a. Evidently we are still able to get enough financing to get us through to payday.

b. The foreign nations have a hell of a problem. If they don't loan us more money, the game ends. All of those dollars they have in their treasury really are worthless.

c. At some point, we will have to do like Argentina does, and increase the interest rate to compensate people for their risk. Bernanke is adding further stress to the system by keeping rates lower than they should be based on the market risk.

It is very implausible. Once the SHTF and the global oil market shuts down with devalued "new" dollar and the age of oil barter begins, US Pirate Navy confiscating all oil tankers is interesting scenario, but very short lived (platform piracy is too stupid to debunk). It would only mean that all oil barter depending on sea routes would die off in a second. Russia would still keep on delivering barter oil through pipelines to EU and China in return for various goods, so US would be the biggest looser, not mentioning the total trade blockade that rest of the world would impose on the Pirate Nation.

What is interesting is that once US is toast, the now flagless Pirate Navy could start oil and gasoline piracy on their own, just to keep themselves afloat for a while.

Knock three zeroes off dollar.

And 10-20 trillion is suddenly "only" 10-20 billion.

Still, no matter what, the time is nearing when US will have to import by barter of goods instead of printing belief.

Well then the isolationists would finally have that "Island Feeling" they so crave.

But yes, looking at the whole thing a while ago I think that may be a plausible scenario, the lights going out in Europe due to lack of Oil would not be an immediate problem. I don't think the Tar Sands could keep the USS America afloat.

The problem is that your offshore oilfields still pump the oil back to shore to put them on a tanker. Hence why they would take out terminals and tankers, not the rigs themselves. After all they may have use for them later on.




Why would the Chinese be interested in keeping the US get their hands on oil that China could use themselves? There is already a resource war going on between the two countries, if China could knock the US out and secure all the oil for themselves they will do so.



You DO know that the US Military never engaged the Russian (or Soviet) forces face to face? Take a look at how it went in Georgia, US trained military, new Western Equipment and they got their asses handed to them. I think you are a bit too high on the Stars and Stripes in your analysis (or dream).



"An army travels on it's stomach". How feasable do you think it would be for the US to keep a supply line going once they piss / threaten enough people? The bases in Europe would most certainly be lost, which robs the US of a jump off base to the middle east an other parts of the world.

Okinawa would probably be gone in no short order too (plus, as far as I know it's mainly a Naval base).

No, Gunboat diplomacy on the level that would be required is too be to chew even for the mighty US Empire. The US got as far as it did because it mainly used sugar, not the whip.



I guess we know within three months should that "option" be taken out by the Commander in Chief. But as noted in the points above, I do consider this to succeed highly unlikely.

Vtsnowedin:

Point taken. Seems to be the difference between US English and my predominantly UK English, where I would have said: "I'm not sure".

MrBean:

I did not know that. I'm assuming this LEAP prediction is based on solid research and analyses. But if they declare the US will default without knowing this is unconstitutional, then I have to re-read the prediction and conclude as you say: in fact they are predicting a dollar devaluation and replacing with a 'new dollar'. The LEAP team couldn't have known about the call for a G20 meeting in November when this prediction was published, and a lot rests on this meeting. No, EVERYTHING probably rests in this meeting.

Currently Spain is having a hissy fit over being excluded from this meeting (Spain is officially the world's 8th economy, and with Brazil, India, Indonesia etc on the invite one has to wonder why Spain is excluded.) Most commentators (including Fidel Castro) assume it is Bush's final snub to Zapatero for completing on his electoral promise of troop withdrawal from Iraq. Whatever, the EU should have a lot to say about whatever kind of re-building of the world's financial system comes out of this, but emmerging economies should have an even bigger say.

Let's see whether the President Elect is invited, surely he should be in on this meeting ...?

Generally speaking, in the last few decades countries who default are red meat for the IMF. The IMF is running out of funds, but can actually create it's own currency, some kind of bond, to lend to the federal reserve. The IMF insists on draconian austerity, like 12% rate of return on the loans it doles out, elimination of federal social programs, etc... In the case of the US, they'd go after the military budget too, possibly.

I doubt that, since US military is the ultimate 'collector' of IMF and guarantor of it's existance.

True enough. Here's there website with a phone number. It would be pretty funny to call them up and ask them what they would do if the US defaulted. You could pretend you're a bigwig of some kind.

http://www.imf.org/external/np/exr/facts/crislend.htm

Sovereign nations cannot claim bankruptcy. They can only default on their debt. As the debt is in US dollars there is no reason to default. They will simply take out a notice in the local newspaper that creditors should form a line in front of the Fed to be repaid in (next to) worthless paper. Kind of like a parade, but less fanfare. No refreshments will be served. Pax Americana ends.

And what happens then?

Will the US revert back to a bucolic, provincial nation of small villages with people enjoying a low-consumption lifestyle? Or will America adopt the persona of a wounded bear, lashing out in global war? Or does everything just stop, going Mad Max approximately 30 days later?

Inquiring minds wanna know...

Peak Oil + American Default = A Poorer World

Wipe $10-11 trillion in accrued savings off, plus deleveraging, plus write-off at $14 trillion economy, and there will be a lot less wealth. Post peak oil resource depletion should ensure that the world economy only recovers at a much lower level of economic activity. A few winners. Many more losers. Lower living standards for almost all. Be careful what you wish for.

Materialistic consumerism is poor attempt to fill the void left empty by other ("higher") unsatisfied needs. Need for a beneficial place in a community, need for love, to love and be loved, need for self-expression, need for spiritual peace. All the polls show that "poor" Nigerians are more happy than "rich" Americans. Be carefull to wish for the right things.

+1

Reverse Engineer