of why they are negotiating with the US President over the debt limit.

Here's another absurdity. The dollars that will be borrowed by a raising of the debt ceiling don't yet exist. They will be created, over time, by issuing and retiring dollar-denominated debt securities. So if, as many Republicans seem to think, the US budget is like a household's, where would our creditors get the extra dollars to lend us? Do they think that China would first print dollars, then offer to lend them to the United States?
 
Markus S said:
Fox News doesn't know yet quite how to tell its readers that the GOP's plan misfired, and that Republican leaders have no clear idea about how to get out of the mess they created. Terrible journalism, btw, it looks like the article was written under great time pressure.

They repeatedly talk of Obama "pushing back". What? How dare he?
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The underlying current (as frequently mentioned by Paul Krugman in the NYT) is that the Republican Party regards itself as the only rightful party of government - they are the real America, and the other lot are Socialists/traitors/unAmericans, unfit to have any part in government. Therefore, anything that leads to the rightful party of government assuming its rightful place is quite in order.

It tends to be forgotten that the first Republican President was Abraham Lincoln. When someone tried to hold him to ransom, his comment was, "You put a pistol to my head and say, 'If you don't do what I want, I have to kill you - and then you are guilty of murder!'" Which is precisely what his descendants (in name anyway) are doing.
 
tones said:
It tends to be forgotten that the first Republican President was Abraham Lincoln. When someone tried to hold him to ransom, his comment was, "You put a pistol to my head and say, 'If you don't do what I want, I have to kill you - and then you are guilty of murder!'" Which is precisely what his descendants (in name anyway) are doing.
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Hmmm... John Wilkes Booth = Boehner? :)

(except Booth didn't threaten or negotiate - he just fired)

Anyway, let me see if I understand US politics...

The trough is almost empty and all the piggies are hungry.
Some piggies have been put out to an empty pasture (to mix a metaphor)
The trough will be declared empty next week if the two groups of piggies can't agree
The slop-fund needed to refill the trough will be deemed to be exhausted when the trough is declared empty
All the little piggies will begin to starve and lose faith in the big piggies if this happens
Meanwhile, the rest of the animals on Old MacDonald's farm are watching in trepidation as the funding for the slop comes - partially - from their troughs
Red piggies and blue piggies are, all the while, enjoying a lovely game of brinkmanship

Is that about right?
 
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