There are two very different scenarios with two very different sets of consequences. An actual default would be disastrous. It would be far worse than Greece, Spain or Portugal. It would probably lead to a full scalle world wide economic collapse. Nobody is talking about a default on our debt.
In contrast, if Republicans ( and fiscally responsible Dems ) refiuse to go along with raising the debt limit , it will not be that bad. Revenues on hand plus incoming revenues would enable us to pay interest on existing debt.
You'd never know it by listening to J.P. Morgan or Goldman Sucks. J.P. Morgan has issued a report predicting financial Armageddon unless Congress keeps borrowing as before. In fact, borrowing new money to pay off old debt is exactly how Greece, Portugal, Spain and Italy got into trouble. So did NYC in the 1970's. This report is actually being taken seriously by people who ought to know better. For one thing, nobody is looking at Morgan's vested interest in the staus quo. Jamie Dimon is a commited Democrat. He and Geithner are BFF's and Tim is leading Obama's effort to get the limit raised without any spending cuts. Obama's Chief of Staff , Bill Daley used to be Morgan's chief lobbyist.
Lloyd Blankfein and Gary Cohn at Goldman Sucks are also big-time Dems. Goldman economists tried to tell us with straight faces that $61 billion in budget cuts would directly lead to another recession. While Goldman may be the worst, every major firm's economic department has supported government stimulus spending and the policies of Helicopter Ben Bernancke. Both policies have been "berry, berry good " to Wall St. ( A salute to my old friend Chico Escuela of SNL.) Banks have had continued access to cheap money regardless of whether they lend it out to Main Street. Plus they are making big money underwriting bonds.
It is more than passing strange that Wall St. firms are predicting doom if the debt limit is not raised while not saying a word about how two years of zero interest money has fueled inflation and soaring commodity prices. Expect more doomsday talk from the same Wall Street Whiz Kids who made huge bets that real estate prices would keep rising forever.
Obama has been just as bad. He is in full panic mode as he tries to scare the country into even more borrowing. Hopefully the Republicans will really call his bluff this time and not blink like Boehner et. al. did the last time.



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