If We Lose, They Win: Who'd Have Benefited From a Debt Default?

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American Eagle, South African Krugerrand and Dutch Guilder gold coins.
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Over the last few weeks, as battles over the government shutdown and the debt ceiling raged in Washington, it became increasingly hard to find anyone really benefiting from the fight. The losers were easy to find: basically, anybody who relies on government spending, anyone who relies on a stable economic system, and anyone who relies on government programs like food inspection has definitely been hurt. In context, it's hardly surprising that even the Koch brothers, among the strongest supporters of the Tea Party's lower taxes/lower services mantra, were pushing GOP congressmen to make a deal and avert a debt ceiling default.

So those are the losers. Winners and potential winners, however, are harder to find. Certainly, a few congressmen -- notably Sen. Ted Cruz (R-Texas) -- rode the crisis to greater prominence, though one could argue that polling in the past few weeks have proved that not all publicity is good publicity. Now that the Senate deal has saved us in the nick of time, Harry Reid (D-Nev.) and Mitch McConnell (R-Ky.) may pick up some statesman points for stepping forward finally corralling Congress into preventing economic oblivion.

But beyond the obvious political hard-liners, who might have benefited from letting the debt limit clock hitting zero? Who had money on the line, and a rooting interest in America's failure?

Here are a few of our best bets:

Lawyers

Warren Zevon once crooned about the need to send "Lawyers, Guns and Money" when things get rough. Regarding the first, it seems likely that some of the victims of the shutdown, including children denied entrance into Head Start programs, consumers poisoned by uninspected meat, and veterans denied access to federal monuments, will take their problems to the courts. And, for that matter, even though the shutdown is over, the longer-term results of Congress' economic shenanigans could push more Americans in bankruptcies and foreclosures.

Guns

Over the past few years, fears about economic and political destabilization have driven gun sales through the roof. Gun manufacturers and private equity firms, like Cerberus Capital Management, that invest heavily in the gun business, have made record profits. With social spending cut and economic insecurity rampant, it isn't hard to see why many people might want to buy the kind of "security" that they can tuck under their pillows.

Money

Score another one for Zevon. The value of the dollar is largely based on the perception that the U.S. government pays its debts -- always. When that perception slips, it could take the value of the dollar with it. Currency traders who bet against the buck stand to make a pretty penny when political gridlock casts doubt on the full faith and credit of the United States of America.

Gold Bugs

Speaking of things that (theoretically) don't lose their value, gold is a classic refuge when more traditional investments go south. This, incidentally, is why it did so well the last time we went through an economic disaster. For this reason, gold bugs sprout up in times of economic misery.

Pawn Shops

Speaking of guns, money and gold, pawn shops usually clean up when things go downhill. In many areas, they are a good source for low-cost firearms; beyond that, though, they also tend to be one of the first stops for desperate people hoping to cash in on their possessions, including gold. With a high-profit business model, it isn't hard to see why they did so well in the last economic crisis, why they've likely done well in this one, and why they benefit from long periods of economic turmoil.

Surplus Stores

When things get really bad, surplus stores are great places to be. From low-cost dehydrated food to firearms, paramilitary equipment to discount clothing, they're a veritable Mecca for people looking to stretch their money -- while preparing for the worst.

Glenn Beck

For years, Glenn Beck has been urging his viewers to prepare for a societal collapse. For him, the worst case scenario has generally been a best-case profit center: Whether the commodity in question is gold, dehydrated food, or farmland, he's reaped huge earnings from his advertisers. To him, an economic storm cloud on the horizon (or right overhead) would certainly have a silver -- or gold -- lining.

Bruce Watson is DailyFinance's Savings Editor. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

(Editor's note: This article was updated late Wednesday evening to reflect the passage by both the Senate and House of a bill to end the government shutdown and raise the debt ceiling.)

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36 Comments

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madfam004

When "France defaulted Napoleon Bonapat sold us the land just West of the Colonies which they claimed but did not really settle in. When Russia defaulted they sold us Alaska. So if we were to default, how many states will we give to China to pay our debt?

