Whew, good thing it happened on Friday night so the WH has all weekend to formulate their spin. I'm willing to bet the fault lies with Bush or the Tea Party.
This bill saved us from default. I am wondering how default could be worse? Could lewy, lady red, Aridog or DWT explain it to me? Seriously. I thought Krauthammer's suggestion for compromise sounded good at the time. Dayum.
I actually heard some talking head suggest increasing unemployment benefit payments. I kid you not.
Also, earlier today John Kerry suggested the media quit covering the Tea Party. You know, the racists, terrorists and hobbits who wanted to have some significant spending cuts in the sugar-coated satan sandwich. Looks like S&P agrees.
If you can't stomach good ole Lurch for two whole minutes, here is the quote:
And I have to tell you, I say this to you politely. The media in America has a bigger responsibility than it’s exercising today. The media has got to begin to not give equal time or equal balance to an absolutely absurd notion just because somebody asserts it or simply because somebody says something which everybody knows is not factual.
It doesn’t deserve the same credit as a legitimate idea about what you do. And the problem is everything is put into this tit-for-tat equal battle and America is losing any sense of what’s real, of who’s accountable, of who is not accountable, of who’s real, who isn’t, who’s serious, who isn’t?
How did the bill save us from default? It is not that all spending was held up until they raised the debt ceiling. The U.S. Government had revenue coming in. The law states that paying off obligations (debt) is the first thing that happens.
ReplyDeleteSo how did the bill save us from default? The debts would have been paid. Maybe the National Endowment for the Arts would not have gotten it's penny, nor Planned Parenthood.
But how did this bill save us from default?
RadioMattM said...
ReplyDeleteThe law states that paying off obligations (debt) is the first thing that happens.
Based up both Obama's and Geithners pre-debt-deal statements, the Obama administration had no intention of complying with the law. I doubt they even know it. I believe I mentioned this previously...Eric Holder certainly was not about to enforce anything.
"Lurch" is certainly a funny guy to hectoring anyone about bull-crap and what is real.
I had a conversation with a business colleague in (my very liberal) town yesterday. He gently inquired as to my politics.
ReplyDeleteI replied that I was a Hobbit, and a terrorist.
Turns out, so is he. Awesome. He expressed regret that some interesting work at NASA is going to get cut. I replied that if we're really going to be terrorists, we have to be willing to shoot all the hostages. He agreed.
I'm not bent out of shape by the terrorism thing - I'm kinda owning it.
The ruling class has been using extortion on the populace for long enough.
In 2008 it was Hank Paulson widely viewed as practicing extortion on Nancy Pelosi - sign my three page term sheet for TARP, or else. He meant it - actually, he was just the interlocutor; he had no power to hold back what was coming if it weren't signed.
I believe at the time, and continue to believe, that TARP 1.0 prevented a catastrophe. That wasn't extortion, it was just reality.
In the aftermath, incredibly craven choices were made - mostly by Obama's crew, who were identical to Bush's crew. TARP II / QE1 / QE2, etc, were extortions by choice. Global Argentina - monetary chaos and the total collapse of trade (and with it America's energy supply) was not on the table - the only thing on the table was the political allocation of economic costs. Things weren't going to hell, they were just going to suck, and the choice was who was going to suck it up. In those cases, the threats of Armageddon were pure extortion. (To be fair, Bernanke didn't really engage in this IIRC, but Geithner did).
If the US did not at this hour have a debt ceiling agreement, there would be consequences. My best guess was that a scramble to avoid actual default (failure to repay interest and redeem mature bonds) would be avoidable for some weeks, through a variety of means. The consequences to the economy would gradually become more severe.
A long term "crashing" of federal spending to stay under the existing debt ceiling would have had very negative effects for the economy. Things aren't simple and linear. If you can understand and believe that in at least some cases, lowering taxes can raise revenue - and I do - then you might be able to see how abruptly lowering federal spending might actually worsen the debt situation - total debt might decline, but if GDP declines faster, then debt/GDP keeps going up. As an analogy, alcohol kills alcoholics, but sudden cessation of alcohol kills can sometimes kill them faster.
