politics

Spectre of U.S. debt default looms at Asian summit

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One scenario would be a U.S. debt downgrade, after which, if it's bad enough, China and other countries would pull their money out of dollars, which would in turn have repercussions everywhere. A downgrade of some kind is likely, I think.

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yeah there's not going to be any default - churchill said it best “We can always count on the Americans to do the right thing, after they have exhausted all the other possibilities.”

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A minority of Americans, but a majority of Republicans who turned out to vote Republican in those Congressional districts where Republicans were elected, would prefer to see a debt default out of spite. Read some Tea Party websites and you will see most comments about speaker Boehner denigrating him as a Democrat in disguise who should be removed immediately. Scared Boehner has committed himself to regaining Tea Party support at all costs, whatever is takes, perhaps even if it means leaving it up to Obama whether or not to try to use unprecedented special presidential powers to prevent a default. This is all uncharted territory. Official downgrade or not, the international trust of US bonds is taking a big hit - most Tea Partiers would describe this as desirable.

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