Moderators: richierich, ua900, PanAm_DC10, hOMSaR

 
thomil13FRA
Topic Author
Posts: 81
Joined: Thu Jul 08, 2010 12:13 pm

Effects Of US Default On US Everyday Life

Fri Jul 29, 2011 8:19 pm

Hi everyone,

The title really says it all. IF the US should really have to default on it's debts, what effect (if any) would that have on everyday life?
On a semi-related note, would the FAA, Immigration and the Department of Homeland Security be affected?
I have a rather personal interest in the last question, as I will make my first trip to the US, more precisely New York City on August 5th. (I'm just about bouncing of the walls with anticipation)
I don't think I have to mention that I am not especially keen on having my flight diverted or cancelled, or to find shuttered immigration counters at JFK when I land.

I'd be really interested if anyone could shed some light on that issue.

regards from Germany,

Thomas
 
jetblueguy22
Posts: 3516
Joined: Thu Nov 29, 2007 12:26 am

RE: Effects Of US Default On US Everyday Life

Fri Jul 29, 2011 9:03 pm

From what I've read all essentials will remain running. Like the military and FAA/DHS. I don't know what specifically would be shut down though.
Blue
Look at sweatpants guy. This is a 90 million dollar aircraft, not a Tallahassee strip club
 
NIKV69
Posts: 14214
Joined: Wed Jan 28, 2004 4:27 am

RE: Effects Of US Default On US Everyday Life

Fri Jul 29, 2011 9:14 pm

Quoting thomil13FRA (Thread starter):
default on it's debts

Even if the debt ceiling isn't raised we will not default we have the money to pay our debts.

Quoting thomil13FRA (Thread starter):
I have a rather personal interest in the last question, as I will make my first trip to the US, more precisely New York City on August 5th. (I'm just about bouncing of the walls with anticipation)

Don't think you have anything to worry about. As even if worst case happens Obama will use his own power to raise it by Monday night.
90 Day Fiancé has taught me that Russian woman are excellent.
 
Maverick623
Posts: 4726
Joined: Thu Nov 30, 2006 9:13 am

RE: Effects Of US Default On US Everyday Life

Fri Jul 29, 2011 11:03 pm

Quoting thomil13FRA (Thread starter):
what effect (if any) would that have on everyday life?

Very little, at least at first. No government agencies would shut down, especially not DHS.

Quoting NIKV69 (Reply 2):

Don't think you have anything to worry about. As even if worst case happens Obama will use his own power to raise it by Monday night.

Exactly. The 14th Amendment has a clause that basically stops Congress from holding the country hostage in this way. Even Bill Clinton has come out and said he'd already have flipped Congress the finger.

I wouldn't worry too much. If the US was really in danger of defaulting, the markets would have shown that by now.
"PHX is Phoenix, PDX is the other city" -777Way
 
ShyFlyer
Posts: 4698
Joined: Fri Jun 19, 2009 11:38 pm

RE: Effects Of US Default On US Everyday Life

Sat Jul 30, 2011 12:51 am

Quoting something (Reply 4):
The FAA already had to furlough 4000 employees. --->

Only because Congress "forgot" to extend the agency's reauthorization bill. The FAA's critical functions (i.e. ATC, safety) are not affected.

http://www.faa.gov/news/press_releases/news_story.cfm?newsId=12943
I lift things up and put them down.
 
ltbewr
Posts: 15612
Joined: Thu Jan 29, 2004 1:24 pm

RE: Effects Of US Default On US Everyday Life

Sat Jul 30, 2011 12:58 am

Even if no default, the cuts in Federal spending and in turn on the States and local governments to avoid it or to deal with the pressure to deal with our debt levels will hurt many.

Fewer government employees. Less government services. Cuts in regulatory agencies that could hurt our financial services industry, job safety, more pollution and so on.

Less money for infrastucture which means fewer jobs, more unsafe and unusable roads, more problems as to clean water, and so on.

The weakened credit condition will also mean most likely that loan and credit card interest rates will go up for everyone - individuals to all businesses from the local family owned to Walmart.

Prices will go up - inflation - for all items, a problem especially for those with declining or fixed incomes.

The value of the US $ will fall to other monies, which will mean higher real costs for all goods, especially imported oil.
 