My best guess is that the credit impact of a "technical default" - a failure to pass the debt ceiling last week - would have resulted in a temporary, but real, impact on the credit rating. There would have been an incremental, but real, price to be paid for holding up the deal. Worth risking, and worth the price, if it resulted in real cuts down the road. As it was the battle was inconclusive, but like I've said before, I'm encouraged by the screaming from the other side. Go Lurch. That had to have hurt, and it makes me smile.
An actual default - heralded by widespread market perception that the US is insolvent and its debts worthless - would not be pretty.
In a nutshell, the US would be unable to import oil (or anything else, the dollar losing all its potency abroad and most of it at home). I'll leave fleshing out that scenario as an exercise for the reader. A global banking collapse, which was in the cards in the wake of the Lehman failure in '08 absent massive government intervention, would have resulted in the same kind of outcome.
The market has given it's opinion (quite as Lewy described it in his best-evah illustration):
ReplyDeleteimgw:"http://i4.photobucket.com/albums/y128/aridog/BearCavalry.jpg"
Can't wait until Monday to see the market's reaction to this. Though it could play out in any number of directions I suppose.
ReplyDeleteThanks, florrie, for the quote. I can't stand at all seeing/hearing that a**hole. To my mind Kerry's remarks on the Tea Party, media coverage, verge on the precipice of true fascism. I mean... who the f*** is he.
I know, that is an overreaction on my part. But what the hell, he can't do that, or at least shouldn't be able to do that without huge repercussions from the MSM, oh wait, they are all part and parcel.
Ah, jeebus. I get so pissed at elite, rich progressive a**holes such as Kerry with his faux concern for the downtrodden. What a hypocritical ba**ard he is.
Matt and Ari,
ReplyDeleteI strongly believe Geithner would have prioritized debt payment. If Obama had ordered coupon payments to cease, he would have rapidly discovered the true extent of his own power.
Geithner is of a sort that knows their own interest and the interests of their tribe. He wouldn't have screwed Wall St and taken down global finance.
I think we could have limped along for about a month without an agreement - probably no longer.
Matt - it's a broad feature of the debt market that "default" signifies things other than a failure to pay. E.g. material change in circumstances can result in covenants being triggered which "accelerate" debt terms - i.e. give me my money back now or I'm seizing your collateral.
Ratings agencies look at political stability in making judgements about the creditworthiness of a sovereign. They aren't completely off base in considering a failure to pass a debt ceiling increase as a "technical" default - a concrete marker of political instability.
What would have prevented a downgrade?
A bipartisan agreement to stabilize the trajectory of our debt/GDP ratio would have prevented a downgrade today. The deal would have had to have been on the order of $4T as S&P had earlier signaled. No policy compromise was acceptable to both sides, so it didn't happen. So we were downgraded.
So I suppose we are all terrorists now, left and right.
In a way, Lewy, I'd almost prefer the edifice come crashing down. I don't trust anyone to know how to fix things, especially those in power. They could give a f*** less I feel, as long as they don't personally suffer. Which, the way the deal is set-up these days, they won't, and never will. This goes not just for those in power but those who dally in making money off credit decisions, et al. I'm fed up with my 'betters' f***ing me over.
ReplyDeleteI feel discouraged that our 401K has lost so much and the statements by Hoyer and Boehner are the same old, same old.
ReplyDeleteMaybe if things get bad enough, Christie or Rubio will be persuaded to run.
I can't stand at all seeing/hearing that a**hole. To my mind Kerry's remarks on the Tea Party, media coverage, verge on the precipice of true fascism. I mean... who the f*** is he.
ReplyDeleteAmen to that.
I know mine is a parochial and short sighted view. I don't care. I'm tired of 'smartness' f***ing things up so bad. Let's give up smartness as a value and go for common sense instead. Or, at least, a measureable mix of the two.
ReplyDeletelewy says:
ReplyDelete"A bipartisan agreement to stabilize the trajectory of our debt/GDP ratio would have prevented a downgrade today. The deal would have had to have been on the order of $4T as S&P had earlier signaled. No policy compromise was acceptable to both sides, so it didn't happen. So we were downgraded."
Would the Ryan plan or CC&B have enabled us to avoid the downgrade?
Luther, I sympathize and I think everyone harbors a shade of that sentiment - but policy has to be predicated on factors other than emotional satisfaction.
ReplyDeleteThe political choice is about the extent of government. The path to success at the ballot box is to contrast the positive aspirations of government interventions with the dismal track record of the real political establishment and the thugishness with which they cling to power. (In this regard Lurch has done us all a favor).
