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Old 10-08-2013, 08:22 PM  
AustinChief AustinChief is offline
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For those claiming it is the GOP to blame for a possible default...

Explain to me why the DEMOCRATS under Reid refused to pass the Full Faith and Credit Act which was passed by the House. And why Obama threatened to veto it if it got to him?

You all seem to whine and cry that we should ALWAYS pay our debts. Well that law makes certain that in a situation like this... we always do.

You can read it here
http://www.gpo.gov/fdsys/pkg/BILLS-1...113hr807rh.pdf

Pretty simple. If we breach our credit limit we (BY LAW) must pay debts first thereby ensuring we NEVER default.

Let's hear your spin on this one.
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Old 10-09-2013, 08:33 AM   #91
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Sorry but what the **** are you talking about?

The House and Senate have NOT agreed on upcoming levels of spending that is the entire problem. Where do you get the fantastic notion that there is no fight over that. That is a large portion of the fight we are in. You do know the budget process is supposed to be a YEARLY thing right?

The threat of default is to get more credit to maintain current spending levels. The House doesn't want that or if they give that up they at least want a concession elsewhere (ie Obamacare).
"The threat of default is to get more credit to maintain spending levels"?

I still don't know why he needs to threaten default to maintain current spending levels. For one, they are set by congress, not him. And he isn't challenging or disagreeing with the level of spending in the House CR.
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Old 10-09-2013, 08:37 AM   #92
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Yes, that's the problem--it has become a fight over incurring more debt. That's a fine discussion to have, but paying the bills shouldn't be held hostage as part of the "discussion."
Look this happens all the damn time. Nobody and I mean nobody right or left wants to talk about it until its a damn crisis. If Reid and Obama aren't willing to sit down and talk now, what's going to bring them to the table when there isn't a crisis?
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Old 10-09-2013, 08:39 AM   #93
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Originally Posted by cosmo20002 View Post
Dumbasses--read this again. And again. I've said it several times and now someone else is saying it. No matter how many times it is explained to you, most of you keep coming back with--we've got to stop this spending!

Sometimes, like TJ in this thread, you acknowledge and agree that the debt ceiling has to do with already-accrued debt and not new spending, but then you go right back arguing how we shouldn't raise the ceiling because we can't afford new spending. Read it again. Let it sink in. And stop the dumb credit card analogies unless it includes not paying your cc bill when you receive it.
I am not saying we shouldn't raise the debt ceiling. I am saying it should be raised, and then we should seriously implement a combination of tax hikes and budget cuts to get our finances in order.

I have said several times that not raising the ceiling actually worsens this problem, as it can hike rates on our existing debt.
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Old 10-09-2013, 08:40 AM   #94
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Originally Posted by Race Card native View Post
Only speaking on default here as I haven't had a chance to really look at that proposed bill.

From what I've seen about it so far in this thread, it would more than likely have a negative effect on our credit rating. Once you start prioritizing payments over others, it sends a negative signal to creditors. Just because you aren't reducing their priority now doesn't mean that it won't happen in the future. The ratings agencies rate the debt on the ability to pay as well as the outlook for the ability to pay (with an element of willingness to pay). Creating a slotting scheme for our obligations definitely sends a negative signal for the future outlook on the ability or willingness to pay. Their ratings are not just quantitatively based.

Second, a default does not require you to stop paying your debts. If you announce intentions to pay less than what you owe or alter the terms on what you owe, that can be considered default. That would also severely affect our credit rating.

All of that being said, the ratings agencies should have zero credibility. Their business models are one giant conflict of interest and they have terrible track records.
So, you haven't actually bothered to READ the bill. All it does is guarantee that PUBLIC DEBT and Social Security are paid. Period. It does NOT create a slot system or further prioritize anything.

You are DEAD wrong on HR 807 and it's possible effect on our credit. I'll chalk this up to you not having read it. HR 807 does NOTHING to negatively affect our ability to pay our debt. ZERO. In fact it does just what it is stated to do, it GUARANTEES we pay it. You do know, we have over 6 times the revenue we need to pay our bond interest, right? You are pulling the same bullshit analysis of our credit rating as if we are a soccer mom getting rated by Equifax. That's simply not AT ALL how it works and given the industry you are in you should know better. As I pointed out in a different thread. The SERIOUS long term concern is continued massive deficit spending. The ratings agencies have STATED this.

