Wow! So many great posts in this forum, that's why I love it here

To the subject - wouldn't it make sense to expect the US govt treasuries (the last bubble) to go bust before the US goes officially broke?

Perhaps we will fully explore the value of the navy and airforce as in "Gun boat diplomacy"?

You've got to be able to get your gunboat there.

The Military will be the last to run out of fuel.. If you disagree with that you are a dumbass

Yeah, Yeah and the US is the greatest, most powerful nation in the world. Yada, Yada, Yada.

When the credit line is cut, we'll be lucky to get our troops home.

When the US defaults, the dollar tanks immediately.

And then what? How do you keep the troops supplied?

It's one thing to get there, another thing to make use of all the equipment and those tanks and HMMVs etc. aren't really very economical on gas.

But yeah, I am sure a handful of aircraft carriers will "show force".

I am sure the occupied nations will chip in to get them on a dingy.

Okay, yeah, lot's of 'off the top of my head' replies. Thanks, I have plenty of those myself. Maybe too much to expect more people to actually think it through, like Cid and galacticsurfer have ...

sittinguy wrote:



..... is that just in your neighbourhood, or you think this is going to be generalised? I mean, in Saudi Arabia, the streets of Huang Zhou, the UK, Ukraine etc....? On the other hand, I totally agree with you: the pentagon/US armed forces are the last to feel the pinch Peak Oil has not/will not affect them, however, a devaluation of the dollar would seriously hamper their plans.

Nobody's mentioned the first step in defualt: devaluing the dollar. When the dollar is officially 'tanked' as in a devaluation, then there's not much point arguing over when it's going to cough up the interest on part of its debts. Is there?
vtsnowedin:

It's not just my premise: most people recognise the US is technically bankrupt. To expect a country to repay debts to the tune of +10 Trillion Dollars is utter lunacy. Nobody wants to buy swathes of US territory, no country can afford to buy a foreign industry in decline (steel, for example.) Maybe we should offer the country some blankets infected with measles and a few glittery trinkets?

Complete monetarization of the debt is about impossible, even running the presses 24/7, but there are other ways out of a default. Negotiations with the Creditors for a debt reduction no doubt will be taking place. If we default, we bring down the creditor nations with us, so they will be willing to negotiate here. Its an exercise in Brinkmanship of course. Who will BLINK first? In the game of Chicken with two cars driving straight at each other, who turns the wheel first and careens off the roadway?

This process could draw out the end game some, but of course the bottom line here is a mass bankruptcy due to overshoot, so some folks gotta die. How they will die is the main question.

Insofar as credit stoppage preventing the US from bringing the troops back home to fight the internal battle on our own soil, this would be unlikely. If there is a complete lockup of trade, the US will of course engage in Gunboat Diplomacy. Any offshore oil rigs will be pirated, and there really is not another Navy in the world that could stop that. The question would be whether outright theft of all the offshore oil rigs still functioning would motivate someone with a Nuke to fire it off. We could bribe nations with some Nukes not to fire them at us by generously sending some of the oil we pirate their way, along with some of the food we produce with our newfound source of VERY cheap oil, since we didn't have to pay for it but just stole it

This scenario basically leaves all non-Nuke countries to Twist in the Wind and fend for themselves. All of Africa is of course Toast in this scenario, far as death rate goes from hunger anyhow. South America is also pretty much toast in this scenario.

Internally in the US, once we default on all the debt, there no longer is pressure to service that debt, and so you could just continue on with the dollar as currency within the country. Wouldn't be worth jack squat outside the country, but would work fine inside, especially with lots of new FREE Oil stolen from everyone else who does not have such a good navy.

The derivatives problem is mostly one of counterparty risk, but of course once you Nationalize all the Banks and all the industries, there ARE no counterparties! All those contracts are basically meaningless then, you would just be paying yourself since you own it all anyhow.

