General / Off-Topic Effect of US Default on Frontier/ED
- Thread starter Herik
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Disclaimer: not a specialist, just information junke. TLDR version is I think FD will be fine, but in any case we all have difficult times ahead.
Well, it must be explained what default actually means here. It means that US government can't borrow money anymore (their debt ceiling is limited in law) and in result it will have sometime in future (1 - 2 months) to choose either refinance older debts or not to pay pensions, wages, costs of infrastructure. Either way it is disastrous for economics, as government is still biggest spender which keeps US economy afloat. If it can't refinance it's debts, it's rating takes a serious hit, and borrowing money starts to become very expensive. More than 7% interest for 5 year bonds are usually thought as death kneel for any modern country, with unease kicking in with 6%.
In long term means it's means slow, painful and chocking death of US economy, which is biggest market in the world. You can figure out further consequences yourself.
** Speculation **
For FD it could make it's life difficult in various ways - first, it's shutting down of gaming markets. While there could be ongoing sales for years, if situation doesn't change not everyone willing will be able to buy ED, and in result, it can cause financial problems for further development after initial release. It could be also harder to refinance it's debt if such need rises. There's nothing to cause sudden danger however, as company seems to be in good health and with right price policy and clever marketing they can weather the storm.
Yes, that means I believe we will see initial release in any scenario. Future is in question, but that won't be only FD problem.
** End of speculation **
However, if they even reach agreement (there are actually enough votes, problem is with House Republicans leadership who doesn't want to go down with the ship of Tea Party) I kinda see such scenarios repeating all the time till elections in November next year, as House Republicans fight for survival. For that they will try to use their threats to sabotage economy as way to get things their way. They will fail, but they are cornered, so this kinda make this much worse.
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Thank you for your reply. This appears to be a horror for world economies. but I'm going to still be optimistic for our game.
I noticed on a graphic in this news story that the American debt started to really ramp up at the onset of the wars in Afghanistan and Iraq. You could say that the sub-Prime debarcle didn't help but that seems to have add just another trillion(!?) to the debt.
However according to Wikipedia the American budget for the military is $680 billion so where did those trillions go? It can't be all servicing debt can it?
However according to Wikipedia the American budget for the military is $680 billion so where did those trillions go? It can't be all servicing debt can it?
It's half a trillion for *one* year. Wars were going on for 8 - 10 years. Do the math
They feed their military a lot more money during their wars than their official budget lets on.
Thus far, for a long, long time, the US has always simply raised their debt limit to get out of problems like these, but it appears that their politicians are realising that they cannot do so forever...
True, but the problem is: A controlled default wouldn't hurt the US as much as it would hurt the rest of the world economy... there are many countries (markets) depending on US dept payment.
It would be good if that actually happened. If you followed debt ceiling debate two years ago, then deadlock was apparent - Obama and Democrats wanted to smart cutting with vetting economical impact, plus restoring taxes for rich pre-Bush times. This last thing which made Tea Party supporters go "bull sees red waving skirt" mad and is most source of their current hatred against Obama.
Republicans of course suggest to gut all government services and destroy middle class completely increasing taxes for them. Not that US gov. services don't need overhaul (every country has to do that time after time) but they want to destroy them eventually. No regulations, no support for poors, nothing.
I suppose we could be impacted as individuals (lost jobs or income) which would affect our ability to upgrade PCs etc. And if things get so bad that we end up needing to take a second job, we could have less time to play
In the long run, the US debt position will need to be resolved in one way or another (as will the UK one). Hopefully it can be done without the sudden shock of an outright default.
In the long run, the US debt position will need to be resolved in one way or another (as will the UK one). Hopefully it can be done without the sudden shock of an outright default.
While blaming the Democrats for "pushing them to it" along the way... not very clever, but effective. Let's just hope the general populous realizes soon who the real "bad guys" here are (and always have been).
The major world view in the US is still materialistic, whereas most European countries strive for humanism (where one of the main tasks of a civilised society is to support its weakest members). The world view in the US is slowly changing, but the republicans hold on to the materialistic values the strongest.
The problem there is, they are so deeply involved in the system... they control/are controlled by the same people that control the banks and stock markets... true socialism will never be possible like that.
There's nothing wrong with materialistic POV, problem is when you start not to see forest behind trees. Tea party claims to be pro-jobs, but all they do is make economy suffer and in result, less jobs. Also they are kinda obsessed that only they know how to create jobs, that only they know how to run things, all that "simple man" charm. Those jobs created by Obama ain't real. And that sort of.
Radical populism polluting politics these days make me ache for old school corrupt officials who knew that being stupid will end up them being out of office.
Probably nothing whatsoever, it is very difficult to see how the US government problems could effect this game.
For a start, the US Constitution forbids defaulting (see the XIV amendment, section 4 "The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."). If the US government attempts to default on their debts they are opening the door to impeachment, so it's very unlikely.
This is an argument about funding Obamacare (Patient Protection and Affordable Care Act), not servicing the debt.
At least that's how I see it...
I agree, but the problem is when it is the _only_ world view that a person believes in and everything else becomes "evil".
I agree with this as well. We have our own problems with a certain populistic party in Finland... :/
That's a very strange view of Government expenditure. Government spending has to be funded through taxation and borrowing, as such Government spending is as responsible for sinking the economy as floating it. And borrowing just helps sink the future economy, which is only fun until you have to pay it back, with interest...
You could make the argument that Government spending on infrastructure has long-term benefits to the economy that outweigh the initial costs, the problem is that historically for every worthwhile infrastructure project the government undertakes it also builds "bridges to nowhere" or similar boondoggles.
You can't choose to go default or not - if you don't pay all your bills, it's a default in modern world. Of course it is up to money lenders to decide if you are trustworthy, but if you don't pay all your debts, what's their point to trust you? And your rating goes down. It is nothing to do with that amendment, because no validity of debt is questioned. It's "I know it's a debt, but I can't pay you" scenario.
Also please, leave Obamacare out of this. 2 years ago it was taxes, 1 year ago during elections it was all goverment and it's 'evil regulations'...for Reps it's a moving target. They compete on claims which part of government they want to see go first. That's how sick it is.