Is USA on the edge of an economic crisis?

6pack

6pack

ex-Mod
m.bbc.co.uk/news/business-24327411

Shutdown impact
If the government does shutdown on 1 October, as many as a third of its 2.1 million employees are expected to stop work - with no guarantee of back pay once the deadlock is resolved.
National Parks and Washington's Smithsonian museums would close,pension and veterans' benefit cheques would be delayed,and visa and passport applications would be stymied.
Programmes deemed essential, such as air traffic control and food inspections,would continue.
The defence department has advised employees that uniformed members of the military will continue on "normal duty status", but"large numbers" of civilian workers will be told to stay home.

The looming shutdown, which would be the first for 17 years, is not the only crisis the US government is facing.
The US government and Republicans are also at loggerheads over extending the government's borrowing limit.
The US Treasury Secretary has warned that the US will hit its debt ceiling by 17 October, leaving the government with half the money needed to pay its bills.
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I think most probably, the row will get settled at the eleventh hour by the politicians there. I mean, most of them would just pass the resolution so that politicians further down the order in coming years will face the heat. Seems like USA is just throwing money at the problem and hoping it will go away.

What will be the outcome, if USA defaults on its payments? Stock market crashes everywhere?
 
If this indeed happens, there will be massive bankruptcies. Businesses will shut down by the thousands. Thousands more will cut their workforce. Asian, especially Indian market would be first to hit.
 
Their ratings is already in poor level. If they raise the ceiling any more (which they will do), their credit rating will go to junk status I believe.
 
6pack said:
I think most probably, the row will get settled at the eleventh hour by the politicians there. I mean, most of them would just pass the resolution so that politicians further down the order in coming years will face the heat. Seems like USA is just throwing money at the problem and hoping it will go away.
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yep, they will kick the can down the road. Though i would prefer a fight and see Obamacare go down.

6pack said:
What will be the outcome, if USA defaults on its payments? Stock market crashes everywhere?
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Their rating slips from AA to A. More expensive to borrow. That's it. Though that might not happen.

Stock market ain't going to crash everywhere. In fact stock market is reacting just like title of this thread.

It will get harder to ease off on the QE come Dec. That means we get maybe litle longer than Dec to fix our own house :)
 
I mean stock market behaviour is as irrational as some of the alarmist comments you see here.

I would give this a month to really get a picture of the extent of the problem. Are people going to track this that long ? heh, nah. We will be discussing something else then.
 
Before the PIGS downtrend it was the dollar bubble which was most talk about.But PIGS save them by crashing.QE3 extension is still inflating the bubble more.It will burst but i dont know when.But this story is on expected line.
 
Well, it seems that the row did not get settled, and the govt has started a shutdown of its services in a controlled manner. I think the longest time, one of their shutdowns ran, was around 21 days and cost them about a trillion dollars in lost revenue. Let's see how long this one lasts.
 
MAGNeT said:
Before the PIGS downtrend it was the dollar bubble which was most talk about.But PIGS save them by crashing.QE3 extension is still inflating the bubble more.It will burst but i dont know when.But this story is on expected line.
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o_O care to make it a bit simple to not go over my head :banghead:
:)

Was watching CNN last night at about 1am when this news came and they were mentioning how 0.8million govt staff will sit at home and get delayed payments and how monuments like liberty statue and war memorial will stay shut for a fortnight... And I thought this all sounds so stupid?? And then Richard Quests asks the same question later to a US Senate. It was something like this. Quest to Senate: "As a brit can you imagine how ridiculous it sounds to me when I hear that the Govt is going to shutdown" :)
 
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Because it forces people to pay extra for health care. They basically are forced to subsidise others. Its going towards the euro model. Socialised health care is very expensive, you might say unsustainable. Which for the US is a step backwards. Creates yet another entitlement. Who's going to pay for this in addition to other entitlements already.

If the US does not sort this ballooning debt within the next 5-10 years they are going to be in trouble.
 
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irony is their markets jumped higher to this news....
And I would like to see the obamacare go away....
I also believe that there is no gold in Fort knox and its all a hoax....
 
hahahaha good one, we are the biggest hypocrites in the world, when Sri Srinivasan is sworn as first Indian American judge of top US court, we are all over twitter, facebook etc etc If an Indian American becomes Ms. America & faces racism then we come in support, but what happens to us when it comes to an Italian becoming Indian prime Minister ?????

well I am not in her favor or against but this is the best example I can think ATM.
 
Crazy_Eddy said:
If you don't stay in the US and aren't using their health system - why does obamacare even matter to you?
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Coz my job is directly affected by it :)
And not only that .... US is chewing much much more than they can swallow.... They cannot fund the total health care thing so why float it and ruin the country.....
Again the million $ question.... Even if I leave aside how this move will affect thousands of jobs in India.... The core issue is will this make healthcare affordable for every one is US??? I dont think so....
Those in US or who have some time taken some medical treatment can testify how insanely expensive US health care system already is.
 
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