At this point it then becomes necessary to actually make a real economy work inside the country, which in theory would be possible with all the new Stolen Oil. However, the folks you stole it from will be none too happy about this, and while they don't have Nukes, they certainly can make life pretty miserable through terrorism. You gradually will see more of the offshore rigs taken off line with small missiles and rockets from the nearby countries you are trying to starve out of existence. War profiteers of course will happily sell these arms to anyone, and while the Ruskies don't build such nice aircraft carriers as we do, they do make perfectly serviceable small missiles that will do an effective job of rendering an oil rig quite useless, if not actually sending it down to Davey Jones Locker.

Of course, if you get the Ruskies to buy into the game, you might avoid this kind of end game, but thing is the Ruskies in charge still themselves DREAM of World Domination, and of course also Gary Kasparov is a mighty good Chess Player. No dummies those Ruskies, even if they are on the Ruthless side. LOL.

You won't see Bankruptcy declared here too soon, Ben and Henry will keep printing the money and there will be continuing negotiations behind closed doors for the next year or so I would imagine. The internal mechanics will continue to break down, but perhaps on the SLY already we are direct stealing Oil from Petrobras to keep our Gas prices down so low. I find it hard to imagine that mere demand destruction has been able to accomplsh this, but maybe.

I'm backing off the SUPER fast crash down to Mad Max levels with this analysis. I think through a combination of currency manipulation, negotiations with the creditors (specifically the Chinese), and the outright theft of Oil through Piracy on the High Seas, the Military State that is the US can continue to function for another couple of years.

Of course we still do have to deal with all that Methane making its way out of the Clathrates and into the atmosphere, and we do have to remember that in a game of Brinkmanship like this, its always possible that someone gets tired of the game and pulls the plug on the Nukes, but on the assumption neither of thoe two things snuff us out in the next year or two, you could see a pretty interesting endgame, and those in their Bunkers already will have missed it. Or at least missed chatting about it with us here on Peak Oil anyhow. Wonder how Cash and Rocc are doing these days?

Reverse Engineer

Really? How so. Right now they don't really have anything. they traded paper for paper. The Chinese (largest debt holders) still have all the machines and other things. Same goes for the Chinese.

It was really mainly the US that completely sold off anything they could (or rather moved it abroad for "efficency") and would have a hard time to re-tool if nobody would want to loan anymore.



What oilrigs do you have in mind? Persian Golf? North Sea?

The Gulf is the worst kind of place really for "gunboat diplomacy". Nobody would need to take on the US Navy, they just need to sink a few tankers in the strait of Hormuz and the thing will be clogged for quite a while.

There are more choke points for the oil to pass, the Suez Canal and the Strait of Gibraltar. If someone would be REALLY determined to prevent the oil to leave the region they can accomplish that.



I don't think it would be much worse than it is now. They are in some places already so low they'll get by with maybe losing an additional 10%.



I think you overestimate just what the US Navy could do to secure a steady oil supply. So far the US Military has proven quite powerful in bombing places back to the stone age, but that's a different thing than trying to secure supply lines half way around the globe.

Who would man the tankers? Who would protect the pipelines to the terminals, not to mention the terminals?

The US and it's allies have not managed to get rid of the Taliban in the last seven years but you think the US Military by itself could secure a steady oilsupply after militarily taking it?



You don't need to take out the oil rigs, you just take out the terminals or tankers. Way bigger targets, easier to hit and much harder to defend (a boat you can see coming towards an oil rig, a guy with a rocket launcher on the shore line is a lot harder to spot).



Your entire plan hinges on the US Military's ability to provide an "oil line" back to the US, and that I think is utterly unlikely, regardless on how much "might" you think the aircraft carrier groups have.

I also doubt that the US would be able to quickly rebuild itself should the bottom really fall out, nobody would want to sell them anything, the factories are mostly gone (or at least to a large enough degree that most shelves would stay empty) and I just can't see the Chinese be willing to play along much longer. They have really very little to lose in all of this.

But it's a nice dream, keep dreaming.

China stopped buying dollars a couple of years ago. Hasn't dumped them, yet, but it is not buying them. Japan and South Korea AFAIK still load up on dollars, although if anyone has any data that proves me wrong you're welcome to present it.





