[mikemike]

So in other words, the US has never defaulted in the modern era.

Good to know, thanks.

Another way to look at it...

1782-1862: 80 years
1862-1934: 72 years

Maybe our country goes through 70-80 year cycles.

1934-2011: 77 years

[jeffkrol]

t.

Suffice it to say, in both cases the bailouts overly generous and disgust me.

Why?

It's not real money and the US would have had to pick up GM's pensions or go back on it's word at the very least, break a contract at the most......

At all three companies, contributions to the VEBA are now partly in cash and partly in stock, which means that available funds to pay retiree health care benefits will be impacted by the financial performance of each firm. Benefit levels will also be affected by the rate of health care inflation, and the progress achieved in reforming the overall U.S. health care system, which remains out of step with the universal, cost-effective systems that are in place in other industrialized countries.

An 11-member board of directors, consisting of six independent directors approved by the courts, and five UAW designees, will administer the VEBA, although accounts for retirees from each company are separate and cannot be intermingled. The VEBA trust, not the UAW, will hold stock received from each company, and has the right to nominate – with UAW approval – a member of the board of directors at GM and at Chrysler.

Consistent with sound fiduciary principles, the VEBA trust will not seek to be a long-term holder of stock in individual auto companies. Instead, the trust is expected to sell shares of individual companies and diversify its assets in order to provide the greatest possible level of protection for UAW retirees.

VEBA directors now have the authority to modify the benefits available to UAW retirees to match available funding sources as of Jan. 1, 2010, when the trust takes over responsibility for paying benefits.

Changes in the VEBA structure are subject to court approval.

All affected UAW retirees and surviving spouses will receive, by mail, detailed notices of the proposed modifications.

VEBA funding modified | UAW

See Mike now they can tank again.. in a default..

[jeffkrol]

Another way to look at it...

1782-1862: 80 years
1862-1934: 72 years

Maybe our country goes through 70-80 year cycles.

1934-2011: 77 years

Maybe I can use my magic wand to find oil...........

[mikemike]

Technically the US "can't run out of money" period..


no argument on any side of the economic schools...

The rest is debatable.......

The idea of default isn't necessarily about running out of money though. It is about not fulfilling financial obligations of a contract such as a bond. Whether that failure is a choice, an accident, or unavoidable it is still a failure and still a default.

[mikemike]

Maybe I can use my magic wand to find oil...........

Good luck with that. The Obama administration won't let you drill for it if you do.

There was a report saying that if the administration was approving permits at historical the historical pace permits were approved, it would created almost a quarter million US jobs over the next year.

[shooz]

bailouts for both Detroit and Wall Street

Why do you lie?
GM and Chrysler were not bailouts.
Fiat will not pay it all back.
You still haven't said how much TARP was paid directly to ANY union, or VEBA for that matter.

[jeffkrol]

The idea of default isn't necessarily about running out of money though. It is about not fulfilling financial obligations of a contract such as a bond. Whether that failure is a choice, an accident, or unavoidable it is still a failure and still a default.

Mike, how do you NOT have the ability to pay off a debt when you PRINT the money (or credit a bank)..... Do you REALLY believe the world will just stop using US dollars?????

Maybe in the far far future.......

How does that go.. FULL faith and credit........ don't see gold,silver,slaves ect. Do you???

[shooz]

Good luck with that. The Obama administration won't let you drill for it if you do.

There was a report saying that if the administration was approving permits at historical the historical pace permits were approved, it would created almost a quarter million US jobs over the next year.

More lies?
We no longer have oil at historic levels.
Fracking is on the increase.

[mikemike]

Mike, how do you NOT have the ability to pay off a debt when you PRINT the money (or credit a bank)..... Do you REALLY believe the world will just stop using US dollars?????

The US might technically have the choice to print their way out of the problem but whether or not the people faced with the decision see that as a valid choice might make it unavoidable... That will be a detail for the historians to work out, so I really guess it comes down to who the victor is.

GM and Chrysler were not bailouts.
Fiat will not pay it all back.
You still haven't said how much TARP was paid directly to ANY union, or VEBA for that matter.

If I don't know an exact number isn't a sufficient answer for you... I don't know that you will be satisfied. I am not too proud a person to admit when I am uncertain of something. Whether you want to split hairs about the directness that is up to you, but without a doubt the UAW and its members was the intended beneficiary and ultimately they are the largest beneficiary of the government intervention made into the US auto industry. As I recall the steps of the mechanism were like this, the companies with the support and urging of the unions and the incoming obama administration went to the bush administration and got huge loans out of the TARP funds. The new obama administration came in and worked out pre-packaged bankruptcy deals for GM and chrysler which allowed the UAW VEBA claims to step over the claims of senior secured creditors who legally should have been made whole or allowed to foreclose on the companies' property, plants, and equipment before the VEBA was compensated. GM and Chrysler were given huge sums of government money from the TARP funds again to get back on their feet.

You can argue over the specific figure and we may never know the specific figure, but there is no point in arguing that the government and the bankruptcy courts did not give extra special treatment to the union's interests in this case. If you don't want to call the billions spent on this a bailout, what would you like to call it?

[Workingdog]

These "defaults" were not caused by one parties desire to destroy the other party in order to position themselves for the next election.

I thought you would notice that.

Shooz, that's hilarious. I really can't tell which party you're referring to there. If you ask me, they both s*uck !!

[redrockcoulee]

The US might technically have the choice to print their way out of the problem but whether or not the people faced with the decision see that as a valid choice might make it unavoidable... That will be a detail for the historians to work out, so I really guess it comes down to who the victor is.



