Wanna bet against me?

[luzribeiro.livejournal.com]

What are the odds that the Democrats and Republicans will turn out so insanely crazy as to plunge the world into another financial chaos*, this time generated in the US Congress rather than Wall Street? Wanna bet against me? There is just a day and a few hours remaining after all, and I'm betting on a "sudden" change of mind and a "glorious" compromise and - oh, surprise! - a deal being reached.

Wanna play?

* why I'm saying this. Not to sound overly sensationalist and apocalyptic, nah. But most analyses indicate that a US default would trigger a domino effect which would ultimately bring a crisis on the markets that would make the 2008/2010 crisis look like a minor kindergarten squabble, which is making some people quite nervous around the world. Just when you thought the US is no more able to send further ripples across the global lake...

(This post may need some update later. Tomorrow maybe. I have no intention to watch the grass grow on CSPAN).

[edit] So here's the update. Surprise-surprise! (Not!) Obama caved in and got the deal the GOP offered. Wow, I'm so shocked! Aren't you? ;)

Comments

[htpcl.livejournal.com]

That's a strong bet. I may need a handicap.

[luzribeiro.livejournal.com]

Depends. How big a head-start do you want?

[htpcl.livejournal.com]

If you could make me a pie, call it even. I like pie.

[a-new-machine.livejournal.com]

I'd take however long it takes to run from here to the nearest Wal-Mart, collect ammunition and survival gear, and then make it to somewhere remote in the Green Mountains. Because if I'm putting money down on the coming collapse of economic activity as we know it, I'm gonna prep for it.

[luzribeiro.livejournal.com]

Sorry, can't promise you such a thing. Plan B: do you like pie?

[a-new-machine.livejournal.com]

Only pumpkin, really.

[luzribeiro.livejournal.com]

You make it too easy for me.

[htpcl.livejournal.com]

Don't forget to buy soap. Loads of it. It's always the first thing to run out. Also, toilet paper.

[a-new-machine.livejournal.com]

And salt. Gonna need to cure all that deer jerky.

[soliloquy76.livejournal.com]

This is how the sausage is made, as they say. The more crazy the people involved get, the harder it is to make the sausage.

[rasilio.livejournal.com]

The reality of a capitulation (there really isn't much room for compromise) by one side or the other is inevitable, the question is how many of them can actually win reelection as a result of stabbing their core supporters in the back.


That said this is all really just a bunch of theater because raising the debt ceiling just buys them some time, maybe 3 - 5 years at best to really come up with a plan to literally eliminate annual deficits and seriously cut the debt.

Already financial markets are becoming aware that American debt isn't safe enough to justify an AAA rating, regardless of what Moodys says and even just a small uptick in rates will make the task of cutting spending that much harder.

[a-new-machine.livejournal.com]

Well, all safety is relative. What security is *more* safe than Treasuries? Greece can bring down the Euro, China's constantly mucking with the currency and actively works against foreign investment by devaluing the RMB... so where do you turn to get a more secure investment?

[rasilio.livejournal.com]

Short term, Canada, Australia, Brazil maybe?

Course none of them are capable of issuing enough debt to satisfy investor demand for bonds (probably)

Longer term, well I hate to break it to you but the odds that the idiots in Washington, Beijing, or the various Euro Zone capitals will be able to avoid a collapse of sovereign debt at some point in the next couple of decades is practically 0 meaning you would be far better off investing in real estate or commodities because at least those investments will retain some value no matter what.

[abomvubuso.livejournal.com]

,Brazil...

,real estate...

(I'd also add India, and partially Kazakhstan. Short- to mid-term, of course).
(Real estate could also generate some income while you're keeping it, if managed properly).

[luzribeiro.livejournal.com]

Anyone who manages to become a millionaire in the middle of a crisis without being a Wall Street insider deserves to be handed the Elder Wand. You should be ashamed of yourself!

[abomvubuso.livejournal.com]

[htpcl.livejournal.com]

Love it when you talk dirty, Richy Rich.

[rasilio.livejournal.com]

I'd have more faith in India if I saw any evidence that they could get a handle on their internal corruption and ethnic/caste problems. That said I think if they do then they have a real shot at being what everyone is trying to make China (bubble central) out to be.

[underlankers.livejournal.com]

I wouldn't doubt it at all. The Tea Party is sincere enough in its beliefs to do that.

[kylinrouge.livejournal.com]

On the 11th hour, a no-strings short term debt ceiling raise will pass the House, the Senate, and then the President's office. Nobody will get what they wanted, and all this posturing will be for nothing.

[mrbogey.livejournal.com]

You realize the US credit rating is not salvageable at this point, right?

Either some FDR styled "default via inflation" or outright default is coming.

[underlankers.livejournal.com]

^Unfortunately, this.

[luzribeiro.livejournal.com]

Do *I* realize that? I think I do. The question is, do your politicians realize that?

[mahnmut.livejournal.com]

The Clock is ticking away (http://www.thecleverest.com/countdown.swf)! Quick you fuckers, you've gotta do something!

