The Banking and Strategy Initiative

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Crisis Theater: The maths of being broke – II

The Economics if the debt default  according to EPI analyst Andrew Fieldhouse on Reuters Insider are as follows:

Politically the answer is in our crisis theater posts of the day suggesting the Republicans have lost their chance and have to fall in line. If the default does happen however, The interest payments are a $29 million for the rest of August and the gap between revenues and payments a $134 bln for the same month. Thus if no deal is struck, 45% of the non interest payments will be unpaid to prioritise these interest payments and that means unemployment benefits, etc

Taking out $134 bln from the Economy means a 1% drop in GDP, and half a tln worth of debt maturing that has to be rolled over which complicates matters further thus making it more critical than the shutdown. You have to protect Federal programs like Medicare and Medicaid and then military programs too..

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This entry was posted on July 31, 2011 by in Amitonomics, Banking, US.

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