"Too_Many_Tools" wrote in message
...
At this burn rate, America is really screwed.

Meanwhile our Chinese bankers are having serious internal financial
problems...which means they will be much less likely to buy our debt.

When will America default?

TMT, several people have explained to you from time to time that the US
*can't* default. If you still don't understand why, please ask about
whatever it is that has you confused, and you'll find that there are several
people here who can explain it. I'm giving up on you. d8-)

--
Ed Huntress

On 2009-01-14, Ed Huntress wrote:

"Too_Many_Tools" wrote in message
...
At this burn rate, America is really screwed.

Meanwhile our Chinese bankers are having serious internal financial
problems...which means they will be much less likely to buy our debt.

When will America default?

TMT, several people have explained to you from time to time that the US
*can't* default. If you still don't understand why, please ask about
whatever it is that has you confused, and you'll find that there are several
people here who can explain it. I'm giving up on you. d8-)

Why, the US can default. It can also choose not to default and print
money due to creditors. But to say that the US cannot default, would
be incorrect.

--
Due to extreme spam originating from Google Groups, and their inattention
to spammers, I and many others block all articles originating
from Google Groups. If you want your postings to be seen by
more readers you will need to find a different means of
posting on Usenet.
http://improve-usenet.org/

"Ignoramus18994" wrote in message
...
On 2009-01-14, Ed Huntress wrote:

"Too_Many_Tools" wrote in message
...
At this burn rate, America is really screwed.

Meanwhile our Chinese bankers are having serious internal financial
problems...which means they will be much less likely to buy our debt.

When will America default?

TMT, several people have explained to you from time to time that the US
*can't* default. If you still don't understand why, please ask about
whatever it is that has you confused, and you'll find that there are
several
people here who can explain it. I'm giving up on you. d8-)

Why, the US can default. It can also choose not to default and print
money due to creditors. But to say that the US cannot default, would
be incorrect.

You're saying we could *choose* to default. Of course. We could all decide
to shoot ourselves in the head, too. That's freedom of choice. g

But I don't think that's what TMT is referring to. Unless he has a more
complicated script running in his head, I'll bet he's suggesting that we
would be *forced* into default. And that, as you know, is impossible.

--
Ed Huntress

On 2009-01-14, Ed Huntress wrote:

"Ignoramus18994" wrote in message
...
On 2009-01-14, Ed Huntress wrote:

"Too_Many_Tools" wrote in message
...
At this burn rate, America is really screwed.

Meanwhile our Chinese bankers are having serious internal financial
problems...which means they will be much less likely to buy our debt.

When will America default?

TMT, several people have explained to you from time to time that the US
*can't* default. If you still don't understand why, please ask about
whatever it is that has you confused, and you'll find that there are
several
people here who can explain it. I'm giving up on you. d8-)

Why, the US can default. It can also choose not to default and print
money due to creditors. But to say that the US cannot default, would
be incorrect.

You're saying we could *choose* to default. Of course. We could all decide
to shoot ourselves in the head, too. That's freedom of choice. g

And it is far from impossible. Right now the CDEs on government debt
are trading at a level that implies a 6% probability of default (it is
not that easy to calculate). So the market thinks that there is
something going on.

But I don't think that's what TMT is referring to. Unless he has a more
complicated script running in his head, I'll bet he's suggesting that we
would be *forced* into default. And that, as you know, is impossible.

You are correct -- unless, that is, Congress would decline to
authorize debt payments.

Many things that are thought of as impossible, have since
happened. And many did not.

--
Due to extreme spam originating from Google Groups, and their inattention
to spammers, I and many others block all articles originating
from Google Groups. If you want your postings to be seen by
more readers you will need to find a different means of
posting on Usenet.
http://improve-usenet.org/

"Ignoramus18994" wrote in message
news
On 2009-01-14, Ed Huntress wrote:

"Ignoramus18994" wrote in message
...
On 2009-01-14, Ed Huntress wrote:

"Too_Many_Tools" wrote in message
...
At this burn rate, America is really screwed.

Meanwhile our Chinese bankers are having serious internal financial
problems...which means they will be much less likely to buy our debt.

When will America default?

TMT, several people have explained to you from time to time that the US
*can't* default. If you still don't understand why, please ask about
whatever it is that has you confused, and you'll find that there are
several
people here who can explain it. I'm giving up on you. d8-)

Why, the US can default. It can also choose not to default and print
money due to creditors. But to say that the US cannot default, would
be incorrect.

You're saying we could *choose* to default. Of course. We could all
decide
to shoot ourselves in the head, too. That's freedom of choice. g

And it is far from impossible. Right now the CDEs on government debt
are trading at a level that implies a 6% probability of default (it is
not that easy to calculate). So the market thinks that there is
something going on.

What's a "CDE"? Do you mean CDS's? If so, I don't know the terms on those
things. If they're purely federal debt, and not an admixture of federal,
state, and/or local, then the next question is if inflation can somehow
factor into these payoffs. If not, then I don't understand what's going on.

Because you know the bottom line. When you're a sovereign government with a
fiat currency and your obligations are designated in your own currency (all
conditions we now have in the US), and you somehow owe more than you have on
hand...AND, you own the printing presses......well, you just oil those
suckers and fire them up. d8-)


But I don't think that's what TMT is referring to. Unless he has a more
complicated script running in his head, I'll bet he's suggesting that we
would be *forced* into default. And that, as you know, is impossible.