Your second point is valid but has nothing to do with this debate. Just saying.

And yes the credit agencies are a crock of shit, but also, not going down that road in this thread.
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Old 10-09-2013, 08:50 AM   #95
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Originally Posted by AustinChief View Post
So, you haven't actually bothered to READ the bill. All it does is guarantee that PUBLIC DEBT and Social Security are paid. Period. It does NOT create a slot system or further prioritize anything.

You are DEAD wrong on HR 807 and it's possible effect on our credit. I'll chalk this up to you not having read it. HR 807 does NOTHING to negatively affect our ability to pay our debt. ZERO. In fact it does just what it is stated to do, it GUARANTEES we pay it. You do know, we have over 6 times the revenue we need to pay our bond interest, right? You are pulling the same bullshit analysis of our credit rating as if we are a soccer mom getting rated by Equifax. That's simply not AT ALL how it works and given the industry you are in you should know better. As I pointed out in a different thread. The SERIOUS long term concern is continued massive deficit spending. The ratings agencies have STATED this.

Your second point is valid but has nothing to do with this debate. Just saying.

And yes the credit agencies are a crock of shit, but also, not going down that road in this thread.
Well, I went through and read it and it may not have a stated slotting system, but it essentially creates one. It only ensures that Treasuries and Social Security are paid. It ignores the rest of the US Government's obligations which in practice would create a slotting/priority system.

The ratings agencies have also stated that political dysfunction is an issue too. Ratings agencies take the whole picture into account (in theory). Our deficit spending is one element. Political dysfunction is another.

BTW, I was at a conference a few weeks ago and the political analyst for Wellington Capital is forecasting government surpluses before the end of Obama's term. If he is correct then the long term deficit spending will take care of itself.
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Old 10-09-2013, 08:53 AM   #96
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There are three main problems with this bill:

1) Credit rating agencies will still likely downgrade us, perhaps not as harshly as if we didn't pay treasury bonds, but still a downgrade if we do not pay our other outstanding bills. This is like a homeowner saying, "I will fix my credit rating by not paying my utility bills and paying my car loan". It may save the car, but there will still be negative items on your FICO score added from the utility company. Regardless of that analogy, it will be the perception, that we cannot be relied upon to pay our bills due in a timely fashion.

2) With the government shut down, it it not clear if there are staff sufficient to administer this prioritization of payments.

3)At BEST, this only delays default on our bonds and doesn't solve the problem. Even if we stopped all government spending except debt payments, we would still default. This is because the cost of borrowing money is not free. The new bonds we have to take out will eventually take out the debt ceiling because of the interest owed on them. The debt ceiling will have to be raised to account for interest payments on the debt.

So we save a couple of weeks, or months, then what? What did we gain by this process? Why not just address the problem now?
OK! FInally have time to address the massive fail in the post.



Let's go in reverse!

3)Please share with us these numbers! I'd love to see how you get here. We currently take in over 6 times what we pay out in bond interest. So let's pretend we lock in the debt ceiling. Now, you will have some bonds come to maturity... but who cares since you can sell more bonds to get back up to the debt ceiling again. Again, I would love to see the math here... because it simply doesn't work.

2)Given the short term current situation, I agree with this RIGHT NOW. As I discussed with FD in a different thread, there are technical problems that the Treasury would have to address. If this law went into effect than we would put measures in place to handle all of this automatically (just like all payments currently go out automatically) BUT Reid and Obama have opposed these measures for something like 2 years now... so that excuse doesn't fly.

