Originally Published Through Yahoo Voices
Just How Might the US Be Split Up If the Government Really Loses it All
Everybody is talking about August 2nd being the new Doomsday. The day that the US will be forced to begin defaulting on it’s international debts and therefore, the day the World Economy begins to suffer. However, with all this debt to repay — who really owns the USA?
According to the Treasury Department, about 47% of the US Debt load is carried by Foreign powers. The largest Debt Holder is China, followed by Japan, the United Kingdom, Brazil, Taiwan, Hong Kong, Russia, Switzerland, and then Canada.
Now, based upon the current Government understanding, even if the Foreign powers all call in their debts, the US cannot simply hand over property or materials in exchange for dollar value to pay off the debt, the Government is listed as the caretaker for the lands and properties and as such cannot simply transfer ownership in lieu of debt repayment.
So, will the USA Default on it’s Foreign debt? Don’t say never, they already did. After the Revolution, the Civil War, and World War I the US Defaulted on it’s debt. Each time the impact was not all that profound. This time, however, with so much of the debt tied up in Foreign powers who will demand their interest payments and they have every right to them, after all, if the US defaults, things will not look so rosy.
One of the first things that will happen is a downgrade in the Federal Government’s International Credit Rating. At this point, the USA holds an A A A Sovereign Credit Rating. Among 16 countries which are considered the best investments for other governments to put money into. After a default, the US would be downgraded to an AA rating. Dropping it out of the top 16 and into the brotherhood of countries that are still considered developing, not developed.
If the crisis continues much beyond August 2nd, then the US becomes less and less able to pay it’s bills outside and inside the country. As this is a Federal Government thing, it will impact all Federally funded programs first; which include Social Security, military spending, medicare/medicaid, and a number of others.
In a worst case scenario, the US would be unable to meet it’s spending requirements and programs would become underfunded. In that case, the government may well attempt to seize assets and stop payment on some things to ensure it can still provide on others. It may also begin a fire sale to dump assets to ensure it has ready cash to keep things ticking along, and this is where this article comes into play.
The major investors in the USA may well come to the door demanding compensation for the loss of funds and/or investments, leaving the US little choice but to begin splitting up it’s valuable federal assets to the highest international bidder in an effort to stave off bankruptcy, a debilitating war, or international condemnation, any of which would cripple the powerhouse nation.
Although it is so remote as to be nigh impossible, the major investors may demand property, government industries or even entire regions as compensation. As China holds the largest share of debt, it could, for example, demand that the west coast states be handed to it for Federal Control, as the government in Washington is unable to fund or control them any further. Similarly to the east coast states, they might be handed off to European nations for governance as compensation, shrinking the United States into a smaller and smaller country with every divestment. The states bordering Canada may well be ceded to Canada to compensate for the debt owed to that country.
Needless to say, before that dire event occurs I am sure the Federal Government will come up with some sort of solution, and hopefully, it will be a permanent one that will begin to reduce this massive federal debt that has all the earmarks of being able to topple the world economy if it collapses. Although, as a Canadian, wanting to see the Greater United States of Canada would be a sight to see.