You are correct -- unless, that is, Congress would decline to
authorize debt payments.

Again, that would be a matter of choice, not one of necessity. And it's
unlikely in the extreme.


Many things that are thought of as impossible, have since
happened. And many did not.

Right. g

I think the point here is that TMT either doesn't understand how this works,
or he prefers not to believe it. Either way, what he's saying is nonsense.

--
Ed Huntress

On Jan 14, 5:26*pm, "Ed Huntress" wrote:
"Ignoramus18994" wrote in message

...





On 2009-01-14, Ed Huntress wrote:

"Too_Many_Tools" wrote in message
....
At this burn rate, America is really screwed.

Meanwhile our Chinese bankers are having serious internal financial
problems...which means they will be much less likely to buy our debt.

When will America default?

TMT, several people have explained to you from time to time that the US
*can't* default. If you still don't understand why, please ask about
whatever it is that has you confused, and you'll find that there are
several
people here who can explain it. I'm giving up on you. d8-)

Why, the US can default. It can also choose not to default and print
money due to creditors. But to say that the US cannot default, would
be incorrect.

You're saying we could *choose* to default. Of course. We could all decide
to shoot ourselves in the head, too. That's freedom of choice. g

But I don't think that's what TMT is referring to. Unless he has a more
complicated script running in his head, I'll bet he's suggesting that we
would be *forced* into default. And that, as you know, is impossible.

--
Ed Huntress- Hide quoted text -

- Show quoted text -

I think you are wrong Ed.

The day the US cannot borrow more money is the day that the US
defaults.

And before you say that will not happen, tell us how the current
situation "couldn't happen".

TMT

On Jan 14, 6:45*pm, "Ed Huntress" wrote:
"Ignoramus18994" wrote in message

news




On 2009-01-14, Ed Huntress wrote:

"Ignoramus18994" wrote in message
om...
On 2009-01-14, Ed Huntress wrote:

"Too_Many_Tools" wrote in message
....
At this burn rate, America is really screwed.

Meanwhile our Chinese bankers are having serious internal financial
problems...which means they will be much less likely to buy our debt..

When will America default?

TMT, several people have explained to you from time to time that the US
*can't* default. If you still don't understand why, please ask about
whatever it is that has you confused, and you'll find that there are
several
people here who can explain it. I'm giving up on you. d8-)

Why, the US can default. It can also choose not to default and print
money due to creditors. But to say that the US cannot default, would
be incorrect.

You're saying we could *choose* to default. Of course. We could all
decide
to shoot ourselves in the head, too. That's freedom of choice. g

And it is far from impossible. Right now the CDEs on government debt
are trading at a level that implies a 6% probability of default (it is
not that easy to calculate). So the market thinks that there is
something going on.

What's a "CDE"? Do you mean CDS's? If so, I don't know the terms on those
things. If they're purely federal debt, and not an admixture of federal,
state, and/or local, then the next question is if inflation can somehow
factor into these payoffs. If not, then I don't understand what's going on.

On 2009-01-15, Ed Huntress wrote:

"Ignoramus18994" wrote in message
news
On 2009-01-14, Ed Huntress wrote:

"Ignoramus18994" wrote in message
...
On 2009-01-14, Ed Huntress wrote:

"Too_Many_Tools" wrote in message
...
At this burn rate, America is really screwed.

Meanwhile our Chinese bankers are having serious internal financial
problems...which means they will be much less likely to buy our debt.

When will America default?

TMT, several people have explained to you from time to time that the US
*can't* default. If you still don't understand why, please ask about
whatever it is that has you confused, and you'll find that there are
several
people here who can explain it. I'm giving up on you. d8-)

Why, the US can default. It can also choose not to default and print
money due to creditors. But to say that the US cannot default, would
be incorrect.

You're saying we could *choose* to default. Of course. We could all
decide
to shoot ourselves in the head, too. That's freedom of choice. g

And it is far from impossible. Right now the CDEs on government debt
are trading at a level that implies a 6% probability of default (it is
not that easy to calculate). So the market thinks that there is
something going on.

What's a "CDE"? Do you mean CDS's?

Yes, sorry, it was a typo.

If so, I don't know the terms on those
things. If they're purely federal debt, and not an admixture of federal,
state, and/or local, then the next question is if inflation can somehow
factor into these payoffs. If not, then I don't understand what's going on.

Could be all kinds of things.

Because you know the bottom line. When you're a sovereign government with a
fiat currency and your obligations are designated in your own currency (all
conditions we now have in the US), and you somehow owe more than you have on
hand...AND, you own the printing presses......well, you just oil those
suckers and fire them up. d8-)

It would be possible with consent of Congress only.


But I don't think that's what TMT is referring to. Unless he has a more
complicated script running in his head, I'll bet he's suggesting that we
would be *forced* into default. And that, as you know, is impossible.

You are correct -- unless, that is, Congress would decline to
authorize debt payments.

Again, that would be a matter of choice, not one of necessity. And it's
unlikely in the extreme.


Many things that are thought of as impossible, have since
happened. And many did not.

Right. g

I think the point here is that TMT either doesn't understand how this works,
or he prefers not to believe it. Either way, what he's saying is nonsense.

What the CDS market on our debt is saying, do not dismiss the
seemingly impossible.