If I don't know an exact number isn't a sufficient answer for you... I don't know that you will be satisfied. I am not too proud a person to admit when I am uncertain of something. Whether you want to split hairs about the directness that is up to you, but without a doubt the UAW and its members was the intended beneficiary and ultimately they are the largest beneficiary of the government intervention made into the US auto industry. As I recall the steps of the mechanism were like this, the companies with the support and urging of the unions and the incoming obama administration went to the bush administration and got huge loans out of the TARP funds. The new obama administration came in and worked out pre-packaged bankruptcy deals for GM and chrysler which allowed the UAW VEBA claims to step over the claims of senior secured creditors who legally should have been made whole or allowed to foreclose on the companies' property, plants, and equipment before the VEBA was compensated. GM and Chrysler were given huge sums of government money from the TARP funds again to get back on their feet.

You can argue over the specific figure and we may never know the specific figure, but there is no point in arguing that the government and the bankruptcy courts did not give extra special treatment to the union's interests in this case. If you don't want to call the billions spent on this a bailout, what would you like to call it?

You do understand that other governments were involved in bailing out the auto industry and at least one of them would have no reason to support the incoming administration. Additionally there is at least one other auto union that was involved and at least in the past was hostile to the UAW. And Sweden assisted both its manufactures and at least three European countries were in the process of doing the same in their respective countries. At least two of the above mentioned have or had right wing governments.

Not sure if Canada, Sweden, France Germany or Italy assisted or was about to assit auto companies because Obama was elected your president.

If the money is all paid out is it still a bailout? Are other loans also bailouts? I know that in Canada the federal and provincial governments often back loans to corporations in certain situations if deemed in the public interest and less likely to be covered by regular loans. Chrysler was 'bailout' once before in the 80s when govts on both sides of the border were conservative. Is it a socialist agenda (of course one would need socialists to have such and you may have as many as three elected and certainly not in the oval office) or sound business/political practice.

[Nesster]

The US might technically have the choice to print their way out of the problem but whether or not the people faced with the decision see that as a valid choice might make it unavoidable...

Fed Can't Rescue Treasury from Debt Debacle

Could the Federal Reserve bail Congress and the Obama administration out of their standoff over the debt ceiling? No way, no how, according to recent testimony by the Fed chairman and people who study the central bank.

With the government about to run out of cash to pay its bills without an increase in the legal limit on how much debt it can issue, speculation has run rampant in financial and political circles that the Fed and its chairman, Ben S. Bernanke, could use their almost unlimited ability to print money to find a way out.

Fed officials are monitoring the situation, and Bernanke and William C. Dudley, president of the Federal Reserve Bank of New York, met with Treasury Secretary Timothy F. Geithner late last week to discuss options. The Fed acts as the “fiscal agent” for the Treasury, a role akin to being the federal government’s banker.

But despite that role, considerable legal restrictions on what the Fed can do make it hard to imagine the central bank being able to address the immediate crisis. And there is no appetite within the independent-minded Fed to intervene in a fundamentally political dispute, particularly one as polarizing as how much the government should spend and how it should pay for it.

“I want to eliminate any expectation that the Fed through any mechanism could offset the impact of a default on the government debt,” Bernanke said at a congressional hearing this month.

There has been speculation that if a downgrade in the U.S. credit rating scared investors away from Treasury bonds, the Fed could step in and buy them. This approach has many problems.

For one thing, the Fed is legally prohibited from buying debt directly from the Treasury. Even if it were to buy debt on the open market, which it is allowed to do, it would not help the fundamental problem of the government lacking the legal capacity to borrow enough money to pay its obligations.

Finally, the Fed’s ability to buy and sell Treasury securities is a tool of monetary policy — the way it increases and shrinks the money supply to affect economic activity and price levels. Central bankers seek to guard their independence and Fed leaders probably would increase their purchase of Treasury bonds only if they expected the unemployment rate to rise or inflation to fall lower than their 2 percent target.

The Fed’s policy committee would resist any step meant only to make up for investors losing their appetite for U.S. bonds. When a central bank “monetizes the debt,” or prints money to lend to a government, it often loses its credibility as being politically independent and high inflation frequently follows.

The Fed probably would be poised to fulfill its normal responsibilities of offering emergency loans to banks that need help if disruptions in the Treasury bond market created a cash shortage.

“If it looks like the financial system is freezing up, the Fed has a mandate to maintain financial stability and could step in to keep things from really turning bad, but that’s if the markets really took things very negatively,” said Peter Hooper, chief economist at Deutsche Bank and a former Fed staff member. “They would not want to step in to try to ease the policy impasse on fiscal policy.”

[mikemike]

But despite that role, considerable legal restrictions on what the Fed can do make it hard to imagine the central bank being able to address the immediate crisis. And there is no appetite within the independent-minded Fed to intervene in a fundamentally political dispute, particularly one as polarizing as how much the government should spend and how it should pay for it.

So basically implementing an economic policy anything like what MMT proposes would require legislation to pass which would make this debt ceiling debate look like a resolution to honor the US Women's World Cup Soccer team.

[Nesster]

a resolution to honor the US Women's World Cup Soccer team

But what about the constitutional amendment to repeal Tiltle IX?

[newarts]

So basically implementing an economic policy anything like what MMT proposes would require legislation to pass which would make this debt ceiling debate look like a resolution to honor the US Women's World Cup Soccer team.

Well put!

The "debt is bad" mantra has been repeated so often that debt's wickedness has made it a demon to destroy even at the risk of everything else!

It will take a long time for people to again realize that no food is not a good trade for no debt.

Go Team Go!