4 ms·

Ask HN: What exactly will happen on debtpocalypse?

13 points by yuvadam 15y ago

mooism2 15y ago
Do you want a prediction on what the politicians will do, how the markets will react, or how various countries' economies will be affected?
swhopkins 15y ago
Nothing. I still believe our politicians aren't stupid enough to actually let the government default. It just may come down to the last minute.
noonespecial 15y ago
They already have the solution, but it's unpalatable to each party's dogma. They'll posture until the last minute and then do what they figured out they had to do weeks ago. It's little more than a reality tv show at this point.
- glimcat 15y ago
  Maybe, but it's never good when two powerful entrenched interest groups decide to play Chicken. The accidental and incidental damage can be significant. I also have a hard time trusting them not to act like childish idiots when they manifestly do so on a regular basis and are in the middle of further posturing for the sake of upholding ideological dogma at the expense of solving the problems they're supposed to be solving.
- hugh3 15y ago
  As I understand it, the differences aren't even ideological any more. According to Nate Silver's article from the other day, http://fivethirtyeight.blogs.nytimes.com/2011/07/27/its-all-over-but-the-face-saving/ http://fivethirtyeight.blogs.nytimes.com/2011/07/27/its-all-... the Boehner bill (which has been passed by the House and rejected by the Senate) and the Reid bill (which may or may not actually exist yet) are pretty much identical in all important ways. The main sticking point is whether to kick the can down the road 'til the middle of election season (which the Republicans want) or 'til slightly after the election is over (which the Democrats want). Both parties have high-minded-sounding justifications for why their preferred option is the right thing for the country, but... I'm trying not to pay too much attention to the whole charade at this point. I know how this movie ends, it's just that the two leads are still arguing over who gets to look like the hero in the final scene.
stonemetal 15y ago
Nothing. There will be a small market panic before, then it will happen. After it will be similar to when the government doesn't pass a funding bill, government workers furloughed etc. The market will recover. Everybody will have a good y2k laugh. The US will not default.
alecco 15y ago
Instead of empty opinions, check what the market is betting on. And still that will be off either way, but at least they put their money where their thinking goes.
zg 15y ago
In the unlikely event that the debt ceiling isn't raised, the government will need to decide which debts not to pay. I imagine it won't want to default on any bond payments, so that will leave any non-bond payments such as federal wages, medicare, medicaid etc. In addition to this, the US credit rating is likely to fall, and potentially confidence in the dollar. If the value of the dollar decreases then this will lead to imports becoming more expensive, leading to inflation.
veyron 15y ago
Obama invokes 14th amendment, debt may be downgraded, we move on

13 points by yuvadam 15y ago

Do you want a prediction on what the politicians will do, how the markets will react, or how various countries' economies will be affected?

swhopkins 15y ago

Nothing. I still believe our politicians aren't stupid enough to actually let the government default. It just may come down to the last minute.

noonespecial 15y ago

They already have the solution, but it's unpalatable to each party's dogma. They'll posture until the last minute and then do what they figured out they had to do weeks ago. It's little more than a reality tv show at this point.

glimcat 15y ago
Maybe, but it's never good when two powerful entrenched interest groups decide to play Chicken. The accidental and incidental damage can be significant. I also have a hard time trusting them not to act like childish idiots when they manifestly do so on a regular basis and are in the middle of further posturing for the sake of upholding ideological dogma at the expense of solving the problems they're supposed to be solving.
hugh3 15y ago
As I understand it, the differences aren't even ideological any more. According to Nate Silver's article from the other day, http://fivethirtyeight.blogs.nytimes.com/2011/07/27/its-all-over-but-the-face-saving/ http://fivethirtyeight.blogs.nytimes.com/2011/07/27/its-all-... the Boehner bill (which has been passed by the House and rejected by the Senate) and the Reid bill (which may or may not actually exist yet) are pretty much identical in all important ways. The main sticking point is whether to kick the can down the road 'til the middle of election season (which the Republicans want) or 'til slightly after the election is over (which the Democrats want). Both parties have high-minded-sounding justifications for why their preferred option is the right thing for the country, but... I'm trying not to pay too much attention to the whole charade at this point. I know how this movie ends, it's just that the two leads are still arguing over who gets to look like the hero in the final scene.

stonemetal 15y ago

Nothing. There will be a small market panic before, then it will happen. After it will be similar to when the government doesn't pass a funding bill, government workers furloughed etc. The market will recover. Everybody will have a good y2k laugh. The US will not default.

alecco 15y ago

Instead of empty opinions, check what the market is betting on. And still that will be off either way, but at least they put their money where their thinking goes.

zg 15y ago

In the unlikely event that the debt ceiling isn't raised, the government will need to decide which debts not to pay. I imagine it won't want to default on any bond payments, so that will leave any non-bond payments such as federal wages, medicare, medicaid etc. In addition to this, the US credit rating is likely to fall, and potentially confidence in the dollar. If the value of the dollar decreases then this will lead to imports becoming more expensive, leading to inflation.

veyron 15y ago

Obama invokes 14th amendment, debt may be downgraded, we move on