6 ms·

Jamie Dimon warns panic will overtake markets as U.S. approaches debt default

24 points by donsupreme 3y ago

tikkun 3y ago
Seems correct.
ragnot 3y ago
Where would you even go if the US defaulted? It's such an armageddon level event that I don't know how you even begin to hedge it.
- JumpCrisscross 3y ago
  > Where would you even go if the US defaulted? Longer-dated Treasuries. This is a technical default, and when threatened in the past, other Treasuries rally. The problem is if someone needs liquidity in an affected issue, or if this prompts a general risk-off mentality which then leads to rising capital costs across the private sector.
  - naveen99 3y ago
    The shortest dated government debt is overnight. But if they don’t pay the overnight rate to money market funds using the reverse repo or banks money in the federal reserve, surely that would cause a divide by zero error somewhere in the financial system.
- deleted 3y ago
  [deleted]
bequanna 3y ago
I dread an actual or “technical” default but I think a line in the sand needs to be drawn. Government freebies and overspending caused incredible harm to the general public as it contributed to inflation over the past few years. Real incomes are painfully down and the average person is much worse off. We’re now paying close to $1T per year in interest alone on bloated US govt debt. Enough is enough. Government spending needs to be cut. Edit: those who downvote, what exactly do you disagree with in the above?
- redeeman 3y ago
  > those who downvote, what exactly do you disagree with in the above? they believe that taxing someone else more is gonna allow their spendomania to continue. if only we take a little bit more of someone elses money!!!
- rnk 3y ago
  We sure could save a lot by cutting social security for old people, reduce medicare payments, cut down food stamps for people with kids that's a few trillion right there. Or we could just cancel recent tax cuts that were focused on wealthy people and get trillions more in revenue. Remember the last pres has a record addition to the debt of $7 trillion with three debt increases without a threatened debt default, somehow.
  - bequanna 3y ago
    Sure, I agree with you. Let’s make the tax system somewhat more progressive and simpler. But that alone won’t help enough. The issue is the spending associated with and related to the “inflation reduction act”. Spending of this type is mostly unnecessary pork.
    - sharemywin 3y ago
      The only way to pay down the debt is massive tax increases on the wealthy. The same way we did it in from 46' to 80' https://www.longtermtrends.net/us-debt-to-gdp/ https://www.longtermtrends.net/us-debt-to-gdp/
  - redeeman 3y ago
    Or how about we implement a FAIR tax system. the entire cost of the US is divided up by the count of its citizens equally. its easy to say "tax this tax that" when its other people getting ripped off. If everyone had to personally decide if playing warlord in god knows how many countries is worth the money they must rip out of their wallet, im guessing the US would be in less wars. if people had to vote with their wallet on whether stuff is worthwhile, i bet spending would be cut very very rapidly, instead everyone wants their cut of an increasingly larger cake, spiralling totally out of control
simmons 3y ago
I hope markets don't panic and I think the chances of an actual default are extremely low. However, I don't think the chances of a default are zero. Everyone I talk to seems to be saying "A devastating default [i.e. not like the brief blip in 1971] has never happened, therefore it cannot happen." Which doesn't seem like sound reasoning to me. I imagine there's no escaping the fallout of such a default, but I'm thinking it may be time to take a break from treasury ETFs for while.
- dllthomas 3y ago
  I really don't understand how default could ever be constitutional, although I don't think alternatives are great either.
  - mkr-hn 3y ago
    The constitution is, in the end, a piece of old paper in a climate controlled box. It's on humans to bring it to life. Humans don't always do the things they say they will on paper even if they put one hand on a different book of paper and swear to while everyone watches.
    - dllthomas 3y ago
      I don't disagree that it could happen without being constitutional. Of course, the debt ceiling is also a piece of paper, as are any laws restricting the printing of money, etc.
- thunky 3y ago
  > I think the chances of an actual default are extremely low It could only happen if our political leaders are incredibly stupid, reckless, and self serving. So I wouldn't bet against it. The fact we're even talking about it right now says a lot.
darkteflon 3y ago
We seem to do this every few years, no? Isn’t this just a re-run of political brinkmanship and posturing from the time before, and the time before that? Sure does seem to get the clicks, though.
- mkr-hn 3y ago
  The GOP has gotten increasingly radical since throwing in with Evangelicals and segregationists[0]. It accelerated with the Tea Party[1] wave which dragged the party further to the right, and keeps getting worse. We always came back from the brink because a shrinking number of cooler heads prevailed. Coming back this time depends on there being enough cooler heads. [0] https://en.wikipedia.org/wiki/Southern_strategy https://en.wikipedia.org/wiki/Southern_strategy [1] https://en.wikipedia.org/wiki/Tea_Party_movement https://en.wikipedia.org/wiki/Tea_Party_movement
  - camdenlock 3y ago
    There are two sides involved. It’s up to both of them to find a compromise.
    - mkr-hn 3y ago
      Both sides pledged to support and defend the constitution when they took the job. One side is refusing to do that. The compromise is they pay their debts and think about this the next time they want to give billionaires a tax cut. https://constitution.congress.gov/browse/amendment-14/section-4/ https://constitution.congress.gov/browse/amendment-14/sectio... >> "The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."
      - redeeman 3y ago
        lol please, as if one side is significantly better than the other. the establishment is exactly the same on both sides, and believe me, they do not work for you. stuff like "one side is refusing that" is just ridiculous partisanship, and anyone that believes it, on EITHER side, just lives in a bubble. and looking at things, the democrats are FAR more radical the the republicans. Both are borderline traitors though, and deserves not an iota of power

24 points by donsupreme 3y ago

Seems correct.

Where would you even go if the US defaulted? It's such an armageddon level event that I don't know how you even begin to hedge it.

JumpCrisscross 3y ago
> Where would you even go if the US defaulted? Longer-dated Treasuries. This is a technical default, and when threatened in the past, other Treasuries rally. The problem is if someone needs liquidity in an affected issue, or if this prompts a general risk-off mentality which then leads to rising capital costs across the private sector.
- naveen99 3y ago
  The shortest dated government debt is overnight. But if they don’t pay the overnight rate to money market funds using the reverse repo or banks money in the federal reserve, surely that would cause a divide by zero error somewhere in the financial system.
deleted 3y ago
[deleted]

bequanna 3y ago

I dread an actual or “technical” default but I think a line in the sand needs to be drawn. Government freebies and overspending caused incredible harm to the general public as it contributed to inflation over the past few years. Real incomes are painfully down and the average person is much worse off. We’re now paying close to $1T per year in interest alone on bloated US govt debt. Enough is enough. Government spending needs to be cut. Edit: those who downvote, what exactly do you disagree with in the above?

redeeman 3y ago
> those who downvote, what exactly do you disagree with in the above? they believe that taxing someone else more is gonna allow their spendomania to continue. if only we take a little bit more of someone elses money!!!
rnk 3y ago
We sure could save a lot by cutting social security for old people, reduce medicare payments, cut down food stamps for people with kids that's a few trillion right there. Or we could just cancel recent tax cuts that were focused on wealthy people and get trillions more in revenue. Remember the last pres has a record addition to the debt of $7 trillion with three debt increases without a threatened debt default, somehow.
- bequanna 3y ago
  Sure, I agree with you. Let’s make the tax system somewhat more progressive and simpler. But that alone won’t help enough. The issue is the spending associated with and related to the “inflation reduction act”. Spending of this type is mostly unnecessary pork.
  - sharemywin 3y ago
    The only way to pay down the debt is massive tax increases on the wealthy. The same way we did it in from 46' to 80' https://www.longtermtrends.net/us-debt-to-gdp/ https://www.longtermtrends.net/us-debt-to-gdp/
- redeeman 3y ago
  Or how about we implement a FAIR tax system. the entire cost of the US is divided up by the count of its citizens equally. its easy to say "tax this tax that" when its other people getting ripped off. If everyone had to personally decide if playing warlord in god knows how many countries is worth the money they must rip out of their wallet, im guessing the US would be in less wars. if people had to vote with their wallet on whether stuff is worthwhile, i bet spending would be cut very very rapidly, instead everyone wants their cut of an increasingly larger cake, spiralling totally out of control

simmons 3y ago

I hope markets don't panic and I think the chances of an actual default are extremely low. However, I don't think the chances of a default are zero. Everyone I talk to seems to be saying "A devastating default [i.e. not like the brief blip in 1971] has never happened, therefore it cannot happen." Which doesn't seem like sound reasoning to me. I imagine there's no escaping the fallout of such a default, but I'm thinking it may be time to take a break from treasury ETFs for while.

dllthomas 3y ago
I really don't understand how default could ever be constitutional, although I don't think alternatives are great either.
- mkr-hn 3y ago
  The constitution is, in the end, a piece of old paper in a climate controlled box. It's on humans to bring it to life. Humans don't always do the things they say they will on paper even if they put one hand on a different book of paper and swear to while everyone watches.
  - dllthomas 3y ago
    I don't disagree that it could happen without being constitutional. Of course, the debt ceiling is also a piece of paper, as are any laws restricting the printing of money, etc.
thunky 3y ago
> I think the chances of an actual default are extremely low It could only happen if our political leaders are incredibly stupid, reckless, and self serving. So I wouldn't bet against it. The fact we're even talking about it right now says a lot.

darkteflon 3y ago

We seem to do this every few years, no? Isn’t this just a re-run of political brinkmanship and posturing from the time before, and the time before that? Sure does seem to get the clicks, though.

mkr-hn 3y ago
The GOP has gotten increasingly radical since throwing in with Evangelicals and segregationists[0]. It accelerated with the Tea Party[1] wave which dragged the party further to the right, and keeps getting worse. We always came back from the brink because a shrinking number of cooler heads prevailed. Coming back this time depends on there being enough cooler heads. [0] https://en.wikipedia.org/wiki/Southern_strategy https://en.wikipedia.org/wiki/Southern_strategy [1] https://en.wikipedia.org/wiki/Tea_Party_movement https://en.wikipedia.org/wiki/Tea_Party_movement
- camdenlock 3y ago
  There are two sides involved. It’s up to both of them to find a compromise.
  - mkr-hn 3y ago
    Both sides pledged to support and defend the constitution when they took the job. One side is refusing to do that. The compromise is they pay their debts and think about this the next time they want to give billionaires a tax cut. https://constitution.congress.gov/browse/amendment-14/section-4/ https://constitution.congress.gov/browse/amendment-14/sectio... >> "The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."
    - redeeman 3y ago
      lol please, as if one side is significantly better than the other. the establishment is exactly the same on both sides, and believe me, they do not work for you. stuff like "one side is refusing that" is just ridiculous partisanship, and anyone that believes it, on EITHER side, just lives in a bubble. and looking at things, the democrats are FAR more radical the the republicans. Both are borderline traitors though, and deserves not an iota of power