Many people feel the government should make things fair, and should provide for those in need. I don't think the path to electoral success is to persuade these people of the genius of Ayn Rand. Rather it is to remind them - relentlessly - of the graft, venality and corruption of the actual politicians they would trust with those aspirational goals.
florrie, I'll hold the SOB down while you slap him silly... wouldn't do any good, but it would make us feel better for a while.
ReplyDeleteHow about the debt commission plan? I realize it's water under the bridge now, but wouldn't we have avoided this if the Obama administration had acted on their suggestions? Why TF did he put the commission together? Really, why? I know he says now it was simply for fact-finding of some such shyte.
ReplyDelete#13, sounds like a plan to me, Luther :-)
ReplyDeleteflorrie#11 - honestly, I don't know. Depends on the trajectory of the debt under these plans - I'll confess that since I never gave them a shot at being enacted I didn't pay much attention.
ReplyDeleteBut if they stabilized the debt / GDP ratio sooner than later, then yeah.
Bond market doesn't much care whether it's tax increases or spending cuts.
(Ratings agencies should, actually, pay critical attention to tax plans which result in revenue/GDP ratios which are outside historic norms. A pure Democrat plan to do nothing but raise taxes might have raised this issue).
flo - why did Obama put the debt commission together? So he could ignore the issue for a couple years by pointing to his commission. Then he could ignore them. Ignoring sensible people is one of his core competencies, so it was a good plan.
ReplyDelete"Many people feel the government should make things fair, and should provide for those in need. I don't think the path to electoral success is to persuade these people of the genius of Ayn Rand. Rather it is to remind them - relentlessly - of the graft, venality and corruption of the actual politicians they would trust with those aspirational goals. "
ReplyDeleteLewy. The problem is, is that 'these people' could care less about "... graft, venality and corruption..." They just want their government check, or food stamps, or cell phones. They look no further than what is in their hands.
The only sure guide to electoral success is to enable such behavior. We, the real workers, are now outnumbered and outgunned.
Luther - some of them do - some of them don't.
ReplyDeleteIMO there are many who are on the "outside" who are held back by not wanting to appear to be a "bad" person. The goal is to persuade people of the limits of government power, not convince them that their heart isn't in the right place to begin with.
I'm looking to see how to "flip" those independent people who are still thinking of the Tea Party as the enemy of common sense. I think this is do-able.
Must go eat dinner - be back later.
ReplyDeleteGood words, Lewy, in #19. I mean that and I hope you are correct. But you are much more optimistic than me.
ReplyDeleteI thank you for your thoughts.
Thanks for the insight, lewy.
ReplyDeleteI listened to Obama's speech yesterday, and was disgusted by his "pay employers to hire vets!" BS.
ReplyDeleteWhat he didn't bother to mention is that there are a whole lot of career military people about to be mustered OUT of the service. I have two nephs in the Navy who can't be promoted because there are no/very few slots above them to fill. The senior personnel aren't retiring like they used to (bad civilian job market?), and it's leaving no room for the up-and-comers. Ten or twelve years in? Too bad. See ya.
Aridog probably knows more about this than I do, and maybe he can expound. I think it's a crappy way to treat people who chose the military for a career. My corpsman neph is currently serving his third tour in a hellhole far, far away..hey, let's boot him out of the Navy when he gets home! Grrr....
I just wanted to share the REASON I think Obama is making overtures to vets. The snake. It's damn sure not out of any sense of right and wrong, it's all about "votes" and "damage control."
As an aside, I find it repugnant that any employer should have to be financially enticed to hire a veteran.
Jonn Lilyea has some reality-based thoughts over at This Ain't Hell.
I was a bit off topic, sorry florrie. You know the way my pea-brain rattles around inside my skull. ;))
ReplyDeleteLewy, I think your strategy in #19 is a good one, but it may be difficult to accomplish. The TP has been dragged behind every hybrid car the left can commandeer, albeit at a slow rate of speed (but hey the mileage is fab!). The polls (for what they're worth) are showing a decline in TP affiliation; I think that TPers are simply keeping their own counsel. For now.
I like to think that every time someone like Lurch opens his big, fat mouth, a bell rings, and another tea-partier is born. :D