Republican mainstream flirts with brief default

Yes, a US Treasury technical default--vs. an outright default, would be troubling, but it could also restore the creditworthiness of an already insolvent US government, so all this talk of panics in bond markets is hyperbolic.  See Stanley Druckenmiller's opinion  <click here> on a technical default, which could help bond investors avoid a haircut should the US outright default.


http://www.reuters.com/article/2011/06/08/us-usa-debt-skepticism-idUSTRE75700720110608

An idea once confined to the fringe of the Republican party is seeping into its mainstream -- that a brief default might be an acceptable price to pay if it forces the White House to deal with runaway spending.

An increasing number of Republicans do not believe the Obama administration's dire predictions of economic "catastrophe" if the debt limit is not increased. They argue a period of technical default can be managed without plunging markets into chaos.

http://in.reuters.com/article/2011/06/08/idINIndia-57573120110608?feedType=RSS&feedName=businessNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FINbusinessNews+%28News+%2F+IN+%2F+Business+News%29

The Republicans' theory is that bondholders would accept a brief delay in interest payments if it meant Washington finally addressed its long-term fiscal problems, putting the country in a stronger position to meet its debt obligations later on.

But interviews with government officials and investors show they consider a default such a grim -- and remote -- possibility that it was nearly impossible to imagine.