Krugman: Failure To Raise Debt Ceiling 'Not At All' Unthinkable

New York Times:

In about a month, if nothing is done, the federal government will hit its legal debt limit. There will be dire consequences if this limit isn’t raised. At best, we’ll suffer an economic slowdown; at worst we’ll plunge back into the depths of the 2008-9 financial crisis.

Read the whole story: New York Times

Comments

[douglas bowyer]

01:41 PM on 08/01/2011

We are in default now and have been for a long time. When people say OH NO we could default. They are either an idiot or they are trying to scare you, because they know that the bulk of poor people are ignorant. They say never has the U.S. defaulted, I say BS. Define defaulted please. It is the liquidation of assets to pay debt. Like when FDR forced the American public to sell there gold to them for 25 dollars an ounce, then sold the gold to foreign governments for 35 dollars an ounce to pay there debts. The liquidation of the publics property for the purpose of paying debt is DEFAULT! And if you have to print money to pay debt, it is DEFAULT!

[Kenz300]

02:01 AM on 07/08/2011

Quote --- " Republicans believe, in short, that they’ve got Mr. Obama’s number, that he may still live in the White House but that for practical purposes his presidency is already over. It’s time — indeed, long past time — for him to prove them wrong."
--------------------------------------------------------------------------------------------

Democrats need to speak up and speak out.

[Todd Sullivan]

02:29 AM on 07/06/2011

personally, i think obama loses the next election if he caves in to republicans on this. the problem is that if he caves in, i think most democrats will figure that it makes no difference if he's in the white house or if a republican is in there because it's the republican agenda that's going to be policy anyway. i just don't see him winning in 2012 if he doesn't fight for this one.

[ScarlettMocha]

01:01 PM on 07/05/2011

Excellent point! President Obama should have secured the debt ceiling rise when he agreed to extending the Bush tax cuts for the wealthy (foresight and vision).

STOP CONCEDING to their ridiculous demands! IOW, grow a pair.

[dmsdzinr]

12:31 PM on 07/05/2011

This is potentially Obama's Last Stand. IF he caves his base will defect, NOT to vote for Republicans, just NOT to vote for him. I cannot understand why the President nor the Democrats always FEAR the GOP??!!! Stand up to them, expose them for what they are doing and THEY will crumble like a House of Cards.

[Papa Tightwad]

11:10 AM on 07/05/2011

I've just completed a scientific study that proves a direct correlation to Krugman's hot air generated from babbling and global climate change. Save the planet folks. Cork Krugman!

[combot1]

10:49 AM on 07/05/2011

Always best to go down fighting than Nevilling an agreement. This is the Prez's last stand.

[Mexeconomia]

08:47 AM on 07/05/2011

The difference with the 08 crisis is that the dollar would not be the safe haven... There would be a massive dollar devaluation... Inflation up ... It would take years for the USA to normalize while loosing all authority in the world... By the way alike dynamics happened to Spain, Great Britain and every empire previous....

[GEM-592]

03:50 AM on 07/05/2011

Great job Congress, Obama, Bush, everyone. Give yourself and hand. Best of luck sticking this situation to the middle class, poor, and underprivileged so you'll have booster support in the next election cycle.

[GEM-592]

05:08 AM on 07/05/2011

"a" hand ... this is fun ... I should try do it before clicking the "post" button.

[capitaldysfunction]

06:21 PM on 07/04/2011

If Obama had let the Bush tax cuts expire, the deficit problem would essentially be over. And what did Obama have to do to let the Bush tax cuts expire? Nothing. Instead he let the Republicans continue them, then he argued that more tax cuts would not be a good thing, a hypocritical statement to say the least.

Of course, criticising Obama on this website is not a good idea. But if he wants to talk like a Democrat and act like a Republican, its not like calling a duck a duck, its more like calling him a corporate sellout. Words hurt. But actions speak so much louder than words and I call them like I see them.

[JTCan]

11:05 AM on 07/05/2011

He did what he had to do to keep millions from loosing much needed unemployment benefits and other things that benefited the middle class. He made a hard choice to do that and explained himself very well. Unfortunately the media twists it to make him look bad, ignoring all the good that did happen.

[ScarlettMocha]

01:07 PM on 07/05/2011

Bottom line, he didn't get enough. I still like him and would vote for him (considering the alternatives). But I have to agree, it would have been better policy to include the debt ceiling rise as part of extending the Bush tax cuts.

If President Obama allows the republicans to gut medicare/medicaid ( and G0d only knows what other safety nets) I will be very disappointed in his leadership. I'm scheduled to campaign for him, and I need meat for the base. I don't want to spend my time coming up w/ excuses for him.

[capitaldysfunction]

06:01 PM on 07/05/2011

Many states did not extend those unemployment benefits anyway. It would be bad though to let Obama take some responsibility. Wait until the lack of government revenue from the continuation of the Bush tax cuts comes home to roost...the poor will lose a lot more than you enumerated.

[Raccoon1]

02:37 PM on 07/04/2011

Is this the right time to be doing this? I don't think so. At a time when we need more money to circulate, taking money out of the system doesn't seem logical.

[deckercat]

11:01 AM on 07/04/2011

if only one side compromises, isn't that just capitulation?

[Genosse Joe]

11:53 AM on 07/04/2011

If government would stop printing fake dollars, we will all benefit.

