The staff at Bloomberg aren’t taking any prisoners as they lay out what defaulting on the national debt would mean for the economy here at home and abroad.
Failure by the world’s largest borrower to pay its debt — unprecedented in modern history — will devastate stock markets from Brazil to Zurich, halt a $5 trillion lending mechanism for investors who rely on Treasuries, blow up borrowing costs for billions of people and companies, ravage the dollar and throw the U.S. and world economies into a recession that probably would become a depression. Among the dozens of money managers, economists, bankers, traders and former government officials interviewed for this story, few view a U.S. default as anything but a financial apocalypse.
The $12 trillion of outstanding government debt is 23 times the $517 billion Lehman owed when it filed for bankruptcy on Sept. 15, 2008. As politicians butt heads over raising the debt ceiling, executives from Berkshire Hathaway Inc.’s Warren Buffett to Goldman Sachs Group Inc.’s Lloyd C. Blankfein have warned that going over the edge would be catastrophic.
Or as Representative Ted Yoho (R-Batshit) puts it, it would “bring stability to the world markets.”
Representative Joe Barton (R-TX), who would like to apologize to BP for that shakedown, says defaulting on the national debt would be no big deal because he’s late paying his bills all the time. (Do we need a better example of how out of touch and clueless they are?)
Senator Tom Coburn (R-OK) says default is really just a myth and to say that we’ll default if we don’t raise the debt ceiling isn’t “entirely accurate.”
And as you may recall, Rep. Ted Yoho also previously said that defaulting on the national debt would actually improve our credit rating. Words of wisdom from a man who held no public office and who counted cattle as his primary constituents before imbeciles in his district elected him.
If you asked me a month ago if we would default on the national debt this month, I would have said no. I would have predicted that a bill will be passed at the 11th hour of the last day to avert catastrophe. But I’m not so sure anymore. I underestimated just how much John Boehner values being the Speaker of the House over preserving the full faith and credit of the United States, and at this point a default wouldn’t surprise me.