If House Republicans don't agree to raise the nation's debt ceiling and a default ensues, the economic effects would be "catastrophic," in the words of Treasury Secretary Jack Lew. The nation's borrowing costs would spike, as would interest rates for average Americans, and the stock market would plummet. But not everyone will lose if a default causes an economic catastrophe. Here's who could profit from a financial calamity:
1. Short sellers: Most folks invest in stocks and bonds hoping the value of their investments will increase. But there's also money to be made by short selling—betting that the value of a stock or bond will drop. Short selling is an investment strategy that's typically employed by sophisticated investors and financial firms, but technically anyone can do it. Investors who bet that the value of US Treasury securities will dip would likely profit. Because a default could cause the US stock market to crash, shorting almost any US stock could make you money. In fact, you can even invest in specific mutual funds that specialize in short selling. "It's a very powerful and disillusioning feeling to know that smart rich people can make money even when America goes over Niagara Falls in a barrel," says Jeff Connaughton, a former investment banker and White House lawyer during the Clinton administration.
2. Investors in gold and silver: Gold and silver typically rise in value when when the stock market is volatile, because they hold their value better than paper money or other assets. The price of both metalsrose this week as default fears heightened.
3. Bitcoin investors (maybe): The value of this untraceable virtual currency has tracked closely with gold over the past year, suggesting that it could serve as a more stable investment during a financial crisis.
4. Currency traders: Traders who bet that the US dollar will decrease in value relative to foreign currencies stand to profit off of a US government default.
5. Pawn shops: If the effects of a default are catastrophic, stocks will plummet, pension funds could dry up, credit card interest rates will rise, and jobs will be lost. Though credit markets may freeze up, as they did in the wake of the 2008 meltdown, pawn shops ought to do well, as they did following the last crisis.
6. Bankruptcy lawyers: See above.
7. Mortgage servicers: Mortgage rates typically rise and fall along with Treasury rates. If a default causes a spike in interest rates, home owners could see their monthly mortgage bills soar, causing some homeowners to default on their loans and wind up in foreclosure. You'd think this would be bad news for all parties involved—families, lenders, investors, mortgage servicers. But the latter actually turn a good profit by foreclosing on people; investors take the losses, while servicers make back all the money they're owed in a foreclosure sale, plus all sorts of fees borrowers have to pay on their delinquent loans.
8. The canned and freeze-dried food industries:Doomsday preppers are already getting ready for the collapse of civilization that could result from a financial meltdown by stocking up on pork and beans and freeze-dried meals.
The United States is the wealthiest country in the world, in terms of GDP. But which country is the richest in terms of median wealth per person? Australia. The median wealth of adults there is $219,505, according to the Credit Suisse 2013 Global Wealth Report, which was released on Wednesday. In the US, the median wealth is only $45,000, compared to an average wealth per person of more than $250,000. Here are some other chart-tastic findings from the report.
Global wealth reached an all-time high of $241 trillion, up about five percent since last year. If all the money in the world were spread out evenly, it would amount to $51,600 per person. And here is a map of what it would look like if countries' GDP were spread out evenly among their populations.
Global inequality remains high. The richest 10 percent of people in the world hold 86 percent of the world's wealth—with just 0.7 percent owning 41 percent of global riches. Meanwhile, the bottom half of adults own one percent of the world's wealth, with more than two thirds of people worth less than $10,000:
Here's what the tip top of that pyramid looks like. About 10,000 people have more than $50 million:
About half of those people live in the US:
Here is the percentage of millionaires by country:
Over the past year, the US made greater gains in wealth than any other country. Meanwhile, we have persistent record levels of poverty and stagnant wages.
In recent weeks, politicians on both sides of the aisle have been fundraising off of the government shutdown and possible default. On Monday, the Democratic Congressional Campaign Committee blasted out an appeal to raise $2.5 million in order to stand up "against Republican hostage-takers." Sen. Elizabeth Warren (D-Mass.) has used the occasion to make a bigger point about the ideology of those tea party hostage takers. On Friday morning, she sent out a missive to her supporters, not to ask for money, but to slam the hypocrisy of "anarchist," "extremist" GOPers who rage constantly about the ills of big government, and then beg for it when it's gone. Warren made similar remarks in a speech on the Senate floor on Thursday.
"[N]ow that the House Republicans have shut down the government—holding the country hostage because of some imaginary government 'health care boogeyman'—Republicans almost immediately turned around and called on us to start reopening parts of our government," Warren says. And this is nothing new: "After the sequester kicked in," she adds, "Republicans immediately turned around and called on us to protect funding for our national defense and to keep our air traffic controllers on the job."
Here's more Warren debunking the myth of "boogeyman government":
When was the last time the anarchy gang called for regulators to go easier on companies that put lead in children's toys? Or for inspectors to stop checking whether the meat in our grocery stores is crawling with deadly bacteria? Or for the FDA to ignore whether morning sickness drugs will cause horrible deformities in our babies?
When? Never. In fact, whenever the anarchists make any headway in their quest and cause damage to our government, the opposite happens.
Why do they do this? Because the boogeyman government in the alternate universe of their fiery political speeches isn't real. It doesn't exist.
Government is real, and it has three basic functions:
1. Provide for the national defense.
2. Put rules in place rules, like traffic lights and bank regulations, that are fair and transparent.
3. Build the things together that none of us can build alone – roads, schools, power grids – the things that give everyone a chance to succeed.
We are alive, we are healthier, we are stronger because of government.
The health insurance exchanges created by the Affordable Care Act opened for business on Tuesday, allowing uninsured Americans to buy subsidized coverage. By Wednesday, conservativewebsites had a fresh conspiracy theory running: if you decline to purchase health insurance, the feds may put a lien on your home.
I actually made it through this morning at 8:00 A.M. I have a preexisting condition (Type 1 Diabetes) and my income base was 45K-55K annually I chose tier 2 'Silver Plan' and my monthly premiums came out to $597.00 with $13,988 yearly deductible!!! There is NO POSSIBLE way that I can afford this so I 'opt-out' and chose to continue along with no insurance.
I received an email tonight at 5:00 P.M. informing me that my fine would be $4,037 and could be attached to my yearly income tax return. Then you make it to the 'REPERCUSSIONS PORTION' for 'non-payment' of yearly fine. First, your drivers license will be suspended until paid, and if you go 24 consecutive months with 'Non-Payment' and you happen to be a home owner, you will have a federal tax lien placed on your home. You can agree to give your bank information so that they can easy 'Automatically withdraw' your 'penalties' weekly, bi-weekly or monthly! This by no means is 'Free' or even 'Affordable.'
The Affordable Care Act itself states that the IRS cannot file a lien on a property because an uninsured person fails to pay a penalty. Nor can it seize bank accounts or garnish paychecks to recover Obamacare fines. Nor will Americans who refuse to pay for mandatory health insurance be subject to criminal prosecution of any kind.
Infowars acknowledges all this, but concludes that the Facebook poster, Will Sheehan, still might be right: "Either Sheehan’s claim that he received this notice is a lie, or the feds have been dishonest with the American people all along, and the revolt against Obamacare is about to take 'don't tread on me' to a whole new level."
As Obamacare moves from legislation to reality, many of the old conspiracy theories making the chain email rounds will be laid to rest. It seems there will be no shortage of new tin foil hat tales to take their place.
There's a new front in the battle over Obamacare: Republican congressional staffers are angry at their bosses for trying to deprive them of affordable insurance.
Like many Americans, most Congressional staffers receive health insurance through their employer, the federal government. And like most employers, the government covers a big portion of the cost: 75 percent. The Affordable Care Act changed this, requiring members of Congress and their staff to obtain coverage via the the health insurance exchanges created by the law. But the language in the law was unclear as to whether lawmakers and their aides would be able to keep using government money to purchase heath insurance. To clear this up, the Obama administration issued a proposed rule in August stating that the government would continue to cover 75 percent of congressional health benefits. The GOP latched onto this new regulation as an "outrageous exemption for Congress" and a "big fat taxpayer funded subsidy." Sen. David Vitter (R-La.) and Rep. Michael McCaul (R-Tex.), introducedbills that would strip out those employer contributions.