My Two Cents on Debt Ceiling at Policymic

Here. With references to Game of Thrones and Breaking Bad!

There can be no half-measures when the full faith and credit of the United States is on the line. In 2011 Obama chose a half-measure, when he should have gone all the way. He’ll never make that mistake again. The U.S. always pays its debts. Even if the Treasury has to break some laws to do it. Obama realized that a few weeks ago. Ryan, Cantor and Boehner are beginning to realize that now.

 

Advertisements

If Republicans Insist on Negotiations, This Time They Have to Pay.

There’s an interesting line of thought being tested in the blogosphere that alleges that Democrats actually have to negotiate with Republicans, but not in order to give them any sort of concessions, but on the contrary, to get something out of it, as Republicans are seeking for a face-saving way out. Peter Beinart thinks that it would be beneficial for Democrats to provide them with such a way out.

I couldn’t help but recall a great American short story by O. Henry, The Ransom of Red Chief, that deliciously describes exactly this sort of predicament. Two swindlers, short of $2000 for a business venture, devise a plan to kidnap a 10-yeat old son of a wealthy citizen. The kid thinks he’s an Indian Chief on a warpath and only welcomes this sort of development. The two hapless kidnappers didn’t account for such a turn of events, as the kid terrorizes them with violent games. As the boy’s father, the prominent Ebenezer Dorset, responds to kidnappers in a note, he’s fully aware of the predicament those guys got themselves into, and shrewdly demands a payment of $250 just to take the boy back.

The end of the story needs to be quoted in full:

It was just twelve o’clock when we knocked at Ebenezer’s front door. Just at the moment when I should have been abstracting the fifteen hundred dollars from the box under the tree, according to the original proposition, Bill was counting out two hundred and fifty dollars into Dorset’s hand.

When the kid found out we were going to leave him at home he started up a howl like a calliope and fastened himself as tight as a leech to Bill’s leg. His father peeled him away gradually, like a porous plaster.

     “How long can you hold him?” asks Bill.

“I’m not as strong as I used to be,” says old Dorset, “but I think I can promise you ten minutes.”

“Enough,” says Bill. “In ten minutes I shall cross the Central, Southern and Middle Western States, and be legging it trippingly for the Canadian border.”

And, as dark as it was, and as fat as Bill was, and as good a runner as I am, he was a good mile and a half out of Summit before I could catch up with him.

If Republicans want to get out of the hole they dug themselves into they have to pay something for it.

Powerful Pretending To Be Powerless.

It’s becoming a recurring theme: men of power pretending or even believing to be the little guy, sort of “Mr. Smith goes to Washington”-type, speaking truth to power. Here’s a Republican congressman from TX, who supported the shutdown, telling park ranger “How do you look at them and deny them access?”, referring to a group of WWII veterans trying to enter the memorial. Unbelievably, he blames the poor park ranger (who probably doesn’t even get paid because of the shutdown) for the shutdown!

This kind of behavior is common among the “trickle-down” and Ayn Rand crowd: they blame the hoi polloi, the Joe Schmos for their troubles. But in order to not look like complete assholes, they have to turn everything around and pretend that it is them who are the little guy, the salt of the earth, and it is those food stamp recipients, the unions and the unemployed who are the real threat.

I think that for some, and Krugman made a good point about it recently, it’s not enough to just be rich and powerful. One has to be adored and admired. It’s like the next step after you have amassed fortunes and made powerful friends and opened your own charity. Your next step is to become a hero, but since opportunities for heroism are limited, you enter the make-belief world, a parallel realm, where you are the persecuted minority and everyone else is out to get you. You find someone who can’t really fight back and make a grand stand.

What fucks!

Will Wall Street See the Light Now?

No, not in that sense. That would be too much to ask.
I mean, will they tell these fucks in Congress they’re not going to fund their political campaigns anymore?

Then the CEOs should make this point: Slower growth means less business borrowing and investment, which results in less job creation. When that happens, business confidence dries up, consumers spend less, markets go berserk and the weak recovery gets even more anemic.

And then the clincher: If you can’t fix this mess, then I can’t, in good conscience, support your re-election or contribute to your campaign fund. And I will tell everyone I know to avoid doing so as well.

This has been my sentiment since about 2011. Well, better late than never.

My New Article on Government Shutdown.

At policymic.

While a threat of default is very real with our dysfunctional Congress, very few are under the illusion that a default would happen due to a real U.S. insolvency. It’s not that the U.S. can’t pay up, it’s that the mechanism for sending the checks is broken. Apparently, this is enough for investors to be sanguine about U.S. debt.

The coin and the IOUs

For the last several days a number of possible solutions to the debt limit poped up in the blogosphere.

The $1 trillion coin.

Pros: It’s a simple and elegant solution to circumvent the Republicans in Congress. No act of congress needed to mint it and the value assigned to it is at the sole discretion of the Treasury.

Cons: The PR perspective. Republicans will not forget it and will use “a trillion dollar coin” as a bludgeon to hit Obama again and again as an irresponsible drunken sailor who has the powers of the Dark Lord Sauron. Minting this coin is already compared to “one ring to rule them all”.

The I.O.Us.

I just read about it this morning and I like it even more than the coin.

Pros: It still achieves the desired effect – government continuing payings it’s bills, but without the hysteria that can accompany the minting of the coin. An IOU is what it is – a piece of paper issued by the US government guaranteeing the full payment if US resolves the debt limit. It’s a temporary facility but that can be extended indefinitely. IOUs will probably be issued at a small discount and will be available for trading on the private market. I’m sure Wall Street will be thrilled about this new instrument. It will be harder for Republicans to portray it as something outrageous, because Dems will always be able to point out that we’re paying the bills they have already passed and they are not technically incurring any new debt.

Cons: I can’t think of any.

Of course, there’s another way – the 14th Amendment that states “the validity of public debt of the US shall not be questioned”. But it was explicitly ruled out by the Administration.

If US hits the debt ceiling and no solution is found it will be unprecedented because a country will default for non-economic reasons. When S&P downgraded US credit rating after the original debt ceiling debacle in August 2011, it stated that their reasons for downgrade was political gridlock, not economic inability to pay. I wonder if Republican Wall Street donors will be more attuned to the situation than they were in the summer of 2011 and realize the Congress doesn’t care about their positions, their clients and their portfolios. At this point they only care, as they go down, to bring Obama with them.