- inaction on the debt ceiling, or
- the "kicking the can down the road" for a resolution of our long-term fiscal condition.
- Current holders of treasury's will face immediate and substantial paper losses (if held to maturity no losses would be realized), and
- We the people will face the prospect of paying more in order to entice anyone to buy our bonds.
The price of the 30-year bond would drop by 3.9 per cent and 6.3 per cent under these scenarios. The analysis focuses on Treasury debt with a maturity longer than two years as this sector is least affected by the Federal Reserve’s near zero interest rate policy. As such, the estimate of costs associated with a downgrade is considered conservative..."
From The Political Commentator on April 18th:
"... Increased federal borrowing costs through higher required interest rates due to an imposed risk premium by our lenders will effectively throw the United States into a fiscal death spiral.
We will face larger deficits requiring higher interest rates leading to larger deficits and so on until we will be in the same condition as the EU PIGS Greece, Ireland and Portugal paying 10%+ to borrow money..."
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