With or without a deal, the ship will keep sinking. The debt ceiling is just some arbitrary number.

I'd still bet on a deal by tomorrow same time, though. Best circus for the masses in years.

[caerfrli.livejournal.com]

Mr Bogey is right, our credit's already shredded. The question now is how much of the economy in general is Washington going to destroy with cutting government jobs and services.

[the-rukh.livejournal.com]

I predict they're going to come up with something, or at least something that puts off the problem until later. Defaulting isn't going to be good for anybody, even the nutcases like Bachmann who think it is. The tea party candidates are going to get marginalized a bit and the theater will continue in a few months. People will get tired of it, things will get more negative.

[caerfrli.livejournal.com]

Default would be good for Cantor who shorted Treasuries.

[the-rukh.livejournal.com]

He'd stand to make a couple 10 to 100 thousand, its not going to be worth it, even for him.

[artkouros.livejournal.com]

yawn yawn yawn.

[policraticus.livejournal.com]

The best advice for Congress: Don't just do something. Stand there.

[allhatnocattle.livejournal.com]

+1

[prog-expat.livejournal.com]

"Just when you thought the US is no more able to send further ripples across the global lake..."

The US will always be able to send further ripples across the global lake. That's an unfortunate side effect of having a 900 lb. gorilla in the world economy: the US has a bad day, everybody has a bad day.

[gunslnger.livejournal.com]

Not increasing the debt ceiling won't trigger a default.

[underlankers.livejournal.com]

Yes, it will.

[gunslnger.livejournal.com]

I see you believe the lie.

[underlankers.livejournal.com]

I see you as usual show basic incomprehension of the real world.

[soliloquy76.livejournal.com]

Depends on what you consider a default.

On August 2nd, we exhaust our borrowing authority. That means we can't pay around 40 to 45% of our obligations, including principal and interest on debt to creditors, entitlement programs, government payroll, military, etc. In order to pay everyone, we would need to issue more bonds which cannot be done without an increase in the debt ceiling. There isn't really a term for it, so everyone keeps using "default". Whatever you want to call it, it's bad for everyone involved, including the Tea Party.

[a-new-machine.livejournal.com]

Most people mean "default on bond and other debt obligations." Yes, we'd default on our obligations to recipients of checks to Medicare, SocSec, the military, government workers, and a dozen other recipients of government money, but we would likely be able to pay our foreign creditors.

[soliloquy76.livejournal.com]

Well, apparently the deal is done so we don't have to worry about that for another year or so. Too bad this idiotic political game has already done some pretty heavy damage in the process.

[a-new-machine.livejournal.com]

Yeah, reading about it now. We'll see how far this gets in the House, though. Boehner's had a hard time bringing the Tea Partiers in line so far. I'm hoping that they'll compromise their principles in the name of sane governance, but they've shown no signs of such an inclination in the debate so far.

[gunslnger.livejournal.com]

A default means being unable to pay your debts and thus having to declare bankruptcy. I don't know of any other common meaning for the term. If the politicians want to create a new definition in order to confuse people, that's a different problem.

[underlankers.livejournal.com]

That is what happens when we cannot raise the debt ceiling and run out of money. I realize that's a foreign concept to you because it implies the government existing means something, but alas.

[gunslnger.livejournal.com]

Not all government money, despite appearances, comes from borrowing. Thus, stopping the borrowing does not immediately result in a default.

[soliloquy76.livejournal.com]

Not necessarily. A default can mean failing to pay something required by law. It was termed "selective default" or "prioritized payments" depending on who you ask. There was concern that we might not be able to pay interest and principal payments for bondholders, which is why Geithner even mentioned it, but it was a little more complicated than that. By then, of course, it was too late. The media already ran with it.

Republicans were dismissing default, but also dismissed seniors not getting their SS check or doctors not getting their Medicare payments for services already rendered. Either way, someone wasn't going to get paid.

[gunslnger.livejournal.com]

It's either some don't get paid now, or everyone doesn't get paid later.

[malakh-abaddon.livejournal.com]

They will work it out. No one politician, no matter how stupid or crazy will want the blame for this "fubar" moment. They know that if we should default, and the economy tanks, the American people will hold everyone responsible, and that will cost them their jobs. To bad when they get tossed out of DC they won't have to get a real job.

[a-new-machine.livejournal.com]

They know that if we should default, and the economy tanks, the American people will hold everyone responsible

You have a lot more faith in the judgment of the American people than I do. Obama gets the blame for breaking campaign promises that he was blocked on, like closing Gitmo when Congress has barred him from spending dime one to do so. People like single targets.

[malakh-abaddon.livejournal.com]

I have faith that we, the American people, are not so completely brain dead, that we will learn. It might take a while, but more of us will be able to see the truth about who is doing what, and hold those responsible accountable.

[eracerhead.livejournal.com]

The frustrating thing for me is that there need not be a deal. Just have a straight vote on raising the debt ceiling, period. I blame the republicans this time on trying to use it as a truncheon to make demands. This is my livelihood being held hostage for their ideology. And BTW I would make the same criticism if it were democrats.