What about people with mortgages if we default? Won't the higher interest rates crush them?

[Poll_Blind]

Them, credit card borrowers, pretty much everyone with anything on credit. Won't this just crush everyone in that position? If it's less than a point or so, maybe not such a big deal. But if we default, it won't just be a point, it'll be a couple of points if not more.

Do I understand this aspect of a default correctly?

PB

[FreakinDJ]

1. think "Fixed Rate"

[abelenkpe]

2. For future debt

Don't know if it will raise existing debt like fixed rate mortgages student loans etc.

[DearAbby]

3. If USA defaults...not much use paying off your debts

you will eventually default too. Yeah it's that bad.

[jtown1123]

4. Good question, I am paying down a cc at 0% intro rate. Would that jump up?

[Poll_Blind]

9. That's what I'm trying to find out. I'm under the impression that it would but....

...I just want to be sure. I mean, I'm under the impression that nomatter if the ceiling is raised or not, because we've had a few downgrades so far, interest rates will still go up even if we do raise the debt ceiling. But far lower than under a default. Like, I wouldn't imagine it would be a half a point at most.

PB

[msongs]

5. interests rates are fabricated made up numbers - they can make them anything they want really nt

[Lone_Star_Dem]

6. You're bound by your agreement, and so are they.

Fixed rates will remain fixed. Variable rates will vary according to your agreement and any raise in the Prime.

[Poll_Blind]

10. Thank you- that was the word I was looking for: The Prime interest rate.

That's what we're talking about going up in the case of a default, correct?

PB

[Lone_Star_Dem]

16. Yes, it would be the Prime Rate which would increase.

Which, for those with variable accounts, would be devastating. Fixed rates, i.e., student loans, mortgages, etc., would not go up, but things like credit cards would.

[Blue Meany]

12. And, you get to pay it in currency that is worthless...

it could be a great deal for some mortgage holds, assuming they still have incomes.

[Poll_Blind]

13. That would assume that wages go up accordingly because of inflation, no?

PB

[NutmegYankee]

19. If we got into a massive inflation event, wages would have to rise.

Historically, they always do, but the inflation can go faster and destroy the currency.

[MedicalAdmin]

17. That is assuming that the "rules don't get rewritten.

I know that is speculative, but who would have thought that we would have given trillions to rich banks and then lend them the money to pay off the TARP loans at zero percent interes while assuming their toxic assets in a 1 to 1 swap for t-bills?

It seems to me that if you own enough politicians, media, etc, and you want the rules rewritten, then they get rewritten and you can charge anything you want...

[NutmegYankee]

7. The fixed rate loans cannot be changed.

If we have massive inflation the loan just gets easier to pay off.

[dixiegrrrrl]

8. My mortgage is fixed rate, I will pay it with inflated dollars.

Variable rate mortgage holders will be screwed, but they were screwed the minute they took out the mortgage.

The government will be screwed, it has a LOT of short term debt it has to turn over on a weekly/monthly basis, the interest rate rise on that will be a horrendous total.

Buyers of NEW fixed rate debt will be screwed.
And all of THAT is possible even without a default. Rates are already rising in the "real" world.
The Fed rate is highly artificial and has no bearing on anything except to give banks cheap money to gamble with.

If the USA gets downgraded, interest rates will climb.
Default, we are looking at massive inflation, so the whole issue of paying off any debt is moot.

[SoCalDem]

11. but people with savings accounts will appreciate getting interest on their savings

for a change.

and fixed rate mortgages will not change rates.

holding down rates artificially like we have done for a long time, is not really a good thing..

we would be better off having identified inflation, instead of the secret inflation we have now.. It's real.. ask anyone who goes to the gas station or grocery store or college or who buys almost anything except for certain electronics & cheap plastic crap.

right now we have the worst of both,. we HAVE inflation but we also have insanely low interest on savings.

[Poll_Blind]

15. Good point! n/t

PB

[lunatica]

14. My opinion is that the government will have to pay more to pay back their loans

And it will come out of our taxes. In other words, less of our taxes will go for the benefit of the US infrastructure, social programs, pubic services like Teachers, Police, and Firefighters and more will go to pay for what we already owe now.

This on top of the teabaggers' cuts in social entitlements and the continued cuts in taxes for the wealthy will basically bankrupt us sooner or later because our government will be in the red for a very long time, not being able to catch up. A lot like a lot of us right now.

[damntexdem]

18. Who'll notice? We'll all be so crushed by so many things ...

we won't even notice those details.