Breakdown coming

I was in Florida in 2005 and saw the effects of Hurricane Wilma. Southern Florida was without power for 2-3 weeks. Breakdown starts to occur once a region is without power for even 24 hours. Gas stations shut down, because the pumps require power. The few that are open have mile-long lines and heavy police presence to prevent fights and robberies. Grocery stores quickly run out of food and don't get restocked because there is no gas for the delivery trucks. Burglar alarms don't work because they require electricity. Computers and the internet in the area shut down.

I don't foresee that kind of breakdown. But I think a different kind of breakdown could occur if there is no debt limit increase by midnight on August 2. It doesn't matter if the government actually runs out of cash by that time or not it is the perception that counts. Here is what could happen: The social security checks don't go out because the Treasury department wants to make a point and is conserving cash to pay the bondholders. A "silent revolt" starts to occur among the populace. People don't pay their mortgages and credit cards in order to conserve cash. (To a large degree this is already occurring). Businesses don't pay their taxes on time. Suddenly the government and banks have huge cash flow problems. A recession instantly starts, and everyone starts to shift into survival mode, and businesses lay off workers in order to survive. Even if the debt ceiling is quickly raised, the damage is already done. People discover the joy of not paying their mortgage. The government bails out the banks (again) which exacerbates the situation. The breakdown is of economic law-and-order.

How do you restore economic law-and-order again? Foreclose on every house in the country? Have everyone declare bankruptcy? I have no idea. But August 2 I think is only a symptom of a much larger problem. It's not a problem for everyone. It's not a problem for people who are debt-free. But it is a huge problem for the banks who have abused the system and put people into economic slavery.

That is why there is no panic over August 2. Some 40% of the population is cheering it on. Another 40% is totally oblivious to it. And the remaining 20% is in denial, saying that it can't possible happen. Believe it buddy. At 12:01 AM on August 3, this will be a different country.