11/30/13
REBELS WITHOUT A CLUE:
Unlike 1995-6, the last government shutdown, "we have a week economy, with falling government
spending one of the main causes of that weakness. A shutdown would amount to a further economic
hit, which could become a big deal if the shutdown went on for a londpg time."
"Still, a government shutdown looks benign compared with the possibility that Congress might
refuse to raise the debt ceiling."
Hitting the debtor ceiling would:
1) force a huge immediate spending cut ALMOST SURELY PUSHING AMERICA BACK INTO RECESSION.
2) would mean missed payments on existing government debt which would "have terrorifing
consequences."
3) WHY? "Financial markets have long treated US bonds as the ultimate safe asset.; the assumption
that America will always honor its debts is the bedrock on which the world financial system rests."
"Treasury bills---short term US bonds---- are what investors demand when they want absolutely
solid collateral adpgainst loans." They are traeated better than cash.
4) "...default would create a huge financial crisis, dwarfing the crisis set off by the failure of
Lehman Bros. Five years ago."
5) "But we don't have a sane political system; we have a system in which a substantial number of
Republicans believe they can force President Obama to cancel health reform by threatening a
government shutdown, a debt default, or both, and in which Republican leaders who know
better are afraid to level with the party's delusional wing."
"Republican radicals generally reject the scientific consensus on climate change, many of them reject
the theory of evolution too. So why expect them to believe expert warnings about the dangers of
default."
"SO HOW WILL THIS END? The votes to fund the government and raise the debt are there, and
always have been: every Dem in the house would vote for the necessary mrpeasures, and so would
enough Republicans." The GOP leadership will not allow such votes.
REBELS WITHOUT A CLUE:
Unlike 1995-6, the last government shutdown, "we have a week economy, with falling government
spending one of the main causes of that weakness. A shutdown would amount to a further economic
hit, which could become a big deal if the shutdown went on for a londpg time."
"Still, a government shutdown looks benign compared with the possibility that Congress might
refuse to raise the debt ceiling."
Hitting the debtor ceiling would:
1) force a huge immediate spending cut ALMOST SURELY PUSHING AMERICA BACK INTO RECESSION.
2) would mean missed payments on existing government debt which would "have terrorifing
consequences."
3) WHY? "Financial markets have long treated US bonds as the ultimate safe asset.; the assumption
that America will always honor its debts is the bedrock on which the world financial system rests."
"Treasury bills---short term US bonds---- are what investors demand when they want absolutely
solid collateral adpgainst loans." They are traeated better than cash.
4) "...default would create a huge financial crisis, dwarfing the crisis set off by the failure of
Lehman Bros. Five years ago."
5) "But we don't have a sane political system; we have a system in which a substantial number of
Republicans believe they can force President Obama to cancel health reform by threatening a
government shutdown, a debt default, or both, and in which Republican leaders who know
better are afraid to level with the party's delusional wing."
"Republican radicals generally reject the scientific consensus on climate change, many of them reject
the theory of evolution too. So why expect them to believe expert warnings about the dangers of
default."
"SO HOW WILL THIS END? The votes to fund the government and raise the debt are there, and
always have been: every Dem in the house would vote for the necessary mrpeasures, and so would
enough Republicans." The GOP leadership will not allow such votes.
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