User avatar
par13del
Posts: 10641
Joined: Sun Dec 18, 2005 9:14 pm

RE: Effects Of US Default On US Everyday Life

Sat Jul 30, 2011 1:18 am

Quoting something (Reply 4):
The FAA already had to furlough 4000 employees. --->

Because the congress has been too busy to pass the FAA re-authorization bill, totally unrelated, they are still out of jobs if the ceiling is raised now, like in tonight.

Quoting thomil13FRA (Thread starter):
as I will make my first trip to the US, more precisely New York City on August 5th.

Now is the time to purchase your ticket since the airlines cannot collect the FAA taxes, now the greedy airlines who everyone is proud of have been raising their prices to offset the difference.

Quoting LTBEWR (Reply 6):

Less money for infrastucture which means fewer jobs, more unsafe and unusable roads, more problems as to clean water, and so on.

Down the road and probably not too significant to the immediate deadline, even the president has had to admit that the number of shovel ready jobs for infrastructure was woefully inadequate, the money has been sitting there waiting for the jobs, not the other way around.

Quoting LTBEWR (Reply 6):
The value of the US $ will fall to other monies, which will mean higher real costs for all goods, especially imported oil.

The US administrations in the past few years have been deliberately lowering the value of the dollar to make eport products competive instead of addressing the reason why the production is too expensive, even the massive increase in the price of fuel has not led to a change in strategy.
 
User avatar
Dreadnought
Posts: 10201
Joined: Tue Feb 19, 2008 6:31 pm

RE: Effects Of US Default On US Everyday Life

Sat Jul 30, 2011 1:30 am

A default will hit me hard.

I moved last year from KY to GA. I am still trying to sell my house in KY, and a default, with an increase in interest rates, will make that more difficult. I've already lost about half the equity I have in that house, at the currect asking price.

And the house in Atlanta is a rent-to-own, where I am paying rent until the other house is sold and I can turn around and buy this one at the price negotiated last year (and I put money down). When that happens my interest rate will be higher.

So this whole thing will hit me hard in the pocketbook.
Democrats haven't been this angry since we took away their slaves.
 
something
Posts: 1239
Joined: Fri May 13, 2011 5:29 pm

RE: Effects Of US Default On US Everyday Life

Sat Jul 30, 2011 1:30 am

Quoting LTBEWR (Reply 6):
Even if no default, the cuts in Federal spending and in turn on the States and local governments to avoid it or to deal with the pressure to deal with our debt levels will hurt many.

America will experience a disrupted cash flow. That's it. It's still the most powerful nation in the world and as that title implies, not in imminent danger of going bankrupt. There is a lot of oil, gold, gas and other stuff to be sold before that will actually happen. They can also keep printing dollars as long as people have trust in the USA and as long as oil is traded in that currency. Raising the debt ceiling will just allow America to borrow more ''easy'' money to keep the cash flow going.

The question is not so much ''what will happen on August 2nd'', the question should rather be ''how much longer will the Republicans find voters''. And that is what will eventually have effects on the everyday lives of Americans.

Quoting LTBEWR (Reply 6):
Prices will go up - inflation - for all items, a problem especially for those with declining or fixed incomes.

Which, in turn, will result in a decreasing global price level for many goods.

Quoting LTBEWR (Reply 6):
The value of the US $ will fall to other monies, which will mean higher real costs for all goods, especially imported oil.

Oil is traded in US$. But, you are right in saying that the effective cost per barrel will be higher in the US than in the Euro zone.

America has had a good run. If you look at the things that made America what it is today, you'll see that almost nothing of that exists anymore. If you look at the things that make America powerful today, you will see that while great, it's not enough to sustain the country.

Short term, not much will change. Uneducated remarks will be made, about how ''I am still alive on August 3rd, so what was all that default talk about? America has no problems!''. But that should be the only noticeable difference. Long term, I'd look for a second citizenship. O al menos empezar a aprender español Iol would bet money AA is not going to deliver the full AA A320 order. Spirit will grow, JetBlue will languish, Southwest will grow albeit slowly, Virgin America is going to go out of business, US will have to merge with someone, Hawaiian will grow in Asian markets, Allegiant will disappear within 6 years from today and I'll do the numbers for Alaskan tomorrow.
..sick of it. -K. Pilkington.
 
signol
Posts: 2652
Joined: Tue Oct 30, 2007 5:18 pm

RE: Effects Of US Default On US Everyday Life

Sat Jul 30, 2011 1:36 am

Quoting something (Reply 4):
''Verunreinigte Staaten von Amerika''

"Separated States of America"?  

signol
Flights booked: NWI-AMS-JNB-DUR, JNB-AMS-NWI
 
something
Posts: 1239
Joined: Fri May 13, 2011 5:29 pm

RE: Effects Of US Default On US Everyday Life

Sat Jul 30, 2011 2:12 am

Quoting signol (Reply 10):
"Separated States of America"?

hehe almost. It's a pun. The key letter here is verunReinigt. Verunreinigen means to pollute, or to adulterate. 'twas a great country once.
..sick of it. -K. Pilkington.
 
signol
Posts: 2652
Joined: Tue Oct 30, 2007 5:18 pm

RE: Effects Of US Default On US Everyday Life

Sat Jul 30, 2011 2:15 am

Quoting something (Reply 11):

Ah, I saw the "un" inserted into "vereinigte" and thought it was a negation  

signol
Flights booked: NWI-AMS-JNB-DUR, JNB-AMS-NWI
 
something
Posts: 1239
Joined: Fri May 13, 2011 5:29 pm

RE: Effects Of US Default On US Everyday Life

Sat Jul 30, 2011 2:29 am

Quoting signol (Reply 12):

If it were only that  
..sick of it. -K. Pilkington.
 
11Bravo
Posts: 1683
Joined: Tue Feb 15, 2005 8:54 am

RE: Effects Of US Default On US Everyday Life

Sat Jul 30, 2011 3:33 am

Quoting something (Reply 11):
'twas a great country once.

The Great American Century 1865-1965
WhaleJets Rule!
 
User avatar
KPDX
Posts: 2504
Joined: Wed Dec 14, 2005 10:04 am

RE: Effects Of US Default On US Everyday Life

Sat Jul 30, 2011 3:34 am

Quoting something (Reply 11):
'twas a great country once.

Yes, and we could only dream of being as great as the UK!  
 
racko
Posts: 4548
Joined: Tue Nov 06, 2001 12:06 am

RE: Effects Of US Default On US Everyday Life

Sat Jul 30, 2011 10:26 am

Aside from the uncertainity in the financial markets, there will be a lot of money missing in an already fragile economy. No matter what you cut, that money was going to someone who in turn was using it to buy something.
 
Mir
Posts: 19491
Joined: Mon Jan 05, 2004 3:55 am

RE: Effects Of US Default On US Everyday Life

Sat Jul 30, 2011 11:18 am

Quoting NIKV69 (Reply 2):
Even if the debt ceiling isn't raised we will not default we have the money to pay our debts.

But there will not be enough money to go around, so even if it's not the US's creditors, somebody is going to have to not get paid (and our credit rating still could go down anyway, which would be damaging).

http://www.slate.com/id/2300207/

-Mir
7 billion, one nation, imagination...it's a beautiful day
 
baroque
Posts: 12302
Joined: Thu Apr 27, 2006 2:15 pm

RE: Effects Of US Default On US Everyday Life

Sat Jul 30, 2011 11:32 am

Quoting thomil13FRA (Thread starter):
The title really says it all.

Glad someone got round to a thread like this. Perhaps significant that the OP does not fly a US flag. Not a lot of illumination has followed so far.

Quoting Dreadnought (Reply 7):
So this whole thing will hit me hard in the pocketbook.

Bloody hell, takes this to find common cause with Charles.

At least you are awake Charles, I fear all too many of your countrymen are happily assuming Obama will act and there will be an end of it. But the most likely outcome is Obama will act, it will NOT be an end of it, and the first not being an end will be a credit down rating and that will cost the lot of you a heck of a lot more than a tax rise would have done. And to no benefit to the debt either, very ironic, how to pay more and have no effect on the problem.

Mind you, not sure where all the extra interest will go, obviously a lot to China and places E, some goodly amount to the ME, but maybe since the richest in the US are probably not net debtor, maybe they too will win from the intransigence. Surely there must be something more concrete than a crazed ideology?

Also interesting is that if this IS the end of the US empire, it has been more self administered than the UK loss, unless you think declaring war on Germany in 1914 and 1939 is the equivalent - which it might be.
 
dxing
Posts: 5859
Joined: Wed Nov 12, 2008 5:14 pm

RE: Effects Of US Default On US Everyday Life

Sat Jul 30, 2011 12:17 pm

Quoting LTBEWR (Reply 5):
Fewer government employees. Less government services. Cuts in regulatory agencies that could hurt our financial services industry, job safety, more pollution and so on.

4000 FAA employees have been missing for a week, has any air travel been disrupted? I haven't seen any save for weather delays. Job safety will not suffer in the short term nor will factories start dumping toxic waste straightway into the waterways.