If government would print another $2 trillion of them, dollar will collapse and take the whole our economy down with it.

[Abnormal Wrench]

11:54 PM on 07/04/2011

We are currently fighting deflation.

[codycap]

04:00 PM on 07/05/2011

Japan shows how to defuse debt time-bomb
By Ellen Brown

The first Great Depression led to totalitarian dictatorships, war to consolidate power, and concentrations of capital in the hands of a financial elite.

The trigger was a default on the global reserve currency, in that case the pound sterling.

The US dollar is now the global reserve currency. The concern is that default could create the same sort of global panic today.

We now know that a government can go quite far into debt without a dangerous level of price inflation occurring - much farther than the US has gone today.

Besides World War II, when US debt was 120% of GDP, there is the remarkable example of Japan. Japan has retained its status as the world's third largest economy, although it has a debt to GDP ratio of 226% - and it is still fighting deflation.

Nothing to fear but fear itself

We have been frightened into believing that government debt is a bad thing, but nearly all money today originates as debt.

''That is what our money system is. If there were no debts in our money system, there wouldn't be any money.'' --Eccles

Shrinking the public debt means shrinking more than just the services the government is expected to provide.

It means shrinking the money supply itself, along with the ability to provide the jobs, wages and purchasing power necessary for a thriving economy.””

[Each1Teach1]

09:57 PM on 07/03/2011

It is sad for a political party to be so mean-spirited and self serving that it would put millions of people in dire straits just so it can impose its ideologies upon a country. But, then again if you are going to overpower a spirited populace, then the best way to do that is to kick the people while they're down. I used to think that the Republicans made absolutely no sense, but I see now that besides being organized they are absolutely determined to remake the country into a Christian version of Iran. And, if they get their way, then that is how I will know that it is time for me to bid America a fond farewell. Perhaps it is true that all good things must come to an end.

[Elijah A Alexander Jr]

06:38 PM on 07/03/2011

There are enough taxes to be collected from corporations which aren't being (Article 1, section 8), there are 2 wars which does nothing but use US taxes (Preamble), the military pays as much as 6 times the street cost for tools, there's so much red tape that nothing gets done, any department which has excess spends it rather than returning it to the treasure and we are making crowd control weapons, spraying chemicals in the air and just being financially wasteful. Those funds alone are enough not to borrow money for the budget.

So long as the US is borrowing money Wall Street sells the credit to get richer while the nation get poorer. It's time this nation stop being controlled by Wall Street, it's time the government regulate Wall Street (Article 1, section 8). So it is true, "failure to raise the debt ceiling [is] 'not at all' unthinkable," to be honest, it is possible not to raise it without dire consequences.

[codycap]

04:05 PM on 07/05/2011

Asia Times Online

This crisis has an exit
By Ellen Brown

http://www.atimes.com/atimes/Global_Economy/MF07Dj03.html

North Dakota is the only US state to have escaped the credit crisis unscathed. In 2009, while other states floundered, North Dakota had its largest budget surplus ever. In 2008, the Bank of North Dakota (BND) had a return on equity of 25%. North Dakota has the lowest unemployment rate in the country and the lowest default rate on loans. It also has the most local banks per capita.

North Dakota has had its own bank since 1919, when farmers were losing their farms to the Wall Street bankers. They organized, won an election, and passed legislation. The state is required by law to deposit all its revenues in the BND. As with the sustainable model of the bank of colonial Pennsylvania, interest and profits are returned to the government and to the local economy.

A growing movement is afoot in the United States to copy this public banking model in other states. Fourteen US state legislatures have now initiated bills for state-owned banks.

Publicly owned banks have been successfully established and operated in many countries, including Australia, New Zealand, Canada, Germany, Switzerland, India, China, Japan, Korea, and Malaysia. In the United States there is currently only one state-owned bank, the Bank of North Dakota.

http://www.atimes.com/atimes/Global_Economy/MF07Dj02.html

This crisis has an exit
By Ellen Brown

[Elijah A Alexander Jr]

05:35 PM on 07/05/2011

Thanks for the link although I knew about ND's escaping the nation's pinch because of the requirement that all people in ND to put their money in its own banks. This government doesn't even have its own bank, yet the constitution's Article 1, section 8 require us to coin our money, which the privately owned Federal Reserve does.

There are many ways of escaping the need to borrow money. There were once two places called "Black Wall Street" because the people had their own banks, one was in the community once called GAP of Tulsa, OK, which the US bombed destroying it in the 1930's, and another in Missouri which went broke working to defend against that happening to them. They were Black communities in the US which were rich but Blacks are not allowed to organize like that anymore, neither is this nation.

So, yes, there's no question that we are able to overcome the state of the nation without raising the debt ceiling.

[alan2a]

03:03 PM on 07/03/2011

And I'd say the Republicans are absolutely correct. Obama will cave and in effect his Presidency has been over since he wimped out on the stimulus package and ignored the economy and jobs to focus on a massive giveaway to the insurance industry in the form of a sham HCR. Obama couldn't or wouldn't draw a line in the sand if his big toe grew as long as he is tall. His obsessive need to compromise, obviously related to a phobic aversion to any kind of serious adversarial confrontation has to be related to his childhood. The only paramount principle that Obama represents as a person is to never stand firm for a principle so he can claim as a pitiful rationale that it was the adult thing to do. When in fact it is the cowardly thing to do.