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US Default Inevitable: Fund Manager

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posted on Jul, 13 2011 @ 06:54 PM
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A U.S. default isn't a matter of "if" but "when," David Murrin, chief investment officer at Emergent Asset Management, told CNBC.

"It's inevitable that the U.S. will default—it's essentially an empire which is overextended and in decline—and that its financial system will go with it," he said.

The question is: Does the U.S. default when it is forced to by the outside world, probably the Chinese, or does it take the option to default on its own terms in such a way that it may have a strategic advantage, Murrin said.

"It's very simple, its (America's) empire system, its financial system is in decline, we've seen very little growth for over a decade apart from financial engineering and leveraging, which ultimately caused the debt crisis of 2008," Murrin said.

"We (in Europe) have tried to regain empire through Europe (through a) forced regionalization process which was bound to fail," he said. "The U.S.'s options are pretty dire and this is a real disaster but you can mitigate it."

The real disaster, Murrin said, would be to avoid recognizing the collapse of America's powerbase. "That only accelerates the loss of power and that creates a bigger vacuum, which China moves into and leads to potential conflict," he said.

For investors wondering where to look in this environment, Murrin said one thing is clear: "You probably shouldn't own dollar-denominated assets."




Refer to full article here.


It is not too difficult to see what the fund manager is foreseeing here with the inevitability of a US default. I don’t believe it will necessarily come through congress remaining locked in a stalemate and watching idly as the deadline expires having not come to a compromise or workaround solution to avoid default and raise the debt ceiling.

But there is certain cause for concern that a default could be triggered by a “financial system... in decline....” together with “very little growth for over a decade apart from financial engineering and leveraging”. It is clearly unsustainable.

Apart from the factors Murin cites for reasons why the US will default, there is the Eurozone debt crisis which also could lead to triggering a US default where any EU country goes into default and there is contagion, the causes and effects of which I understand are not easily identified.

While Murin’s outline of factors are moreso foreseeable and maybe predictable, it is the unforeseeable factors that could catch the US by surprise, and then we’ll see some chaos and crises that would be very difficult or even impossible to contain. I personally don’t think China will escape the fallout where I understand they have quite a lot invested in European and US debts and assets.

What do other ATSers think? Is a US default inevitable? Could a US default be imminent? Could the next crisis come as a surprise like it did back in 2008?



posted on Jul, 13 2011 @ 07:01 PM
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reply to post by surrealist
 


How could the next default be unexpected that is all they have been saying for months now. Put your money elsewhere like where. You can't put it in the stock market they just outlawed from my understanding gold and silver. They are saying don't hold cash assests. there really isn't a whole lot left. Anyone have any ideas. I am running out.



posted on Jul, 13 2011 @ 07:11 PM
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reply to post by surrealist
 


I will post the same info here that I posted in other threads. This information is not only incorrect, it is total fear mongering.



The BPC study found that the United States is likely to hit the debt limit sometime between August 2 and August 9. “It’s a 44 percent overnight cut in federal spending” if Congress hits the debt limit, Powell said. The BPC study projects there will be $172 billion in federal revenues in August and $307 billion in authorized expenditures. That means there's enough money to pay for, say, interest on the debt ($29 billion), Social Security ($49.2 billion), Medicare and Medicaid ($50 billion), active duty troop pay ($2.9 billion), veterans affairs programs ($2.9 billion). That leaves you with about $39 billion to fund (or not fund) the following:
Defense vendors ($31.7 billion)
IRS refunds ($3.9 billion)
Food stamps and welfare ($9.3 billion)
Unemployment insurance benefits ($12.8 billion)
Department of Education ($20.2 billion)
Housing and Urban Development ($6.7 billion)
Other spending, such as Departmens of Justice, Labor, Commerce, EPA, HHS ($73.6 billion) The decision to prioritize payments would fall on the Treasury department, and Powell points out it would be chaotic picking and choosing who gets paid (in full or partially) and who doesn't.


Bipartisan Policy Center: U.S. Won't Default on Debt If Congress Fails to Raise Debt Ceiling



posted on Jul, 13 2011 @ 07:13 PM
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Originally posted by redrose123
reply to post by surrealist
 


How could the next default be unexpected that is all they have been saying for months now. Put your money elsewhere like where. You can't put it in the stock market they just outlawed from my understanding gold and silver. They are saying don't hold cash assests. there really isn't a whole lot left. Anyone have any ideas. I am running out.



Ya buy what you need to last awhile a year or two. Buy things you can barter when shtf
Or just don't worry go on and put your money in china's market
That what the eleites are doing ??? It's up to u or have fun live it up



posted on Jul, 13 2011 @ 07:19 PM
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Well of course its inevitable!

How can you spend billions and billions and billions in less than a decade and expect to stay solvent.

Our government has broken the number one rule. Don't spend more than you make. Except in their case they've done it so much and so often that it's added up to a mountain of debt that will take two generations to climb it.

The sooner we default and begin to realize the reality of our situation, the sooner reality will reach the minds of Americans. Until then, we will continue our decline in a stunning fashion.



posted on Jul, 13 2011 @ 07:32 PM
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reply to post by SpaDe_
 


The issue with interest payments is that they can increase dramatically where there is cause for concern about their risk.

Now since the US has so much money at hand, why the quantitative easing? Why flag QE3? Why not just pay down on those increasing deficits? Why the previous bailouts at tax payers expense? Why the ongoing low interest rates? Where are the positive effects of all this on the US economy and jobs?



posted on Jul, 13 2011 @ 07:50 PM
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The safest currency right now is the Saudi Riyal. They unplugged from the US Dollar.

Their currency is safe, China's their #1 oil buyer. They successfully booted the US military out of their country. Who else has done that in the last decade?

Riyal's.......they've got more Gold than China, US, Russia combined. They can buy mercenaries/foreign militaries to keep their sovereignty.



posted on Jul, 13 2011 @ 07:53 PM
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Absolutely, the US economy is about to collapse.

Do not be taken in with all of this political posturing about raising the debt ceiling. The debt ceiling will be raised (at the last minute) no matter what. Our political leaders are using this issue as a diversion tactic. Obama saying SS checks are going to be withheld is just political BS. Republicans calling for reduction in social programs is just the same BS. It is all for show, and anyone that gives it anymore than a glance is a fool.

US economy collapse, yes , not if , but when.

What will “trigger” the collapse is just speculation. Lot of “triggers” floating around right now.

Will it be the Real-Estate market, one thread on ATS was pointing out the still shaky home market as a possible trigger, but when talking real-estate it is the Commercial side that is the most venerable to collapse. Foreclosure of just a few large Commercial real-estate loans could send that market into a nose drive that has no bottom.

The true trigger as I speculate is when the dollar loses it place as the “Petrocurrency”. How long will the rest of the World allow the US to purchase tanker loads of oil by just printing the money.

The US, unlike any other country in the world, can simply print the money to purchase oil. In reality the US gets it oil free, need some oil just Xerox some more dollars and wa-la.

When, not if, the US loses it position as petrocurrency this will be the death nail. However since the petrocurrency is the de-facto World Currency the economic collapse will be global in scope.



posted on Jul, 13 2011 @ 08:15 PM
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reply to post by SpaDe_
 


Keep spreading the word. Honestly your link is the best, most simply factual, unbiased information I have seen on this whole thing.



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