The Warring States of NPF - How to end the debt crisis

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How to end the debt crisis - With a credit default swap...

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The United States government debt is approximately 14.6 trillion dollars. There is a non-zero chance that the U.S. government will default on some or all of this debt. And given the debt ceiling crisis, that chance has increased.

So here's what Treasury Secretary Geithner should do. He should sell a credit default swap on the entire debt of the United States to the Federal Reserve Bank. The insurance premium will be 2 trillion dollars for six months.

If the U.S. keeps paying the bond holders during this six month period, nothing happens. But if the U.S. defaults, the Fed collects the entire loan amount on the defaulted debt.

I really don't know if this is a good idea. But you're effectively allowing the Fed to give security to the system, and take on our debt. Of course, the fact is, this makes a world of sense now, but what about when politicians get their hands on this? How much will this change around because Obama and Boehner can't get what they want out of the deal?

I'm not a fan of the credit default swaps at all. But could it be used to get us out of the debt ceiling crisis?

How to solve the debt crisis: Sell all the Republican controlled states to China.

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Originally Posted by NonCon (Post 1144892)

How to solve the debt crisis: Sell all the Republican controlled states to China.

Wait, debt is an asset now right? Banks have bought and sold it.

If we never pay our debt, it's obviously worthless. So China will be wanting to get rid of it.

So we buy our own debt from China.

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Originally Posted by Karesh (Post 1144896)

So we buy our own debt from China.

SHHHH! You're giving the politicians ideas!

I just wanted to check, weren't we in the black only about a decade ago?

SHHH! Don't tell the Republocrats that! They have to continue fighting the War on Drugs/Violence/Peace/Terrorism/Ideas/Populace/Antipartydisestablishmentarianism!

Clinton put the US in the black. I think that was the last time it happened.

well I was in middle school when that happened, so maybe some of you old people know. How did he get us in the black? I know the same thing probably wont work, but there has to be something to learn from there just as there must be lessons from last ten years on what not to do

He cut the military budget so bad that he was laying off Army/AF personnel.

And he avoided a lot of missteps by polling the nation and listening to what the people wanted. It also helps that the Congress of 10 years ago was much more vastly split ideologically than what we see now in some of the top brass.

http://en.wikipedia.org/wiki/Bill_Clinton

more details if you're interested.

If you want to see an interesting timeline, you can watch the debt bounce along- Republicans keep it red, a democrat gets in and we see the books black, then back to red. So far, Obama's slackin'!

Didn't California dump it's national debt to the local banks at a miniscule interest rate, so it could dodge this bullet?