"A politically disruptive standoff is likely later this year," Goldman's David Kostin said, citing the bank's economists while editorializing around the potential market ramifications of a worst-case debt ceiling outcome in Washington. It's unfortunate, to say the least, that the rest of the world is compelled to periodically ponder the prospect of a voluntary US default. Do take a moment to consider how spoiled, selfish and reckless this looks in other locales. The rest of the world needs dol
8 thoughts on “Default Plan”
Back to back HRs. Give that man a contract!
Helpful article, good zingers.
I always looked at this as a charade, a stupid game of chicken. And I thought the fools on the republican side were just desperate to use some form of imaginary leverage to get attention but did not want to actually hurt the country. They merely wanted to shine light on themselves while they made spurious arguments, in the hope of obtaining some imaginary form of credibility within their own party (not that there is anything credible about their arguments).
I appreciate your intimate knowledge of this topic, Walt. These are not truths that I know in my everyday life. But your perspective of this topic is a product of life-long experience. Would it be possible to suggest that your argument find its way to the New York Times or Wall Street Journal? Are there any other former colleagues of yours on Wall Street, financial leaders with a similar understanding of the ramifications of the threats being made by House republicans?
Do members on either the democratic or republican sides of the House have such an understanding of possible outcomes enabled by this fools’ game? Are there not multiple, significant Wall Street donors that favor the Republican party who could make a call to the Republican caucus in the House and tell them to knock it off?
My hope is that some big donors have a meeting with the whole Freedom Caucus and tell them that a default only gives China the advantage. Once the trust and full faith of USD comes into question why not start writing business contracts in Yuan instead of USD.
On John Cochrane’s comparing MBS during the GFC, and Treasuries now, says “they didn’t so much fail as become risky, so people wouldn’t take them as collateral, and everyone started dumping them”.
Not being snarky; I’m very interested in how our “system” was devised/has evolved, but couldn’t that be construed a failure? Doesn’t it speak to the inherent pyramid-esque design of our system? Can we talk about the un-educated lawmakers on either side when it comes to debt/deficits without also getting into how confidence is the real currency (maybe collateral)? Is the process of educating the public impossible? There are still plenty of regular people with adequate levels of education that should be able to understand how our system works for us at home and others abroad. Is it too scary for people “in the know” to consider letting others in on things? If so, that seems problematic.
All way above my education level and pay-grade I guess. I don’t watch or listen to financial news pundits, but really appreciate this site for what seems to be intellectual honesty.
The concept of “the people”, while talked about a lot over the years, was not something the founding father’s totally trusted. When the constitution was adopted in 1789, it established two divisions in the Congress, There was a House of Representatives, to be elected by those “people,” apportioned by population in each state and serving for two year terms. The country chose to have a President rather than a king, after all that’s what we had fought and many died to get rid of. However, the rich and powerful liked the idea of England’s House of Lords whose members held hereditary titles and were major landowners. So we decided Senators had to own property and that they should not be elected by “the people.” Instead, the founders decreed that the legislative bodies of each of the several states would each choose two senators from their respective states to serve for six years. One suspects this was done to reduce blowback from the states, them not all being happy about ceding many key rights solely to the Federal government. While the property requirement was eliminated, the direct election of Senators was not enacted until 1913 through the 17th Amendment. Of course, it wasn’t until the 19th Amendment was passed in 1920 that the “people” came to include the ladies of the country. In between, as some may remember, Amendment 18 gave us the income tax and the beloved IRS. One thing this country didn’t erase when it was formed, was the dominance of white men and the power of the rich over the poor. (There was an equal rights amendment in there somewhere but it still hasn’t been enacted.) If you didn’t when H posted the link, go to OXFAM and read the white paper on “Taxing the Rich.”