Quoting LTBEWR (Reply 5):
Less money for infrastucture which means fewer jobs, more unsafe and unusable roads, more problems as to clean water, and so on.

Road repair will continue as much of it paid for by the States and localities. As noted above, "shovel ready" projects are few and far inbetween. Monies for constuction will have already been allocated in the contract process. You do realize that virtually every State has their own State EPA?

Quoting LTBEWR (Reply 5):
The weakened credit condition will also mean most likely that loan and credit card interest rates will go up for everyone - individuals to all businesses from the local family owned to Walmart.

Those have been predicted to go up regardless by many market and economic types. The total debt of the nation has finally reached a point of concern for the financial markets.

Quoting ShyFlyer (Reply 4):
Only because Congress "forgot" to extend the agency's reauthorization bill. The FAA's critical functions (i.e. ATC, safety) are not affected.

It had more to do with a squabble between democrats and GOP members over the continued subsidies of airlines feeding small regional airports.
Warm winds blowing, heating blue skies, a road that goes forever, I'm going to Texas!
 
User avatar
par13del
Posts: 10641
Joined: Sun Dec 18, 2005 9:14 pm

RE: Effects Of US Default On US Everyday Life

Sat Jul 30, 2011 12:42 pm

Quoting Baroque (Reply 17):
But the most likely outcome is Obama will act, it will NOT be an end of it, and the first not being an end will be a credit down rating and that will cost the lot of you a heck of a lot more than a tax rise would have done.

The tax rise is truly ironic as your comment below rings true there as well.

Quoting Baroque (Reply 17):
And to no benefit to the debt either, very ironic, how to pay more and have no effect on the problem.

No one was proposing borrowing money or raising taxes to pay off debt, so yes, truly ironic.

Quoting dxing (Reply 18):
Those have been predicted to go up regardless by many market and economic types. The total debt of the nation has finally reached a point of concern for the financial markets.

Seems to be the biggest bone of contention, maybe those experts don't protest loud enough since it seems as if only the Tea Party has lent them an ear, certainely to include other nefarious reasons, but they lent an ear.
 
User avatar
Dreadnought
Posts: 10201
Joined: Tue Feb 19, 2008 6:31 pm

RE: Effects Of US Default On US Everyday Life

Sat Jul 30, 2011 1:49 pm

Quoting Baroque (Reply 17):
At least you are awake Charles, I fear all too many of your countrymen are happily assuming Obama will act and there will be an end of it. But the most likely outcome is Obama will act, it will NOT be an end of it, and the first not being an end will be a credit down rating and that will cost the lot of you a heck of a lot more than a tax rise would have done. And to no benefit to the debt either, very ironic, how to pay more and have no effect on the problem.

The problem is that even if the GOP gave in and signed off on Reid's plan, the US credit rating WILL be downgraded very soon. Even the current Boehner plan probably won't prevent it. The only plan that had a chance of avoiding that downgrade was Cut Cap & Balance, which the Dems shot down as fast as they could pull the trigger.
Democrats haven't been this angry since we took away their slaves.
 
baroque
Posts: 12302
Joined: Thu Apr 27, 2006 2:15 pm

RE: Effects Of US Default On US Everyday Life

Sat Jul 30, 2011 2:56 pm

Quoting Dreadnought (Reply 20):
The problem is that even if the GOP gave in and signed off on Reid's plan, the US credit rating WILL be downgraded very soon. Even the current Boehner plan probably won't prevent it. The only plan that had a chance of avoiding that downgrade was Cut Cap & Balance, which the Dems shot down as fast as they could pull the trigger.

Agree the credit rating is likley gone already. The number of plans is truly mid boggling especially after each has been interpreted. The only one that seemed likely to work had fairly steep cuts, but also had removing tax loopholes and some new taxes, forgotten how much, but enough to recoup the tax revenue lost from 2001 to 2008 in systemic not cyclical terms.

The hold outs basically have most likely managed to achieve the worst possible outcome, no savings and a credit downgrade. I can see that the credit agencies might not have been happy just with savings, as you have said they are harder to "bank" compared with increased revenues. I am not clear why a savings, increased revenue package could not have been attached to a debt revenue reduction set of targets. You could not have that legislated because it would be dependent upon revenues holding up, and the most likely thing with the savings is they will impact revenues just about as hard as the expenditure.