1)You, and KC Native and Direckshun seem to all think the US govt is rated by credit agencies like Moody's the same way that TransUnion would rate Jane Doe, Soccer Mom. It's ridiculous. Here, let me give you a counter analogy to yours. Soccer mom says "I will fix my credit rating by paying my car and home loans but I will have to stop paying my bookie and my drug dealer." So the mean old credit agency is going to look at that and say "aha! you didn't pay your drug dealer, looks like your credit score is going down!!!"
If it doesn't reflect on our ability to pay our ACTUAL DEBT than the credit agencies simply don't care. HR 807 does not in ANY WAY SHAPE OR FORM hinder our ability to pay our debt. EVER.
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Old 10-09-2013, 08:54 AM   #97
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I am not saying we shouldn't raise the debt ceiling. I am saying it should be raised, and then we should seriously implement a combination of tax hikes and budget cuts to get our finances in order.

I have said several times that not raising the ceiling actually worsens this problem, as it can hike rates on our existing debt.
I understand--I was just using your post as a voice of reason. You more or less said what I've been saying and I'm tired of with these people who constantly want to ignore that the ceiling needs to be raised in order to pay current debts and it is not a method of authorizing new spending.
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Old 10-09-2013, 08:58 AM   #98
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Well, I went through and read it and it may not have a stated slotting system, but it essentially creates one. It only ensures that Treasuries and Social Security are paid. It ignores the rest of the US Government's obligations which in practice would create a slotting/priority system.

The ratings agencies have also stated that political dysfunction is an issue too. Ratings agencies take the whole picture into account (in theory). Our deficit spending is one element. Political dysfunction is another.
LOL WUT? So, you are saying what Direckshun said. A bill which GUARANTEES that bond payments are ALWAYS made on time... would somehow cause the credit agencies to downgrade us. You realize how ridiculous that is right?
A law that makes CERTAIN that they will always be paid will make them say "well **** them for always paying us.. we'll downgrade them cuz they are prioritizing shit!" LOL. Please just stop. You KNOW that's complete horsehsit. If you continue with it don;t EVER bother trying to pass yourself off as anything other than a Cosmo-esque partisan shill.

I have stopped short of saying that HR8 807 would cause a credit upgrade. In theory it should but continuing dysfunction in govt and massive deficit spending are still real problems so I doubt it would be enough on it's own. But it sure as hellwouldn;t cause a downgrade. You guys are hilarious.
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Old 10-09-2013, 08:58 AM   #99
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Originally Posted by AustinChief View Post

1)You, and KC Native and Direckshun seem to all think the US govt is rated by credit agencies like Moody's the same way that TransUnion would rate Jane Doe, Soccer Mom. It's ridiculous. Here, let me give you a counter analogy to yours. Soccer mom says "I will fix my credit rating by paying my car and home loans but I will have to stop paying my bookie and my drug dealer." So the mean old credit agency is going to look at that and say "aha! you didn't pay your drug dealer, looks like your credit score is going down!!!"
If it doesn't reflect on our ability to pay our ACTUAL DEBT than the credit agencies simply don't care. HR 807 does not in ANY WAY SHAPE OR FORM hinder our ability to pay our debt. EVER.
Our debt is not the only factor in the ratings agencies' equations. There are qualitative factors that go into it as well. Once you open the door to prioritizing payments, it creates a risk that you will extend it to your debt thus increasing your default risk. The ratings agencies ratings are based on default risk.

It doesn't mean that will happen but it sends a negative signal to creditors.
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Old 10-09-2013, 08:59 AM   #100
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Look this happens all the damn time. Nobody and I mean nobody right or left wants to talk about it until its a damn crisis. If Reid and Obama aren't willing to sit down and talk now, what's going to bring them to the table when there isn't a crisis?
There are plenty of opportunities to address future spending. Money that's been spent (put on the credit card so to speak) was authorized by Congress and threatening to not allow payment of the bill on that authorized spending is an irresponsible and shitty tactic.
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Old 10-09-2013, 09:04 AM   #101
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Originally Posted by cosmo20002 View Post
Dumbasses--read this again. And again. I've said it several times and now someone else is saying it. No matter how many times it is explained to you, most of you keep coming back with--we've got to stop this spending!

Sometimes, like TJ in this thread, you acknowledge and agree that the debt ceiling has to do with already-accrued debt and not new spending, but then you go right back arguing how we shouldn't raise the ceiling because we can't afford new spending. Read it again. Let it sink in. And stop the dumb credit card analogies unless it includes not paying your cc bill when you receive it.
At first I just assumed you were spinning shit in your normal partisan fashion but now it's pretty clear... you really have NO CLUE what you are talking about here. Why do you wade into a discussion when you are so completely ignorant of the subject matter?

