What would be the effect if US defaults on its Debt repayments.

Evident effects would be Panic in world markets, Erosion in Dollar value, China's and Other countries's investments in US paper goes bust, Commodity prices zoom due to erosion in dollar/euro value,Shortage of capital worldwide, Gold zooms.

Wondering what would the impact on India be?

Obvious impacts would be zooming crude payments (provided crude does not crash due to worldwide recession), inflation takes off further,More rate hikes, Reduction in IT budgets,Panic in keeping Indian money outside etc etc.

Now since our country is not exposed to exports & US/Europe (except may be in IT) like other countries in Asia, would Indian assets become valued? Since our country has the largest stock of Gold assets, would it boost value of Indian rupee?

If indeed, rupee value rises, what would the impact of land prices/ real estate assets be? Is the possibility of collapse in value of RE assets more than the possibility of increased investments/value?

Would be good if people share their thoughts....
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  • Originally Posted by corvette
    What would be the effect if US defaults on its Debt repayments.

    Evident effects would be Panic in world markets, Erosion in Dollar value, China's and Other countries's investments in US paper goes bust, Commodity prices zoom due to erosion in dollar/euro value,Shortage of capital worldwide, Gold zooms.

    Wondering what would the impact on India be?

    Obvious impacts would be zooming crude payments (provided crude does not crash due to worldwide recession), inflation takes off further,More rate hikes, Reduction in IT budgets,Panic in keeping Indian money outside etc etc.

    Now since our country is not exposed to exports & US/Europe (except may be in IT) like other countries in Asia, would Indian assets become valued? Since our country has the largest stock of Gold assets, would it boost value of Indian rupee?

    If indeed, rupee value rises, what would the impact of land prices/ real estate assets be? Is the possibility of collapse in value of RE assets more than the possibility of increased investments/value?

    Would be good if people share their thoughts....


    Hi,

    All the if's and but's are happening now similar to 2008. It is the not the only industry that is exposed to exports, our textile industry is also very much exposed to exports and then there is our diamond industry. Do you know textile industry is the largest employer in India? If the US defaults then things will be more dangerous than we can ever imagine. it's going to be pain for everyone.

    Regards,
    Sridhar
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  • hi dont worry of US default at least for now. they will come up with QE3 then 4, then 5 then 6 they will keep printing money until their economy grows.

    so for now dont worry, yes one day they will default that is going to be really not in the next few years.

    if they default there is no direct effect on RE, but the indirect effect will be disastrous, whole world will crumble with a financial psunami and naturally the RE will burst in no time.

    but how severe is US default fears now? it is exactly not prominent in the TV shows at least and US markets are falling for few sessions which is fishy?
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  • If the US defaults, the republicans will lose their chance to get to the white house for another 4 years as already they are being blamed by more then 50% of the polls conducted. The issues are more to do with higher interest rates which will show up in the next year or two. RBI is already ahead of the curve and hiking rates blaming food inflation. However the real reason is to support the rupee.

    Salary inflation in India is 10-20% on average, so everything linked to spending including real estate purchases has to rise as the supply of money has increased.

    The US experienced sub-prime crisis as the economy got hit due to overexposed leverage. This didn't repeat in Canada where the lending was more controlled. If an Indian banks defaults I am 100% certain Indian flat prices will be 50% of their current value or even lower
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  • US debt default drama is a political drama

    US debt default drama played out on News Channels & Newspapers is a political drama.

    However the top creditors to USA like China are not actually happy watching this drama played by American politicians (actors).

    Even this drama on Aug 2 deadline for rising the US debt ceiling will pass through as if no catastrophe happened. Even 2008 was passed through by QE1 and now QE3.

    However all this drama apart, I would listen to one advise many veteran financial gurus have made.

    Escape out of USA before its too late. Better to catch the earliest flight out of that place.

    Asia and Latin America are the places to be in coming decades. Even for those not willing to come to India, there are other options like Singapore, Brazil, Argentina etc.
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  • There will be a compromise for sure after all the drama and climax, default is very unlikely.
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  • Before you catch the earliest flight out of U.S, think about the state of affairs in your new destination. Make sure you take a 360 degree view for sure! :)

    Originally Posted by contra

    Escape out of USA before its too late. Better to catch the earliest flight out of that place.
    QUOTE]
    Escape out of USA before its too late. Better to catch the earliest flight out of that place.
    QUOTE]
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