--
Due to extreme spam originating from Google Groups, and their inattention
to spammers, I and many others block all articles originating
from Google Groups. If you want your postings to be seen by
more readers you will need to find a different means of
posting on Usenet.
http://improve-usenet.org/

"Too_Many_Tools" wrote in message
...
On Jan 14, 5:26 pm, "Ed Huntress" wrote:
"Ignoramus18994" wrote in message

...





On 2009-01-14, Ed Huntress wrote:

"Too_Many_Tools" wrote in message
...
At this burn rate, America is really screwed.

Meanwhile our Chinese bankers are having serious internal financial
problems...which means they will be much less likely to buy our debt.

When will America default?

TMT, several people have explained to you from time to time that the US
*can't* default. If you still don't understand why, please ask about
whatever it is that has you confused, and you'll find that there are
several
people here who can explain it. I'm giving up on you. d8-)

Why, the US can default. It can also choose not to default and print
money due to creditors. But to say that the US cannot default, would
be incorrect.

You're saying we could *choose* to default. Of course. We could all decide
to shoot ourselves in the head, too. That's freedom of choice. g

But I don't think that's what TMT is referring to. Unless he has a more
complicated script running in his head, I'll bet he's suggesting that we
would be *forced* into default. And that, as you know, is impossible.

--
Ed Huntress- Hide quoted text -

- Show quoted text -

I think you are wrong Ed.

The day the US cannot borrow more money is the day that the US
defaults.

NO! The day we can't make an interest payment on the publicly-held portion
of the national debt is the day we "default." But we print the money. So we
can't be forced to default. Hello? Are we getting through now?

And before you say that will not happen, tell us how the current
situation "couldn't happen".

Of course this can happen. It just did.

TMT, there is one thing, and only one thing, that makes this economy so
vulnerable, and that is that it runs on, it *needs*, very large leverage
ratios to operate. That's another way of saying it's running on debt, but
leverage ratios turn it into a quantifiable term, the size of which is
easier to comprehend. And before you look around at other economies for a
better model, make sure you look at their current situations. They're
sucking wind just like we are. Most western countries have the same economic
vulnerability we have. That's why they tanked, too. And the
neo-mercantilists, like China and Japan, are tanking because they depend on
us. Different kind of dependency, same result. Global economic
interdependency implies that the house of cards could have been knocked down
by any of the major players.

We're all interdependent, and globalization absolutely REQUIRES huge amounts
of leverage. When you listen to the economists who are part of this
neo-liberal economic mindset, what you see is that most of them talk all
around this issue, except to say we're "overleveraged." What they don't say
is what the proper leverage ratio might be. Because they know that once our
economies get going again, international competition is going to force us
all, once again, to chase the highest possible leverage ratios, just to be
able to compete on the global stage.

Nobody knows what the "proper" leverage ratios are and most economists
recognize that limiting the leverage ratios our financial institutions are
allowed to pursue is to condemn them to also-ran status in world markets.
Maybe the central banks and other leaders in the Gang of 8 will get together
and decide to fix those ratios, something like we did at Bretton Woods with
currency, so we can have a more secure economic future.

Nobody knows, either, how much of these trillions of recently collapsed
"assets" are going to evaporate in the zero-sums that financial institutions
run against each other, and how much is going to impact the consumer. You
can't make any assumptions about that. The top economic researchers in the
world don't know, so the journalists you keep quoting certainly don't know.
We *do* know that a lot of it collapsed and nothing much happened as a
result, except that credit dried up and everybody got scared. Everybody
getting scared may be the worst part of it.

Meantime, you're running around like a chicken with his head cut off, and
you seem to lack a sense of perspective. Retail just fell off 3.7%.
Considering how retail works, that's going to be hell on a lot of retailers.
But it doesn't mean the end of life on this Earth as we know it.

Likewise, the $2 trillion loss you quoted tonight is NOT 401k's, but all
retirement assets. Do you know what retirement assets were estimated to be
before that loss? They were running around $17.4 trillion a year ago; $16.9
trillion in October of last year. So, retirement assets fell something like
12%. Some people got wiped out. Many others felt nothing at all. Overall,
we're feeling a nasty pinch and it will make a lot of people ****ed off.
But, again, it doesn't mean that "everyone aged 60 is screwed." It means
Toyotas instead of Benzes, maybe.

We do have some serious economic problems and we're going to suffer some
getting over it. But nobody is going anywhere unless we see clearly where we
are and what's going on. Your Chicken Little act doesn't help anything. It
just adds to fear and panic, based on what seems to be a congenital desire
on your part to see everything as a disaster.

Chill. We need level heads right now, not headless chickens.

--
Ed Huntress

"Too_Many_Tools" wrote in message
...
On Jan 14, 6:45 pm, "Ed Huntress" wrote:
"Ignoramus18994" wrote in message

news




On 2009-01-14, Ed Huntress wrote:

"Ignoramus18994" wrote in message
om...
On 2009-01-14, Ed Huntress wrote:

"Too_Many_Tools" wrote in message
...
At this burn rate, America is really screwed.

Meanwhile our Chinese bankers are having serious internal financial
problems...which means they will be much less likely to buy our debt.

When will America default?

TMT, several people have explained to you from time to time that the
US
*can't* default. If you still don't understand why, please ask about
whatever it is that has you confused, and you'll find that there are
several
people here who can explain it. I'm giving up on you. d8-)

Why, the US can default. It can also choose not to default and print
money due to creditors. But to say that the US cannot default, would
be incorrect.

You're saying we could *choose* to default. Of course. We could all
decide
to shoot ourselves in the head, too. That's freedom of choice. g

And it is far from impossible. Right now the CDEs on government debt
are trading at a level that implies a 6% probability of default (it is
not that easy to calculate). So the market thinks that there is
something going on.

What's a "CDE"? Do you mean CDS's? If so, I don't know the terms on those
things. If they're purely federal debt, and not an admixture of federal,
state, and/or local, then the next question is if inflation can somehow
factor into these payoffs. If not, then I don't understand what's going
on.

Because you know the bottom line. When you're a sovereign government with
a
fiat currency and your obligations are designated in your own currency
(all
conditions we now have in the US), and you somehow owe more than you have
on
hand...AND, you own the printing presses......well, you just oil those
suckers and fire them up. d8-)



But I don't think that's what TMT is referring to. Unless he has a more
complicated script running in his head, I'll bet he's suggesting that
we
would be *forced* into default. And that, as you know, is impossible.

You are correct -- unless, that is, Congress would decline to
authorize debt payments.

Again, that would be a matter of choice, not one of necessity. And it's
unlikely in the extreme.



Many things that are thought of as impossible, have since
happened. And many did not.

Right. g

I think the point here is that TMT either doesn't understand how this
works,
or he prefers not to believe it. Either way, what he's saying is nonsense.

--
Ed Huntress- Hide quoted text -

- Show quoted text -

LOL...would you have believed the current financial situation was
possible if I had stated such a year ago?

Yes. If you read the economics literature, you'll see that there have been
numerous voices out there who said this was a house of cards. Nobody
listened to them because there are always such voices, and it would have
been very inconvenient to believe them.

People much richer than us have lost billions..no make that trillions
thinking it was not possible.

Like I said Ed, let's just agree to disagree and see how it is played
out.

TMT

I don't mind that, but pay attention to the facts we DO know and to the
numbers. You seem to be getting pretty loose with the latter, and it just
makes it that much harder to have a rational discussion.

--
Ed Huntress

Ed Huntress wrote:
"Ignoramus18994" wrote in message
news
On 2009-01-14, Ed Huntress wrote:

"Ignoramus18994" wrote in message
news:erydna1azdqf9vPUnZ2dnUVZ_hadnZ2d@giganews. com...

On 2009-01-14, Ed Huntress wrote:

"Too_Many_Tools" wrote in message
...
At this burn rate, America is really screwed.


Meanwhile our Chinese bankers are having serious internal financial
problems...which means they will be much less likely to buy our debt.

When will America default?

TMT, several people have explained to you from time to time that the US
*can't* default. If you still don't understand why, please ask about
whatever it is that has you confused, and you'll find that there are
several
people here who can explain it. I'm giving up on you. d8-)

Why, the US can default. It can also choose not to default and print
money due to creditors. But to say that the US cannot default, would
be incorrect.

You're saying we could *choose* to default. Of course. We could all
decide
to shoot ourselves in the head, too. That's freedom of choice. g

And it is far from impossible. Right now the CDEs on government debt
are trading at a level that implies a 6% probability of default (it is
not that easy to calculate). So the market thinks that there is
something going on.


What's a "CDE"? Do you mean CDS's? If so, I don't know the terms on those
things. If they're purely federal debt, and not an admixture of federal,
state, and/or local, then the next question is if inflation can somehow
factor into these payoffs. If not, then I don't understand what's going on.

Because you know the bottom line. When you're a sovereign government with a
fiat currency and your obligations are designated in your own currency (all
conditions we now have in the US), and you somehow owe more than you have on
hand...AND, you own the printing presses......well, you just oil those
suckers and fire them up. d8-)


But I don't think that's what TMT is referring to. Unless he has a more
complicated script running in his head, I'll bet he's suggesting that we
would be *forced* into default. And that, as you know, is impossible.

You are correct -- unless, that is, Congress would decline to
authorize debt payments.


Again, that would be a matter of choice, not one of necessity. And it's
unlikely in the extreme.


Many things that are thought of as impossible, have since
happened. And many did not.


Right. g

I think the point here is that TMT either doesn't understand how this works,
or he prefers not to believe it. Either way, what he's saying is nonsense.

--
Ed Huntress



The US will default only if their printing presses break down.


John

Too_Many_Tools wrote:

On Jan 14, 5:26 pm, "Ed Huntress" wrote:

"Ignoramus18994" wrote in message

om...






On 2009-01-14, Ed Huntress wrote:

"Too_Many_Tools" wrote in message
...
At this burn rate, America is really screwed.

Meanwhile our Chinese bankers are having serious internal financial
problems...which means they will be much less likely to buy our debt.

When will America default?

TMT, several people have explained to you from time to time that the US
*can't* default. If you still don't understand why, please ask about
whatever it is that has you confused, and you'll find that there are
several
people here who can explain it. I'm giving up on you. d8-)

Why, the US can default. It can also choose not to default and print
money due to creditors. But to say that the US cannot default, would
be incorrect.

You're saying we could *choose* to default. Of course. We could all decide
to shoot ourselves in the head, too. That's freedom of choice. g

But I don't think that's what TMT is referring to. Unless he has a more
complicated script running in his head, I'll bet he's suggesting that we
would be *forced* into default. And that, as you know, is impossible.

--
Ed Huntress- Hide quoted text -

- Show quoted text -


I think you are wrong Ed.

The day the US cannot borrow more money is the day that the US
defaults.

And before you say that will not happen, tell us how the current
situation "couldn't happen".

TMT


The latest thing is the big interest in Savings bonds. Probably the
best investmet going right now, with a garanteed payment of principle
and intrest based on the good faith in the US govnmt


John

On Wed, 14 Jan 2009 19:35:59 -0600, Ignoramus18994
wrote:

On 2009-01-15, Ed Huntress wrote:

"Ignoramus18994" wrote in message
news
On 2009-01-14, Ed Huntress wrote:

"Ignoramus18994" wrote in message
...
On 2009-01-14, Ed Huntress wrote:

"Too_Many_Tools" wrote in message
...
At this burn rate, America is really screwed.

Meanwhile our Chinese bankers are having serious internal financial
problems...which means they will be much less likely to buy our debt.

When will America default?

TMT, several people have explained to you from time to time that the US
*can't* default. If you still don't understand why, please ask about
whatever it is that has you confused, and you'll find that there are
several
people here who can explain it. I'm giving up on you. d8-)

Why, the US can default. It can also choose not to default and print
money due to creditors. But to say that the US cannot default, would
be incorrect.

You're saying we could *choose* to default. Of course. We could all
decide
to shoot ourselves in the head, too. That's freedom of choice. g

And it is far from impossible. Right now the CDEs on government debt
are trading at a level that implies a 6% probability of default (it is
not that easy to calculate). So the market thinks that there is
something going on.

What's a "CDE"? Do you mean CDS's?

Yes, sorry, it was a typo.

If so, I don't know the terms on those
things. If they're purely federal debt, and not an admixture of federal,
state, and/or local, then the next question is if inflation can somehow
factor into these payoffs. If not, then I don't understand what's going on.

Could be all kinds of things.

Because you know the bottom line. When you're a sovereign government with a
fiat currency and your obligations are designated in your own currency (all
conditions we now have in the US), and you somehow owe more than you have on
hand...AND, you own the printing presses......well, you just oil those
suckers and fire them up. d8-)

It would be possible with consent of Congress only.

Not so. This can be done by the "independent" FRB by "monetizing
the [national] debt" as described in another post, more or less
at their whim. Through the magic of fractional banking, one
dollar in federal debt serves as collateral for issuing 10 new
virtual or real dollars in greenbacks. One of the new greenbacks
can buy another 1 dollar in federal debt to start the magic money
cycle all over again leaving a 9 dollar "profit" on every trip
through the looking glass, or the entire 10$ can be "invested" in
Treasury securities [again and again]


But I don't think that's what TMT is referring to. Unless he has a more
complicated script running in his head, I'll bet he's suggesting that we
would be *forced* into default. And that, as you know, is impossible.
It is as long as the federal and other obligations guaranteed by
the government are denominated in US dollars. On occasion the US
has been forced to sell yen denominated securities [called
samurai bonds] and the Carter bonds, which were
Deutschemark-denominated Treasuries, in the late 1970s to avoid
steep interest charges, but this is rare and happened long ago.

It will be a red flag when the Treasury again starts selling
Yen/Euro/Yuan etc. denominated securities. Don't look for this
on Faux News, CNN, etc. It will be announced in one of the
overseas journals such as The Economist or The Financial Times.

Also be aware that considerable quantities of Samurai/Shogun and
Euro denominated debt has been sold by financial and other
institutions where the US Taxpayer has [at least indirectly]
guaranteed the debt.

You are correct -- unless, that is, Congress would decline to
authorize debt payments.

Again, that would be a matter of choice, not one of necessity. And it's
unlikely in the extreme.


Many things that are thought of as impossible, have since
happened. And many did not.

Right. g

I think the point here is that TMT either doesn't understand how this works,
or he prefers not to believe it. Either way, what he's saying is nonsense.

What the CDS market on our debt is saying, do not dismiss the
seemingly impossible.

Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

"Ignoramus18994" wrote in message
...
On 2009-01-15, Ed Huntress wrote:

"Ignoramus18994" wrote in message
news
On 2009-01-14, Ed Huntress wrote:

"Ignoramus18994" wrote in message
...
On 2009-01-14, Ed Huntress wrote:

"Too_Many_Tools" wrote in message
...
At this burn rate, America is really screwed.

Meanwhile our Chinese bankers are having serious internal financial
problems...which means they will be much less likely to buy our debt.

When will America default?

TMT, several people have explained to you from time to time that the
US
*can't* default. If you still don't understand why, please ask about
whatever it is that has you confused, and you'll find that there are
several
people here who can explain it. I'm giving up on you. d8-)

Why, the US can default. It can also choose not to default and print
money due to creditors. But to say that the US cannot default, would
be incorrect.

You're saying we could *choose* to default. Of course. We could all
decide
to shoot ourselves in the head, too. That's freedom of choice. g

And it is far from impossible. Right now the CDEs on government debt
are trading at a level that implies a 6% probability of default (it is
not that easy to calculate). So the market thinks that there is
something going on.

What's a "CDE"? Do you mean CDS's?

Yes, sorry, it was a typo.

If so, I don't know the terms on those
things. If they're purely federal debt, and not an admixture of federal,
state, and/or local, then the next question is if inflation can somehow
factor into these payoffs. If not, then I don't understand what's going
on.

Could be all kinds of things.

Because you know the bottom line. When you're a sovereign government with
a
fiat currency and your obligations are designated in your own currency
(all
conditions we now have in the US), and you somehow owe more than you have
on
hand...AND, you own the printing presses......well, you just oil those
suckers and fire them up. d8-)

It would be possible with consent of Congress only.

I think the Fed can do it all by themselves. They issue the order to
Treasury to print. The Fed is semi-independent specifically to keep Congress
out of these decisions.



But I don't think that's what TMT is referring to. Unless he has a more
complicated script running in his head, I'll bet he's suggesting that
we
would be *forced* into default. And that, as you know, is impossible.

You are correct -- unless, that is, Congress would decline to
authorize debt payments.

Again, that would be a matter of choice, not one of necessity. And it's
unlikely in the extreme.


Many things that are thought of as impossible, have since
happened. And many did not.

Right. g

I think the point here is that TMT either doesn't understand how this
works,
or he prefers not to believe it. Either way, what he's saying is
nonsense.

What the CDS market on our debt is saying, do not dismiss the
seemingly impossible.

I'm not sure what it's actually saying. I'd have to see precisely how those
things are structured before I'd have any idea.

--
Ed Huntress

"john" wrote in message
...


snip




The US will default only if their printing presses break down.

g Yes. That's the only thing we have to fear. Let's hope they weren't made
in China.

--
Ed Huntress

On Jan 14, 8:29*pm, "Ed Huntress" wrote:
"Too_Many_Tools" wrote in message

...
On Jan 14, 5:26 pm, "Ed Huntress" wrote:





"Ignoramus18994" wrote in message

m...

On 2009-01-14, Ed Huntress wrote:

"Too_Many_Tools" wrote in message
....
At this burn rate, America is really screwed.

Meanwhile our Chinese bankers are having serious internal financial
problems...which means they will be much less likely to buy our debt..

When will America default?

TMT, several people have explained to you from time to time that the US
*can't* default. If you still don't understand why, please ask about
whatever it is that has you confused, and you'll find that there are
several
people here who can explain it. I'm giving up on you. d8-)

Why, the US can default. It can also choose not to default and print
money due to creditors. But to say that the US cannot default, would
be incorrect.

You're saying we could *choose* to default. Of course. We could all decide
to shoot ourselves in the head, too. That's freedom of choice. g

But I don't think that's what TMT is referring to. Unless he has a more
complicated script running in his head, I'll bet he's suggesting that we
would be *forced* into default. And that, as you know, is impossible.

--
Ed Huntress- Hide quoted text -

- Show quoted text -
I think you are wrong Ed.
The day the US cannot borrow more money is the day that the US
defaults.

NO! The day we can't make an interest payment on the publicly-held portion
of the national debt is the day we "default." But we print the money. So we
can't be forced to default. Hello? Are we getting through now?

And before you say that will not happen, tell us how the current
situation "couldn't happen".

Of course this can happen. It just did.

TMT, there is one thing, and only one thing, that makes this economy so
vulnerable, and that is that it runs on, it *needs*, very large leverage
ratios to operate. That's another way of saying it's running on debt, but
leverage ratios turn it into a quantifiable term, the size of which is
easier to comprehend. And before you look around at other economies for a
better model, make sure you look at their current situations. They're
sucking wind just like we are. Most western countries have the same economic
vulnerability we have. That's why they tanked, too. And the
neo-mercantilists, like China and Japan, are tanking because they depend on
us. Different kind of dependency, same result. Global economic
interdependency implies that the house of cards could have been knocked down
by any of the major players.

We're all interdependent, and globalization absolutely REQUIRES huge amounts
of leverage. When you listen to the economists who are part of this
neo-liberal economic mindset, what you see is that most of them talk all
around this issue, except to say we're "overleveraged." What they don't say
is what the proper leverage ratio might be. Because they know that once our
economies get going again, international competition is going to force us
all, once again, to chase the highest possible leverage ratios, just to be
able to compete on the global stage.

Nobody knows what the "proper" leverage ratios are and most economists
recognize that limiting the leverage ratios our financial institutions are
allowed to pursue is to condemn them to also-ran status in world markets.
Maybe the central banks and other leaders in the Gang of 8 will get together
and decide to fix those ratios, something like we did at Bretton Woods with
currency, so we can have a more secure economic future.

Nobody knows, either, how much of these trillions of recently collapsed
"assets" are going to evaporate in the zero-sums that financial institutions
run against each other, and how much is going to impact the consumer. You
can't make any assumptions about that. The top economic researchers in the
world don't know, so the journalists you keep quoting certainly don't know.
We *do* know that a lot of it collapsed and nothing much happened as a
result, except that credit dried up and everybody got scared. Everybody
getting scared may be the worst part of it.

Meantime, you're running around like a chicken with his head cut off, and
you seem to lack a sense of perspective. Retail just fell off 3.7%.
Considering how retail works, that's going to be hell on a lot of retailers.
But it doesn't mean the end of life on this Earth as we know it.

Likewise, the $2 trillion loss you quoted tonight is NOT 401k's, but all
retirement assets. Do you know what retirement assets were estimated to be
before that loss? They were running around $17.4 trillion a year ago; $16..9
trillion in October of last year. So, retirement assets fell something like
12%. Some people got wiped out. Many others felt nothing at all. Overall,
we're feeling a nasty pinch and it will make a lot of people ****ed off.
But, again, it doesn't mean that "everyone aged 60 is screwed." It means
Toyotas instead of Benzes, maybe.

We do have some serious economic problems and we're going to suffer some
getting over it. But nobody is going anywhere unless we see clearly where we
are and what's going on. Your Chicken Little act doesn't help anything. It
just adds to fear and panic, based on what seems to be a congenital desire
on your part to see everything as a disaster.

Chill. We need level heads right now, not headless chickens.

--
Ed Huntress- Hide quoted text -

- Show quoted text -

The "headless chicken " here. ;)

I have been posting the facts as they are published.

Like retail being down 10% compared to last year for last
quarter...and last year stunk.

You are waving your arms rapidly up and down...with no facts to back
up that the economy is doing better.

If you have them, show them.

As I point out..the "impossible" just happened...and we stand at the
edge of the worst recession since the Great Depression...and NO ONE
knows where the end is.

Want to predict where it is headed?

The banks have just blown through $350 billion dollars in THREE
MONTHS.

Care to calculate how much more they will need for the coming year?

I read somewhere that the estimated expense of this Bush disaster is
over one trillion WITHOUT the $700 billion package.

And those who have taken major hits in their 401Ks...well all the
words in the world will not help them when they need their retirement
money. As they run dry, they will become a burden on the government
programs that again you and I need to support by increased taxes.

Ed...I respect your opinion but debt IS debt no matter what you want
to call it...and it needs to be repaid...by you and me.

Only because the remainder of the world is willing to lend us money
YET is this insanity still continuing. And like any lender, the day
can come where the answer is "No".

Note the selloff happening at Citicorp...the money machine that the
government was filling has run dry.

http://www.nytimes.com/2009/01/13/bu...iti.html?fta=y

If the government can just make wealth out of thin air, then why
don't they just keep giving money to the banks forever?

The answer is that they can't...history shows that they can't

No government can.

It may seem like it because the United States has deeper pockets...not
bottomless..just deeper.

When you start throwing trillion after trillions of dollars down the
toilet, you can hit the bottom of that pocket rather fast.

TMT

"Too_Many_Tools" wrote in message
...

snip


The "headless chicken " here. ;)

I have been posting the facts as they are published.

Like retail being down 10% compared to last year for last
quarter...and last year stunk.

You are waving your arms rapidly up and down...with no facts to back
up that the economy is doing better.

If you have them, show them.

Now, wait a damned minute. This is exactly what I mean. Nobody, including
me, has said "the economy is doing better." The economy is in a deep
recession, it will get worse, and it looks like it will be a tough climb
back.

But you're predicting one disaster after another -- that 60-year-olds are
"screwed," when the reality is that we've lost 12% of our retirement assets,
not half of them, or even a quarter of them. Retail businesses are in
trouble for their own internal financial reasons, but, even if the
year-over-year falloff is 9.8% (it depends on what you include; this is the
worst measure), that means we're still buying 90.2% as much as we were. And,
for the final time, the US cannot be forced into default because of the way
our currency works and the way our debts are structured.

None of your dire predictions are reasonable. The median prediction by
mainstream economists is that GDP will bottom in the second or third quarter
of this year. Employment will bottom roughly a year later. The biggest
concern is that the equilibrium employment rate will remain low and that
reducing unemployment to desirable numbers will take years.

But the economy did not just tank. What happened is that some wildly
speculative values, including houses and securities, just fell off a cliff.
The automobile industry is about to get seriously re-shuffled, possibly with
a lower equilibrium sales volume that will stay with us for a long time to
come. But the underlying assets didn't disappear.

As I point out..the "impossible" just happened...and we stand at the
edge of the worst recession since the Great Depression...and NO ONE
knows where the end is.

Many, if not most, economists knew full well that it wasn't impossible. The
Fed was aware that real estate was experiencing a bubble and that
refinancing had pumped up consumption to unsustainable levels. They hoped
for a soft landing. For reasons they didn't recognize at the time, but which
some economists had been predicting, it was instead a harsh landing with
cards toppling everywhere. But that was a financial house of cards, not the
real economy. The real economy is taking serious fallout from it but, again,
most economists are predicting GDP to bottom later this year and then to
start up again, although slowly.

As for where the end is, they have a pretty good idea.

Want to predict where it is headed?

I'll go with the economists who have spent their lives studying it, not with
amateurs and journalists.


The banks have just blown through $350 billion dollars in THREE
MONTHS.

What do you mean by "blown through"? Do you know where the money went? And
if not, why not, since you're making such dire predictions?

Hint: They didn't burn it. It's still there. To get out of your Chicken
Little mode, you'll have to acquire an idea of the possible places where it
might be, and where it's going to wind up.


Care to calculate how much more they will need for the coming year?

Again, do you know where the money goes?


I read somewhere that the estimated expense of this Bush disaster is
over one trillion WITHOUT the $700 billion package.

You can read anything these days. The writers are having a field day
extracting doomsday data.


And those who have taken major hits in their 401Ks...well all the
words in the world will not help them when they need their retirement
money.

Again, you're looking at a 12% loss in total retirement assets.

As they run dry, they will become a burden on the government
programs that again you and I need to support by increased taxes.

Let's see how it looks under your growth models.


Ed...I respect your opinion but debt IS debt no matter what you want
to call it...and it needs to be repaid...by you and me.

Federal debt is no more like household debt than the federal government's
risk of default is like yours and mine. You don't seem to have a grip on why
there will be no federal default, despite my attempts to explain it, so I'm
not going to try to explain federal debt.


Only because the remainder of the world is willing to lend us money
YET is this insanity still continuing. And like any lender, the day
can come where the answer is "No".

Tell us how much of the national debt is owed to foreigners; compare it to
our annual GDP; work out the payment scenarios for 0% economic growth, 2%,
and 4%. Then you'll see what the obligations are and where our focus should
be. If you want me to do it for you, you'll have to wait. But if you can't
do that, then you have no idea what it will mean if "the remainder of the
world" won't buy our Treasury bills. While you're at it, you might try to
explain why we're selling Treasuries to foreign buyers now, at record-low
interest rates. Understanding that, too, will help you see what's going on.


Note the sell off happening at Citicorp...the money machine that the
government was filling has run dry.

And tell us, please, what the economic implications are of that selloff to
the US economy. You will want to consider the fact that someone is buying,
as well as selling.


http://www.nytimes.com/2009/01/13/bu...iti.html?fta=y

If the government can just make wealth out of thin air, then why
don't they just keep giving money to the banks forever?

Because it isn't wealth that they're making. They're making currency. And it
is only a small fraction of what most people think, because much of it is
guarantees that are unlikely to be fully claimed.

But it won't go on much longer. It will soon create more trouble than it may
solve.


The answer is that they can't...history shows that they can't

No government can.

It may seem like it because the United States has deeper pockets...not
bottomless..just deeper.

When you start throwing trillion after trillions of dollars down the
toilet, you can hit the bottom of that pocket rather fast.

Again, tell us where the money is going, and you'll start to see what's
wrong with these doomsday scenarios. The money isn't burned, and it isn't
being stuffed into toilets. It's winding up back in the economy. What you
need to do is to find out where in the economy that might be.

--
Ed Huntress

"Ed Huntress" wrote:

The US will default only if their printing presses break down.

g Yes. That's the only thing we have to fear. Let's hope they weren't made
in China.

I don't think we got our intaglio process presses from China. I did google a bit and see
that China does make their own.

I remember reading who made ours at the US Mint a while back but can't recall or google it
up for name of the printing press manufacturer.

Wes

"Ed Huntress" wrote:

The day the US cannot borrow more money is the day that the US
defaults.

NO! The day we can't make an interest payment on the publicly-held portion
of the national debt is the day we "default." But we print the money. So we
can't be forced to default. Hello? Are we getting through now?


Then there is the simple matter of you just try to invade our country and grab an asset.
I'd be more worried than a texas repo guy picking a car up at night in Texas.

Wes

"Wes" wrote in message
...
"Ed Huntress" wrote:

The day the US cannot borrow more money is the day that the US
defaults.

NO! The day we can't make an interest payment on the publicly-held portion
of the national debt is the day we "default." But we print the money. So
we
can't be forced to default. Hello? Are we getting through now?


Then there is the simple matter of you just try to invade our country and
grab an asset.
I'd be more worried than a texas repo guy picking a car up at night in
Texas.

Wes

All of these scenarios are for illustration purposes only. g The
consequences of even approaching those situations would be so grave for the
world's economies that no one is going to let them happen.

Most people wildly overestimate how much of our national debt is owed to
foreign governments, banks, and individuals. When you see the numbers and
see how they relate to small swings up and down in our growth rate, you
realize that we're being victimized by our own paranoia and by the press's
need for high drama.

What it shows is that getting the economy growing again is the answer to
most problems. Screw the deficit for now; if we can't get the beast moving
again, a balanced budget will mean nothing. It will be the equilibrium of
the dead.

--
Ed Huntress

"Wes" wrote in message
...
"Ed Huntress" wrote:

The day the US cannot borrow more money is the day that the US
defaults.

NO! The day we can't make an interest payment on the publicly-held portion
of the national debt is the day we "default." But we print the money. So
we
can't be forced to default. Hello? Are we getting through now?


Then there is the simple matter of you just try to invade our country and
grab an asset.
I'd be more worried than a texas repo guy picking a car up at night in
Texas.

Wes


Fortunately we have plenty of oralloy the will detour any debtors from
invading the USA.

Best Regards
Tom.

Wes wrote:

"Ed Huntress" wrote:


The US will default only if their printing presses break down.

g Yes. That's the only thing we have to fear. Let's hope they weren't made
in China.


I don't think we got our intaglio process presses from China. I did google a bit and see
that China does make their own.

I remember reading who made ours at the US Mint a while back but can't recall or google it
up for name of the printing press manufacturer.

Wes


The presses are highly sophisacated units made in Switzerland if I
recall. You can buy one only if you are a legimet goverment. ( I
wonder how they determine that?) North Korea can print money better
than the real thing. They dumped a bunch of counterfit dollars in the
first couple years of this century.

http://digg.com/world_news/North_Kor..._ US_currency

http://www.nkeconwatch.com/2007/05/2...t-north-korea/

http://formerspook.blogspot.com/2007...supernote.html



John

john wrote:

I don't think we got our intaglio process presses from China. I did google a bit and see
that China does make their own.

I remember reading who made ours at the US Mint a while back but can't recall or google it
up for name of the printing press manufacturer.

Wes


The presses are highly sophisacated units made in Switzerland if I
recall. You can buy one only if you are a legimet goverment. ( I
wonder how they determine that?) North Korea can print money better
than the real thing. They dumped a bunch of counterfit dollars in the
first couple years of this century.

http://digg.com/world_news/North_Kor..._ US_currency


Thank you, the above article from the NYT is the one I was trying to recall.

Wes