Wednesday, June 8, 2011

Insane Default

I read that the Republican Party in America is “thinking” of forcing the U.S. government to go into a “brief default” on its debt as a way to force U.S. President Obama to cut spending. To any American readers of my blog, I will say this; the Republican Party is crazy!

Honestly they are because there is no such thing as a “brief default”! If America defaults on its debts, does anyone truly believe nothing will happen? The idea of a technical default, delaying interest payments for a few days, is insane for America because no one buy U.S. Treasury for its returns; people buy U.S. Treasury bonds because it’s safe. America is a safe haven but if America default, then it will no longer be considered a safe haven and people will dump it in a hurry. If its no longer safe, then the U.S. Treasury bills are useless.

So there is no such thing as a “brief default” for America. If the United States cannot make interest payments on its debt…the consequences could be far reaching to say the least.

No comments: