The Waterfall at the Edge of the World
- by astranavigo
- Posted on 22 July, 2011
“I will not vote to increase the debt ceiling.”
— Michele Bachmann
As I write this, the United States is a little over a week away from the financial equivalent of Hiroshima. Absent a miracle now, the U.S. will fail to raise the debt-ceiling (something which Congress is required to do if they want to go on borrowing money), triggering a default on interest payments on current debt and bringing the entire American government to a hard stop.
From Iraq and Afghanistan to the local National Guard armory, American military personnel will not be paid. Social Security checks will not go out; domestic organizations from the Post Office to the local Department of Agriculture and FDA inspectors will cease work.
For their part, the Tea Party types in Congress have made it clear (Bachmann being their unofficial leader-of-sorts) that they will not vote to increase the debt ceiling, no matter what sort of ‘deal’ gets made in Congress between now and then. They’ve not made a statement regarding perceived consequences; perhaps they really just want to see the pretty fireworks when it all implodes, or (most likely) they just don’t fucking know any better.
Meanwhile, the Federal Reserve is making contingency plans – there are at least some who see the truth, and they’re engaged in the moral-equivalent of the citizenry who spontaneously went to the outskirts of Saigon to dig tank-traps in the spring of 1975 while their government told them to ‘remain calm’.
I don’t know whether to laugh or cry.
So, what are the consequences? Let’s take a look.
First, our debt-rating would be downgraded. Already, three credit rating agencies have stated flatly that our coveted AAA debt-rating could drop to the status of junk within days.
Second, the stock market could collapse. (Now, I’ll warrant that this has less impact on Joe Average than you might think – most 401K’s are history, thanks to the recession; the only people who own stocks are that sliver of the middle-class which survived, and the wealthy) – however, there’s an immediate effect on things like employment when a company’s stock loses 90% of its value overnight.
Think an official unemployment rate of 9+% is bad? Try 30%.
Third, you’d start seeing dominoes fall in a hurry. Stocks get hit; employment gets hit; everything from the local grocery to the corner sandwich-shop go out of business. In fact, most things would grind to a halt.
Fourth, everything in America would likely double in price overnight. Stating that we’re no longer going to pay our bills is sort of the ultimate ‘fuck you’ to the rest of the world. Anything we get from overseas (which is a lot) wouldn’t show up for fear of nonpayment; anyone sitting on goods would likely hoard them against payment in something which had value (either trade, or gold/silver).
Speaking of gold and silver, count on those going through the roof. Gold is now at $1,500+/ounce; that set an official dollar-for-dollar record recently, but not a real, adjusted-for-inflation record – it’d have to reach $4,500+ in today’s dollar to do that. There’d be nothing to prevent that from happening.
By the time all of these things happened – and they’d happen at unholy speed – we could start looking for serious civil unrest. (If you like the genre of future-history, you can go here and read a piece I wrote this past spring regarding just such a scenario – it begins with a default by one of the nation’s largest states).
There’s a better-than-even chance of balkanization if we get to that point – and there’d be little the government could do to stop it, because the military, National Guard stipends, and most of the nation’s police-forces’ salaries would stop immediately. (History’s on my side here with plenty of examples of soldiers not showing up for the particularly dangerous work of putting down domestic insurrections when they’re not getting paid.)
At this point, it’s anyone’s game. Most people who start revolutions expecting to have a semblance of control don’t quite realize that when ‘power lies in the streets’, everyone is a leader – and when they all show up to the party, no one is in charge.
Obama has the habit of entertaining nuclear-options (remember, he and Bernacke cooked up the whole quantitative-easing thing late last year as a means of injecting money into the economy when the banking bailout didn’t work) – and it’s quite possible he could simply invoke the Constitution and his oath to ‘preserve, protect and defend’ by way of issuing an executive order to raise the debt ceiling.
While this would make the problem go away – at least, until the next election – it would send a clear message to the rest of the world that our government was permanently broken; cries of ‘Dictator!’ would be heard from the far Right, and in this case, they’d be partially correct.
Polarized and incapable of making a decision, Congress may well be handing Obama something he doesn’t want and no sane person would contemplate unless disaster was looming. With their simplistic and skewed understanding of economics and politics, the Tea Party faithful in Congress are behaving now like a gaggle of schoolboys in a room ankle-deep in gasoline who’ve all-of-a-sudden decided that playing with a lighter is a good idea. A default at this point would cost the American economy 10% of its GDP outright, sending us into a depression-with-a-capital-‘D’. Obama is losing his support-base over his bizarre stance on Social Security and Medicare, and now Bachmann and her Teabagger minions are already clapping, anticipating the fireworks.
Meanwhile, no one is at the helm of the Ship of State – and no one hears the vague rushing sound of the waterfall at the end of the world.
W.D. Noble: American military personnel will not be paid. Social Security checks will not go out; domestic organizations from the Post Office to the local Department of Agriculture
According to an article in today’s Forbes, the debt ceiling will probably be raised, but it will only delay the ultimate fall of the dollar by two years at the most. Their message was clear; don’t be caught holding dollars when this happens. I see it as more of an over-extension than an over-spending. The U.S. Government has spread itself too thin, invested in too many manipulations to create a dependency on Government sponsored agencies; beginning with the militia, and breaking down into invasive overseas policies, a burgeoning court system, a dysfunctional and extremely expensive D.E.A., Child protective services that do everything except protect the well-being of children, family laws that remove the power from families and creating a dissemination of familial/social community networks through the interference of municipal, state and federal government codes. When you seek to create a society of government dependents; and i am not talking about welfare and unemployment and social security recipients; i’m talking about the entire system of law enforcement, municipal, State and federal employees, education and social service employees; you are talking about the majority of the work force. All that you have left are those who work for a corporation, a private practice, a business or self employment.
Those who work for a government funded job comprise the bulk of our middle class who take vacations every year or two, who drive nice vehicles, who own homes, who eat out twice a week. Yes, it would certainly send the walls crashing down.
Will, you mentioned that most soldiers won’t fight without a paycheck. Actually, i think that’s a good thing. Down-sizing our active military would not only save the US money, it might improve its image with the International community. I also wonder how many legislators would be willing to remain legislators if their salaries and per diem rates were slashed? It might dwindle down a little on corruption in politics.
Essentially, we need to decide which services are the most important, and what type of payment is a fair wage. The ones who advocate cutting teacher’s salaries, closing libraries and pinching those social security checks (that come out of your income) are the ones making one hundred fifty thousand a year, plus. Why are their job capacities so very valuable? I say, if they can’t live on a middle class wage, they need to get out of government and find another job.
[Quote=Article] Most people who start revolutions expecting to have a semblance of control don’t quite realize that when ‘power lies in the streets’, everyone is a leader – and when they all show up to the party, no one is in charge.[/quote]
That’s the idea – I don’t know about you, but I’ve had it with the notion of a ruling class. A little anarchy in the steets doesn’t frighten people like me in the least: it’s the rising fascist police state that scares sensible people shitless, not a little civil disorder…
Well, I’m actually supportive of order – because along with it come things like the ability to walk down the street without being shot for random reasons.
Further, when there’s ‘order’, a semblance of ‘peace’ usually follows – and, in that vein, it means that there’s usually things like running water, lights, paved streets – y’know, that stuff.
Third, there’s never any such thing as ‘a little civil disorder.’
You’ll note that I didn’t say squat about a ‘ruling class.’ We’ll probably agree on this – I’m frankly surprised (as I’ve said before, elsewhere) that the mansions of the uberwealthy from Laguna Niguel to the Hamptons haven’t been torched to the ground by howling mobs of 99’ers; that the arseholes in charge of this economic goat-rodeo aren’t hanging in iron cages at the corner of Wall and Broad Streets, and why there isn’t a guillotine or a ten-man gallows on the Capitol Mall in Washington.
Americans have the ability to put up with a lot of stuff; most of it bad. We’re that way, because as Steinbeck once said, “…Socialism never took root in America, because Americans don’t view themselves as oppressed masses; simply as temporarily embarrassed millionaires.”
When you actually believe that the people at the very top of the economic food-chain are people whose criminal behavior is to be emulated because you, too, may someday join them in their exclusive economic club, then by definition you’ll put up with a lot of crap.
No sane person wants to see the kind of civil disorder that accompanies an economic meltdown. However, as I stated above, Congress may be giving America no alternative – because half of Congress lives in another reality; the kind where shutting down the government is a good thing.
They either genuinely want to see the fireworks – or they’re so oblivious that they don’t see the consequences (Bachmann’s unilateral statement that she would not vote to increase the debt ceiling, no matter what, is proof of that last statement).
Barring a miracle, Obama will have to invoke the 14th Amendment to increase the debt ceiling.
Meantime, no one is talking about getting the economy moving again, with the attendant job-creation which in turn generates the revenue to service a national debt – this is the real problem, and it’s not being discussed. At all.
So, start the popcorn. I’ll bring the soft-drinks.
It’s going to be a hell of a movie, no matter how it ends.
@ W.D. Noble,
Personally, I see such things as “public safety” and “peace” as luxuries rather than necessities – they are certainly nice, but I don’t see them as worth my sovereignty. And right now the only game in town to provide such things happens to be the ruling class (composed of primarily of politicians and businessmen at the moment), which leaves me with three options: accept the authority of the oligarchs (which is unthinkable for me), live with the consequences of civil disorder (which I *can* do if I needed to – it’s not the ideal situation, but I have less to fear from a mob of regular people than a squad of well-trained agents of the police state) or I can go somewhere far removed enough from the fray to set up my own order (the option I intend to exercise when the system finally fails).
The way I see it, the tolerance of the working classes will reach its breaking point within the next decade or so – after all, people with no work and swimming in debt become more unstable the longer they remain in that condition. You’re right about one thing: there certainly will be one hell of a show…
decentpoints there. I did my own search on