Ok, let's dumb it down some MORE for you.

The House is NOT REFUSING TO PAY OUR DEBT. Obama/Reid are.(well they are using it as a threat) The House passed HR 807 to make sure our DEBT (those are all those past authorized expenditures) will ALWAYS be paid. Obama/Reid blocked it.

Obama is saying "If you don't give me more money to spend on whatever I want I won't pay the bills we already have."
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Old 10-09-2013, 09:05 AM   #102
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LOL WUT? So, you are saying what Direckshun said. A bill which GUARANTEES that bond payments are ALWAYS made on time... would somehow cause the credit agencies to downgrade us. You realize how ridiculous that is right?
A law that makes CERTAIN that they will always be paid will make them say "well **** them for always paying us.. we'll downgrade them cuz they are prioritizing shit!" LOL. Please just stop. You KNOW that's complete horsehsit. If you continue with it don;t EVER bother trying to pass yourself off as anything other than a Cosmo-esque partisan shill.

I have stopped short of saying that HR8 807 would cause a credit upgrade. In theory it should but continuing dysfunction in govt and massive deficit spending are still real problems so I doubt it would be enough on it's own. But it sure as hellwouldn;t cause a downgrade. You guys are hilarious.
Sorry but no.

You are ignoring the qualitative factors that go into credit ratings. Remember they are the opinions of the ratings agencies and are as much as art as they are a science.
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Old 10-09-2013, 09:08 AM   #103
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Our debt is not the only factor in the ratings agencies' equations. There are qualitative factors that go into it as well. Once you open the door to prioritizing payments, it creates a risk that you will extend it to your debt thus increasing your default risk. The ratings agencies ratings are based on default risk.

It doesn't mean that will happen but it sends a negative signal to creditors.
Yes, of course there are other factors but those factors all relate DIRECTLY to our willingness and ability to pay our debt. HR 807 strengthens us in both regards.

Please read the bolded part aloud. Now read it again.

NOW explain to the class how a law that guarantees payment on debt increases default risk.

Yeah, thought so. Seriously. Don't ever come back and claim to not be a partisan hack like cosmo if you won't admit this is ridiculous. At least he and Direckshun can claim complete ignorance of the subject matter.
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Old 10-09-2013, 09:12 AM   #104
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Sorry but no.

You are ignoring the qualitative factors that go into credit ratings. Remember they are the opinions of the ratings agencies and are as much as art as they are a science.
Let's get you on record then. You are saying that a law that GUARANTEES we pay our debts will be looked at unfavorably by the credit agencies who rate us based on whether we pay our debts?

AND YES we all know about the other factors involved but they become almost irrelevant when you have a law that guarantees payment. The "art" goes away when the politics get removed from the equation. At that point the credit agencies have two concerns. #1 will Hr 807 get repealed and #2 Can we actually PAY our debt? #2 is the REAL concern but that has nothing to do with HR 807.
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Old 10-09-2013, 09:13 AM   #105
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Yes, of course there are other factors but those factors all relate DIRECTLY to our willingness and ability to pay our debt. HR 807 strengthens us in both regards.

Please read the bolded part aloud. Now read it again.

NOW explain to the class how a law that guarantees payment on debt increases default risk.

Yeah, thought so. Seriously. Don't ever come back and claim to not be a partisan hack like cosmo if you won't admit this is ridiculous. At least he and Direckshun can claim complete ignorance of the subject matter.
Again, you are ignoring the qualitative factors and other US Govt obligations that aren't US treasuries.

We have made our implicit backing of Fannie and Freddie explicit. What happens if they fall short and the US Government has to kick money out for those obligations?

That's just one scenario. That bill does nothing to actually reduce the risk of default. Just because they put language into it "guaranteeing" debt payment doesn't make it the magic cure for default risk.

Also, how do they define public? Are they going to just pay the Treasuries that are held by individuals or mutual funds? What about Treasuries held by the Fed or other central banks?
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I'm just a little pussy from Iowa
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