Republican mainstream flirts with brief debt default

[Cali_Democrat]

Republican mainstream flirts with brief default
By Tim Reid and Steven C. Johnson
WASHINGTON/NEW YORK | Tue Jun 7, 2011 11:01pm EDT

(Reuters) - An idea once confined to the fringe of the Republican party is seeping into its mainstream -- that a brief default might be an acceptable price to pay if it forces the White House to deal with runaway spending. An increasing number of Republicans do not believe the Obama administration's dire predictions of economic "catastrophe" if the debt limit is not increased. They argue a period of technical default can be managed without plunging markets into chaos.

<snip>
Many on Wall Street disagree. They fear even the briefest default would cause a steep climb in interest rates worldwide and a tumbling dollar, which would tip a fragile economy back into recession and cause financial market upheaval on a scale not seen since the collapse of Lehman Bros.

<snip>
"It's a very dangerous tactic," said Mirko Mikelic, who helps manage $17 billion at Fifth Third Asset Management. "I think you would see investors move away from the United States and move to other markets as they lose confidence in the financial system and our ability to keep our house in order."

Many Republicans doubt the August 2 deadline. They argue that if the borrowing cap is not raised by then, the Treasury will have sufficient revenues to service the nation's interest payments and, for a period of time, pay obligations such as Social Security and Medicare.

Read more...http://www.reuters.com/article/2011/06/08/us-usa-debt-skepticism-idUSTRE75700720110608

Any doubts that the Republicans want to plunge the economy into chaos? It's so obvious and it looks like they might get their way because they have the ability to reject any debt limit increase and there's nothing Obama can do about it. I hope you guys have some portfolio protection.

[SpiralHawk]

1. Teh Republicon Party already is in a state of Extreme Soul Debt

So I guess they figure they will drag America down with them.

[Proud Liberal Dem]

2. And the Republicans are positively gleeful about any bad economic news

They think that it will make it easier for them to sell their own *solutions* to resulting fallout and, of course, win back the WH/Senate next year.
:puke: :argh:

[RandomKoolzip]

3. Okay, so define "runaway spending."

Are they referring to the defense budget? Corporate welfare? No. They're talking about necessary social programs - welfare, medicare, etc. Stuff that helps a lot of (poor) people. I think the GOP should just be straight with the American people and say what they mean: "We want more poor people to become homeless and then die so we don't have to share resources with them." The GOP's platform is a mass extinction program disguised as "pragmatism" parading its "bravery."

Oh, and they want Obama to take the blame for the eventual catastrophe that will result, but that's besides the point.

[Avant Guardian]

4. Will Obama fold to the terrorists?

We shall see.

[Proud Liberal Dem]

9. If you mean, giving in and accepting Ryancare in exchange for raising the debt limit

Hell no! The Republicans are, as often is the case, pissing in the blowing wind on this one.

[Avant Guardian]

10. I do hope you're right

[Proud Liberal Dem]

11. It would be utterly suicidal for the Dems to give in on Ryancare

I know that the Democrats in Congress (and sometimes in the WH) are no strangers to shooting themselves in the foot but they did hold firm together on Social Security privatization and were able to deep-six that back in 2005 (I REALLY expected them to cave on it and hand Bushco another *victory*) and nobody seems to be softening on Ryancare now (so far). I'm just not really able to see a scenario where the Democrats and/or President Obama give in on this- even if the Republicans take the debt limit hostage crisis all the way to the mat.

[Andy Chryse]

5. Deficit spending is the rule, not the exception to such

At least, on this side of the pond. Don't be fooled by European "austerity" measures: They leave more than enough money in sky to give Mr. Boehner a stroke!

[yellowcanine]

6. "brief debt default" Isn't that similar to "little bit pregnant" ?

[JoePhilly]

7. Their goal is to damage the economy to the point where

the American people will be so desperate that they will willingly give up Medicare and Social Security.

[Proud Liberal Dem]

8. I wonder if this whole debt ceiling default debate (I mean, hostage crisis)

is what is creating at least some of the uncertainty in the markets and part of why businesses are anxious about investing/hiring? :shrug: