Default.... what a loaded word..
If main stream media used this word 10 years ago, many (if not most) Americans would misinterpret this word and apply it to the discussion incorrectly.
Post 'Great Recession' though, we all pretty much know what this word means.
Defaulting now-a-days means to not pay your bill(s).
But, within the use of this word from our; leaders, media, bloggers, etc is the seed of deceit many Americans are now eating.
Lets stop for a moment, drop all that we have presumed or conceived to be true and consider the reality of a 'Default' of America on its own Credit Lines.
One thing quite a few representatives have said would happen if America were to fail to raise the debt ceiling would be that America would 'Default'. 'Default' on what? Its loans or its obligations? Both?
If I own a house and the accompanying land and I do not pay my mortgage, I default on my Mortgage, right? What happens then? The bank takes my house & land (at some point). If i have a line of credit that I utilize and I do not pay my minimum monthly payment I default on my line of credit. What happens then? Nothing really. The creditor adds a bad entry to my 'Credit Report' and impacts my ability to borrow more money in the future. Depending on the amount of the line of credit, they might take me to court to attempt to collect on their loan. If I were smart enough and knew enough good lawyers, I could wrap that argument up in the courts for quite a while and drag their claim out (finances depending) almost indefinitely. Eventually though, worse case scenario, the creditor will probably get some piece of my house or my land as restitution for their willingness to loan money to me and my inability or indecision to return the favor in kind.
Well, most people arent going to attempt to drag something like that out in court and are going to accommodate the creditor in some way. For most people, this would mean "robbing Peter to pay Paul".
So, back to the US. Do you really think the United States of Indebted America is going to NOT pay the creditors their "due" share? Or are they going to rob Peter to pay Paul? When push comes to shove, I think we all know the answer.
This country will rob Peter ( you, me, seniors, Govt. Employees, anyone within the confines of the borders of this country ) to pay Paul ( any and all external Creditors, with the highest creditor to the lowest ). This country will pay its debtors before it pays its servants. You would pay your mortgage first, car second and electric third.
Like it or not, lets be honest... When push comes to shove, this is the most likely scenario to play out should the debt ceiling not be raised.
But, as with all things, there is more to it than that....
And to consider the More there is to IT, we have to go back to the Average American for another example of how this TV drama will play out in the real world.
When the Average American starts running into some troubles with their finances, and those troubles do not get resolved by robbing Peter, every American ( I would argue every Human Being ) does the same thing next.
WE sell Sh!7. Everytime, without fail. Take a quick look at Craigslist, your newspaper classifieds or your local Pawn Shop.
Well, lets consider what America, as a debtor, has to sell, or at least bargain with shall we?
America has some of, if not the most, elite weaponry in the world. What value do you think our stealth technology has to a burgeoning country like China? How many months worth of 'excused payments' do you think that will buy with them?
- Nuclear Technology
Need I say more? How many years of scientific analysis is this worth?
- Medical Research
- Space Technology
- Economic knowledge
- Military Force
- Military bases
I am sure there is more that could be added to the list.
Then, when all else fails, there is the other option that a debtor might take when their debt holders come knocking for their payments. A quick, simple, "F- Off". This option would probably be saved for the smaller countries out there who have no aggressive options at their disposal.
Either way... default? Buy it if you want to, but the odds of that really happening are pretty slim. Though the effects on our society might look like a default, the reality behind closed doors is probably going to look a lot different, and that is a reality most, if not all of us, would never get to see anyway.
Well, it is Friday and getting close to End of Business for America. My prediction: it doesnt look like we are about to have some agreement on the debt ceiling in the next few hours and I would expect that America's credit rating is going to be downgraded sometime tonight or early in the weekend. Just in time for the Asian markets to open and "react" to the news.
Then again, maybe I am wrong. I mean, this is just an opinion piece isnt it?