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Monday, October 14, 2013

Thanksgiving in Canada and Turkeys in Washington...

Today is October 14th which is Thanksgiving in Canada..

And if we were from the Great White North (which we're not) we'd be most thankful we didn't have this US President and Congress running our nation..

But we're not so it is what it is..

T-minus 4 days and counting to the big nothing non-event of 2013-- the dramatic globe-shattering 'default' where we do absolutely nothing of the sort..
Read an article over the weekend that stated the last modern industrial nation that defaulted was Nazi Germany in 1933.   We'll address that one in a moment..

Guess the authors didn't think the former Soviet Union or Argentina are 'modern' or 'industrial' since it did so in 1989 and 2002 respectively.

Here's the truth:

1) US has no intention on defaulting even if it misses its payment due date

2)  Even if it did, it wouldn't be the first in modern times..
Below are 2 charts.. you may need to double-click them to expand to visible size.

The charts show all the nations that have defaulted between 1920 -1980, and 1980 until 2003..

There's a lot of them!  Some.. repeat offenders..

So sorry to break it to the US media but in cyberchat-speak,

"Save the drama for yo'r mama... Been there, done that...'

Now, lets' address Germany's 1933 default like mature adults..

There's a taboo that one can never say anything remotely positive about the Nazi regime without it seeming that the speaker is condoning the ideologies of hate espoused by the party and/or Hitler as its leader.

This is silly..
The Nazis were 100% evil and Hitler was a monster. They caused the deaths worldwide of 50 million people, the world is a better place without their existence and we have our WWII vets to thank for their service and sacrifice..

That said, Germany was 100% correct to have defaulted on their debts and as history showed, not only were they not punished by the financial global community for such a brazen move, but rewarded for their action.

The post WWI Treaty of Versailles had imposed upon Germany a crippling and humiliating reparations debt upon the newly formulated Weimar government which they could never seem to get their nation's finances in order while repaying..
During the mid 1920s their currency devalued to such extremes that the paper was utterly worthless and ultimately the entire currency had to be re-pegged to avoid ultimate collapse.

So Hitler comes into power in late 1932 and says in basic layperson speak:

 ' You expect me to keep paying this humiliating and cripling debt when I wasn't the one who signed the Treaty or agreed to its terms??.. Fuck you..  I dare you... Make us pay!'

So the global banking community was in horror.  And because nations like France and Britain stopped receiving the blood money, they could no longer re-pay what they owed to the US govt and banks..
~ 'Tackled at the 55 yard line.. 3rd down.. time to punt...'

So what happened to Germany?  Was Hitler ostracized from the lending community?  Did Germany's finances collapse upon itself??

Hardly..

The greedy soulless banks of the day simply established new lines of credit and repayment to Hitler while the industrialists like that piece of shit Henry Ford jumped at the chance to do business with the Nazi government, who's ethnic views many embraced..
~ Go Calgary Flames!

So Germany actually was able to grow economically and militarily as a result of defaulting..

And while that was terrible for the rest of the world, it was wonderful for Germany; it was the right decision for them at that moment in time..

And if the US defaulted (which we will not do since no one in Washington possesses the intent) little to no harm would befall us.

As it is, we can continue paying our debts without this ceiling..
Every month we take in more than $200 billion in revenue and the interest on our debts is somewhere in the low $30 billion..

So we're fully capable of paying our bills no matter..  And even if not, we can print the money and/or have the Fed earmark some $$ to us, or loan the government via T-Bill purchases

Its all bullshit.

And lets say we missed our payment window entirely, what really happens next??  Well, let's think of it and bring it down to an individual level.
You have a credit card bill for $10k and you don't have the $300 min payment much less the principal..  So what happens?

Well for one thing, you get a bill the following month i.e a new opportunity to pay along with fines and interest accrued.

And if you really didn't want to pay?

Someone would probably call you to negotiate an easier payment plan or establish a buyout where you pay a percentage of the overall total then the debt is settled.
You would only have to file the differential on your 1040 statement as income..

But the world doesn't collapse and life still goes on..

Same with the US debt

As we say repeatedly, its all about securing future credit/borrowing or in simple understandable terms, making sure your drug dealer is getting paid on time so he doesn't cut the line of credit preventing you from the coke, crack or heroin hooked on..

Really no different..the US is heavily addicted to borrowing.

So three days left and counting until Thursday the 17th...

The day in 1777 the British surrendered to the Colonial forces at Saratoga, NY  and where in 1781 Cornwallis surrendered to Washington at Yorktown..

And where (potentially) the US populace fully surrenders its ability to construct independent thought where its government is concerned