

Default More Than 400 Years Ago Leaves Scars - gatsby
http://www.bloomberg.com/news/2011-07-31/default-more-than-400-years-ago-leaves-scars-christophe-chamley.html

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hapless
This column perpetuates a misleading theme in the debate. The author implies
that the U.S. will suffer terrible consequence in the event of a default. This
is true, but completely irrelevant: _Under no circumstances will the U.S.
actually default._

As long as federal revenues are greater than the costs of servicing our debt,
we will continue to service it. The government is constitutionally obligated
to do so. Rather than default, we will see catastrophic and immediate cuts in
services. All of a sudden, the government's monthly outlays will have to fit
into monthly revenues. This is the goal of the House Republicans -- "starve
the beast." They're comfortable with a failure in negotiations. For them, it's
a heads-we-win, tails-you-lose situation.

In any case, while a failure to raise the debt ceiling will send a lot of
people home hungry, those people will certainly _not_ be the bondholders.

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gte910h
The issue is credit ratings. The agencies which set them may view this as a
selective default.

I too doubt they'll miss a debt payment (our debt payments aren't hard at all,
they were worse in the 90's), but I am fearful of the SS cutoff that might
happen being considered as a Selective Default.

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wlievens
Amusing read, but the "leaves scars" part is completely unsubstantiated in the
text itself, except for a vague allusion in the last paragraph.

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RuadhanMc
Yes, it leaves scars only in the sense that the event has been recorded by
historians. Interesting story, but bad title.

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georgieporgie
For those concerned about the current debt issues, the last two Planet Money
podcasts of were fantastic, and rather reassuring:

[http://www.npr.org/rss/podcast/podcast_detail.php?siteId=944...](http://www.npr.org/rss/podcast/podcast_detail.php?siteId=94411890)