October 17 2013 at 9:27 AM Report abuse rate up rate down Reply
c2t2beau

if we defaulted, does that mean,, we couldn't help other countries ? Aliens would leave ? The Prez would stop fist bumping ?

October 17 2013 at 9:03 AM Report abuse +1 rate up rate down Reply
aeweidman

I just want to know , if we default , can China foreclose on us and evict us? On another front , our goverment has stolen money from SSI without repaying it, and has grossly mismanaged our money to the point that at 62 y.o. I realize I will most likely never retire. So do I care about the rich and famous and their future. Think again! I'm busy learning my two new phrases for the jobs I'll have to carry in the future, "Do you want fries with that?" and the ever popular " welcome to Walmart , would you like a shopping cart?"

October 17 2013 at 8:46 AM Report abuse rate up rate down Reply
IRVING

Our country may not be able to sustain the next hit that we all see coming. Our government, all branches acted like children in a school yard, pointing fingers at one another instead of circling the wagons and saving this game which has lasted for about 240 years. Let them all take their balls what's left of them and go home.

October 17 2013 at 7:16 AM Report abuse rate up rate down Reply
toosmart4u

In 2006 bush jr. budget was over 2 trillion dollars. Not a word from you republicans. That was after he took 500 billion out of social security.

October 17 2013 at 5:44 AM Report abuse -1 rate up rate down Reply
1 reply to toosmart4u's comment
Mark

toosmart ----- could ya splain to us slaves what a deficit is??/ cuz we bin tole dat dis current dumme gots sum purty big ones goin on. we bin lide to en dem dum publicuns sayin dat da defit debt goin up trillions under dumbo ----- kin we jist tell em its bushs fault still. what do we say win everbody gits poor by bamacare in they caint ford surance? win duz anything be dumbo's fault or we gonna ferever say it bush fault an dumbo din do nuthin

October 17 2013 at 7:00 AM Report abuse +1 rate up rate down Reply
toosmart4u

It goes to show you the republicans are not good for the health or well being of this country. From now on the democrats will always have my vote, just one box to check from now on.

October 17 2013 at 5:42 AM Report abuse +1 rate up rate down Reply
Tom

What a load of "progressive" crap with little or no facts.

October 17 2013 at 4:57 AM Report abuse +1 rate up rate down Reply
1 reply to Tom's comment
aeweidman

hey Tom, remember I'm picking you up on the way to the KKK rally tonight., I may not go if it rains, you know Velma hates to wash those robes and iron them when they get all muddy when I stand out in the field at the bon-fire.

October 17 2013 at 8:57 AM Report abuse rate up rate down Reply
Douglas & Karla

Wow! I usually read this particular column but never equated it to the left leaning crowd like Huffington Post. But this one is quite snarky, i.e. Koch Bros., Ted Cruz, guns for "security," ad nauseum. AOL's bundle of "news" services have really gotten "progressive" (I hate that word; the Lefties have bastardized it). Guess I'll read my news someplace else and leave the leftie pontificating up to AOL and Barry's Little Beggars.

October 17 2013 at 1:19 AM Report abuse -2 rate up rate down Reply
1 reply to Douglas & Karla's comment
aeweidman

Bye, don't let the door knob hit ya on the way out .

October 17 2013 at 8:48 AM Report abuse rate up rate down Reply
justoldog

Not to mention Iran, Russia and any nation currently threatened by us, that is not tied to the dollar- Cuba, N. Korea, African nations, etc...

October 17 2013 at 12:38 AM Report abuse rate up rate down Reply
1 reply to justoldog's comment
aeweidman

hey , you said you wouldn't mention them.

October 17 2013 at 8:49 AM Report abuse rate up rate down Reply
betty_brock

I knew they would go back to spending like drunken sailors. It is part of our punishment.

October 16 2013 at 11:41 PM Report abuse rate up rate down Reply
1 reply to betty_brock's comment
aeweidman

hey I was a drunken sailor when I was in the service and I am insulted by the inference.

October 17 2013 at 8:50 AM Report abuse rate up rate down Reply