On Wed, 9 Feb 2011 15:40:05 -0800 (PST), Too_Many_Tools
wrote:

Two questions George...

1) If YOU were our Chinese banker and saw the United States default on
its loans, would you lend us any more money?
The proposed Senator Toomey [R-Penn] legislation is
specifically designed to prevent the politicians/
bureaucrats and bankers from causing the US government to
default by forcing bond redemption and interest payments to
the top of the Federal disbursement priority list, thus
putting real meaning in the phrase "full faith and credit."

From the available data the tax revenues of the US
government are at least 10X the amount required to redeem
the bonds / service the loans. You can review the Toomey
proposals at http://toomey.senate.gov/record.cfm?id=330945

The Chinese are getting shafted all right, but because of
the QE2 inflation of the dollar by the FRB, because the Yuan
is tied to the US Dollar, this also inflates their currency.
While this does seem to be reinflating the domestic US stock
and commodities bubbles, it is having disastrous effects on
the other economies as the "carry trade" hot money [borrow
cheap in the US, lend at the high inflation fighting rates
there] funds pour into their already overheated economies,
e.g. Brazil. FWIW -- The food commodity bubble appears to
be a major contributing factor to mid-east instability.

2) How will YOU feed hundreds of millions of Americans when the
American economy collapses literally overnight after the credit dies
up?
Why do you think that a lack of credit will result in a lack
of basic food stuffs? There may be a flat screen TV crisis
and a shortage of Brie, but in any event how will it be any
less catastrophic if the collapse occurs when no one will
loan the Federal government any more money in a few years
rather than Congress refusing to enact an increase in the
debt limit now, preventing the government from any more
borrowing (and profligate spending)? If the money is
available it will be spent. Private business, local and
state governments have had to reduce their work force and/or
cut back on hours, e.g. California state worker "furloughs."
Why should the Federal Civil Service be exempt? I would
improve the Toomey proposals by making certain governmental
departments and activities dead last on the disbursement
priority list such as the TSA, ICE, BATF, Dept of Education
and foreign/military aid.

TMT


-- Unka George (George McDuffee)
...............................
The past is a foreign country;
they do things differently there.
L. P. Hartley (1895-1972), British author.
The Go-Between, Prologue (1953).