They're fucked. They are way too weighed down with petro dollars, although Dubai is a good question since it is the only one of them with a real economy. It could very well make it through. probably not unscathed but it is in a better position to deal with it than the others.

Its not a "dream", its just a theoretically possible scenario. How effective it would be for any length of tiime is an open question of course. I myself identified how easy it would be with relatively low tech weapons to disrupt the supply line.

However, offshore oil fields differ from the fields in Iraq or Iran in that they are much more susceptible to being hijacked by a Navy. It would be darn hard for any low tech locals to be succesful in bombardment, since as soon as you toss off one rocket, you give away your position and basically bring down the fires of hell on that location. I do not think in such a case the US Military will worry whether the missile was fired from a Children's Hospital or not, they will level it regardles.

As long as we guaranteed to the Chinese that in return for some Debt Forgiveness we would keep a steady flow of Oil toward them to run the factories in their country to produce the goods we buy in the US, I seriously doubt they would take issue with this policy. Of course the Ruskies would not be too happy about this, but face it, they have good Kalishnikov Rifles but the high tech hardware they have just SUCKS. Any Jets they put up in the air are TOAST once a Shooting War starts. However, shut them completely out fot he game, they might decide its time to pull the plug on their Nukes and blow NYC to Kingdom Come. At which point we fire one off to blow Moscow to Hell, and the Game is OVER. So I doubt the Ruskies are shut out, they will be coopted into the game ALSO.

Basically, its everyone ELSE out there who does not have a big enough gun or big enough economic engine worth coopting that is in the deep doo-doo. It would seem likely that at least in the short term, in order to retain their power, these countries might work cooperatively to depopulate the rest of the world.

Just a THEORY, not a DREAM, and by no means do I consider this a very good outcome for the Planet Earth or its people. It is however a PLAUSIBLE scenario, and you haven't really proved by any means that its NOT POSSIBLE. You haven;t even really shown its implausible EITHER.

Reverse Engineer

It's not just my premise: most people recognise the US is technically bankrupt. To expect a country to repay debts to the tune of +10 Trillion Dollars is utter lunacy. Nobody wants to buy swathes of US territory, no country can afford to buy a foreign industry in decline (steel, for example.) Maybe we should offer the country some blankets infected with measles and a few glittery trinkets?[/quote]

"I don't know": An expression conveing doubt or uncertainty, An admission of incomplete command of the facts, lack of all knowing ness,
You don't see it used much here on Peak Oil but I find it usefull from time to time especally when I am not deep in my cups. Many others here could use it with accuracy on a daily basis.
Before we seize offshore oil rigs and try to maintain them from Texas we might try (Horror of horrors) doubleing or tripleing taxes.
As to selling off the countrys assets, its been done before and it may be done again. Thats how we got Alaska in the first place. But more likely we will deliver production from our assets at much reduced prices in exchange for covering our debt. The day they won't sell us a boatload of oil unless a boatload of corn goes the other way COD will be a major monkey wrench in our economy but even that would not be the end of the world and would not be bankruptcy. A lot of people reach their credit limit without going bankrupt but some do. On a national scale they may be the same but I don't know as that has to be or is automatic.

But the US is too big to let go under.... isn't it ?

Hey I thought all swans were black ... Oh, that's right, I live in Australia.

Federal state has been borrowing not the standard 2 billion per day of Bush years, but 20 billion daily since September. Instead of half a trillion per year US is now adding half a trillion per month. Can't keep that up ad infinitum, question is, how many months more before collapse a la Island (but no IMF for rescue for US)? At 14 trillion (by June?). At 20 trillion? (by end of FY 2009?).

What the French thinktank is predicting seems to be that US will replace the old dollar with heavily devaluated new dollar - official default would be unconstitutional. What that means? New USD is no more the global reserve currency, US cannot buy oil etc. merely by printing currency but will have to barter real products (what???) for imports. Yep, that means US will have to suddenly produce and transport food etc. with less than half of current oil consumption. The death of the American Consumer, the birth of the American Surviver.

It will not be pretty, but it will have strange beauty of it's own kind, PO beauty (also known as "doomer porn" ).