What a bloody mess. Anyone in the US followed the Australian story of deficits and surpluses from 1995 to 2011? Not a blameless story, especially with about 30 billion in revenues being pissed away in middle class welfare and pointless tax cuts instead of being used to build infrastructure, but still something the US could have tried to follow.

It is depressing to see the speed at which outsourcing is blamed. Not a mention of the low cost goods that the US has as a result. It is a two way street and the US having fostered the idea of a global economy, it is a bit funny when it is the chief culprit instead of a DD- political system.

Anyone want to give Rupert Murdoch a hand for assisting in getting to DD-?
 
dxing
Posts: 5859
Joined: Wed Nov 12, 2008 5:14 pm

RE: Effects Of US Default On US Everyday Life

Sat Jul 30, 2011 3:10 pm

Quoting Dreadnought (Reply 20):
The problem is that even if the GOP gave in and signed off on Reid's plan, the US credit rating WILL be downgraded very soon. Even the current Boehner plan probably won't prevent it

Moody's seems to agree. The Hill had an article in which they basically said that none of the plans currently under consideration in either house would reduce the deficit enough to ensure that our credit rating would not be down graded. I would post the link, but it refuses to be pasted here.
Warm winds blowing, heating blue skies, a road that goes forever, I'm going to Texas!
 
User avatar
par13del
Posts: 10641
Joined: Sun Dec 18, 2005 9:14 pm

RE: Effects Of US Default On US Everyday Life

Sat Jul 30, 2011 3:12 pm

Quoting Baroque (Reply 21):
but also had removing tax loopholes and some new taxes, forgotten how much,

I believe it was 500 billion, Obama was also inclined to accept until a private meeting with Reid and Pelosi then he retuiurned with some additional "reasonable revenue increases" and the speaker walked leaving the president with his now famous left at the alter speech.

With all the additional stuff that has happened, that meeting of the 3 democratic powerhouses was where Obama had a chance to shine as leader and push his leaders to take the plan back to the rank and file versus the three deciding among themselves. What all 3 knew going in was that the Republicans were united as a group in addressing spending, which everyone agrees has to be addressed, they also knew that they were also adamantly opposed to any form of increase in tax rates, they did compromise on eliminating loopholes hence the billions in increased revenues. Plan was in the range of a 3 to 1 ratio of cuts to spending.

I hope that is the plan that is ultimately revived as it more than anything does address the guidance of the markets to maintain the AAA status. The plan when passed by the House was going to be amended in the Senate anyway and sent back for reconciliation, why it was never given a chance probably killed all compromise. The American people would have been better served seeing it's legislators debating and compromising on the floor versus everyone being denied the option to lend their voice. Issue is definately too large and important to the country for leaders and their aides alone to sit in judgement.
 
dxing
Posts: 5859
Joined: Wed Nov 12, 2008 5:14 pm

RE: Effects Of US Default On US Everyday Life

Sat Jul 30, 2011 3:18 pm

Quoting par13del (Reply 23):
I believe it was 500 billion,

800 billion, the President said ok to that deal and then welched the next day after word got out and the liberal democrats on the Hill pitched a fit and demanded more revenue. That is when he came back with a 1.2 trillion figure, again after agreeing to 800 billion, that was unacceptable to the GOP as rather than just closing loopholes and cancelling deductions it actually increased tax rates which the conservative members of the GOP would not support.
Warm winds blowing, heating blue skies, a road that goes forever, I'm going to Texas!
 
baroque
Posts: 12302
Joined: Thu Apr 27, 2006 2:15 pm

RE: Effects Of US Default On US Everyday Life

Sat Jul 30, 2011 3:20 pm

Quoting par13del (Reply 23):
I hope that is the plan that is ultimately revived as it more than anything does address the guidance of the markets to maintain the AAA status.

Thanks for the details, so many options, but is about what I seemed to remember from iteration XXYZ-PG-ver3! Acceptance of a plan something like that might save the credit rating, but short of both spending cuts and revenue increase I can see the ratings folk being pretty leery. After all, they got a well deserved caning over the CDOs or whatever they were they gave AAAs to when they were junk.

If the solution does not look to be long term, I imagine the problem for the ratings houses is that the customers for US debt are now a bit nervous and so falling off the AAA perch gets very likely. Watching this train crash in slow motion once has been enough, anyone who thinks repeating it again and again is a good strategy - for anything, well other than suicide - needs some head reading.

Who is online

Users browsing this forum: Aaron747, sierrakilo44 and 61 guests

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos