A Brief Explanation if the U.S. Defaults with Debtors
Monday, July 18, 2011
It's now just 2 weeks until the United States hits it's debt ceiling, the consequences can be sweeping and profound. Starting on August 3rd, the government will fall way short of being able to pay all of its bills.
As an example, the United States will have revenues coming in at about 172 Billion in the month of August. That may seem to be allot, but the U.S.bills for the same month total to about $306 Billion falling way short for paying its debtors. But who will get any remaining monies will be up to the Secretary of the Treasury, as he can decide what gets paid and what does not, but at this point in the game, if the money is just not there, it will be a mouge point who will get even up to a dime.
Everyone expects that wall street, investors to get paid first and then the U.S. would not default. But then, it gets tough, as the government could pay Social Security, Medicare and Unemployment Benefits, but if the government does that, then they would not be able to pay the U.S. Troops. If you wanted to pay the troops, then the government couldn't pay unemployment benefits, but in either case, there would be no money for security or for any other federal workers.
Now back to wall street. What would happen to the markets? Interest rates would be in the rise and just about everything would cost more. How much? That would be in dispute. It is very likely that there would be significant disruptions in the market. The equity and bond markets may be fine, but for the general population of the country, hard times including a recession would hit so fast that people wouldn't have time to respond. The value of the U.S. Dollar would rapidly plummet.
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