Re: My God, you are an idiot.
 

This is not a shut down. This is a default. This is a "holy shit, they can't even make a ministerial vote to pay for the spending they already agreed on."

And, of course, the economic situation is vastly different. I don't recall anyone then being terribly concerned about a small increase in interest rates at the time (not that I would have been paying much attention as a freshman in college).

Anyone know how "event of default" is defined for CDS on US government bonds? What I've heard (in off-hand conversations and maybe in-house CLEs with lawyers who work on them), not paying your other bills would seem likely to qualify, but I'm only guessing.

Re: My God, you are an idiot.
 

You mean when the budget talks deadlocked? And the government kept paying its debt? And Gingrich and the Rs still got their asses kicked by the voters for playing games with the American economy?

Is that the one?

Re: My God, you are an idiot.
 

I don't know about you, but I'm planning to represent China in their suit against the US. I don't think "we decided not to pay it" is a defense.

Re: My God, you are an idiot.
 

Why do the Rs have leverage?

Oh, that's right -- just like in any negotiation, they have demonstrated that they are willing to walk away from a deal.

Re: My God, you are an idiot.
 

I don't think there are cross default provisions in USTs, but I'm going to check now to be sure.

Re: My God, you are an idiot.
 

They have leverage because the Ds are asking them to change the status quo. No change in status quo is to their benefit. It requires the G to do what the Rs want it to do anyway.

Re: My God, you are an idiot.
 

So now you're saying that they won't raise the debt ceiling?


And, it seems, you are crowing "starve the beast!" Will the Rs think it's a win when we have to slash military spending, in order to pay entitlements that Obama was willing to cut?

Re: My God, you are an idiot.
 

I think club is saying that inbound revenues will mean that we can pay foreign creditors. Just not the military.

Re: My God, you are an idiot.
 

The status quo is "if we don't raise the debt ceiling the US will default." The Rs see that as a benefit?

Re: My God, you are an idiot.
 

Defaulting is to the Rs benefit? Stiffing military families, social security beneficiaries, and states is to the Rs benefit?

Damn. I hadn't realized this.

Re: My God, you are an idiot.
 

No, I'm not saying that at all. I'm saying that the Ds will have to cave because they have no leverage.

Re: My God, you are an idiot.
 

Just like Clinton and Gingrich, right?

Re: My God, you are an idiot.
 

So, you think that the Rs want the USG to default on its obligations (however construed)?

Re: My God, you are an idiot.
 

No. The status quo is that if we don't raise the debt ceiling we will have to choose which payments we make, at least in the short term. Bond holders will get paid. SS will get paid. Government contractors, e.g., will be delayed. The government may also have to sell assets (e.g., gold, land, etc.) to raise cash to pay obligations. Longer term, there is a risk of default on our debt.*

Debt typically refers to indebtedness for borrowed money, not any contractual payment obligation.

Re: My God, you are an idiot.
 

I knew Bill Clinton. Obama is no Bill Clinton.

Re: My God, you are an idiot.
 

Keep up, Cletus. He's refocusing on how the Democrats have no leverage because they're wussies who love America (and probably want to gay-marry it), not on the idea that the Republicans have leverage because they hate America.

Re: My God, you are an idiot.
 

No, but I think a default scares the Ds a whole lot more.

Re: My God, you are an idiot.
 

Sure. A further fucked economy will be terrible for Obama in thE election. Win-win as long as the stupid voters don't figure them out. No fear of that!

Re: My God, you are an idiot.
 

Of course they already have.

Re: My God, you are an idiot.
 

Whether they do or not, why are they common in CDSs? Because creditors care about paying your other bills?

Re: My God, you are an idiot.
 

True. Dems have always been pussies. Why, some Dems thought that a war in Iraq would last more than 6 weeks.

Re: My God, you are an idiot.
 

They are common in most debt transactions because yes, a default on other obligations goes to credit worthiness.

You have been arguing all day that a downgrade wouldn't have a major effect because the market can still determine credit worthiness. I think the same applies here.

Re: My God, you are an idiot.
 

Obviously. But I think there is a difference between a group of people who are usually wrong (spectacularly recently) saying there is a problem and actively demonstrating that there is a problem. Because default on other obligations goes to creditworthiness.

Re: My God, you are an idiot.
 

And others thought the war in Libya would be a matter of days or weeks, not months.

Re: My God, you are an idiot.
 

I think you are right that Republicans have convinced themselves that Democrats are more afraid of default than they are. I think it's true. Many conservatives spoil for this kind of fight, and not many Democrats do.

On the other hand, if they shut the government down, I think Republicans will pay a bigger price politically. They did in 1996, and what they are doing now is much more reckless. Obama is playing to the middle and Boehner and McConnell are forced to play to their base, and the recent polling suggests how that will play to most people.

eta: Oliver Willis:

Re: My God, you are an idiot.
 

say what you will about clinton, but ignoring the 1st WTC and the embassy bombings and the cole didn't extend out troops.

Re: My God, you are an idiot.
 

Yea, I've seen those polls. There are other polls that suggest that the public favors "balance budgets" and the government "living within its means" so ultimately it will come down to who wins the spin game.

Re: My God, you are an idiot.
 

Since it is getting increasingly obvious Boehner doesn't have Republican votes sufficient to raise the debt limit, shouldn't he at some point start working with the Dems in the House?

Cute little "you're not compromising unless you sign my bill" whine tonight, but there's a reason most people who watched Obama turned him off.

Re: My God, you are an idiot.
 

That we can keep paying certain bills is immaterial. The question is whether the downgrade that follows missing the 8/2 deadline spikes our borrowing costs, and with it, makes credit even less affordable and available.

Of course, El Erian of PIMCO, among many others, has been saying DC's display so far has already guaranteed a downgrade. And ratings agencies have suggested any deal without cuts in excess of $3 trillion will result in downgrade.

I think, however, downgrading us is a huge risk for any rating agency. If the market sees through it (and there's a good chance it will*), nobody will ever give a fuck what the rating agencies say next time we go through this. And these agencies can't afford to lose any of their last shreds of credibility. Also, as GGG said, a downgrade kills loads of deals. And the whores at these agencies get paid by Wall Street. Downgrade is pinching their own revenue stream. I don't see those pricks doing it until there's a real, true default, and that will never happen.

*We are still the most stable issuer of debt. Where else can the rest of the world park its money?

Re: Fine, you guys win
 

The debt's cheap argument has merit. But given this is a structural train wreck, if we follow that logic and just keep borrowing, the sheer enormity owed eventually becomes the problem.

It's like buying a house.

"Rates are low! Yay! I need to buy a house! It's so cheap!"

"Check the price, dipshit. The house was 100k cheaper two years ago. Know why? Rates and price: Inverse."

Of course, it's fine to buy the big house when prices keep climbing and you can keep refi-ing at lower rates. But what happens when the bubble on prices pops? No more refi. Now you've got a great rate, but you're underwater.

That's us. Underwater. There is no real recovery on the horizon. Borrowing because it's cheap is wise in the short term, but we have to start to get a handle on it because the math of it only works if we get a real recovery in the mid to long term. And that isn't going to happen.* A mountain of cheap debt is still a mountain of debt.

Perhaps it can be perpetually rolled over. But that? Well, that's Greece. Kicking the can into 2080.

*Apropos given my analogy, because housing is long term fucked. No housing recovery, no relief in unemployment. No relief in unemployment, no true recovery.

I'd like to be wrong.
 

I could be very wrong, but I saw Obama's speech as aimed not at persuading Republicans of anything, but of persuading independents and the media that he has tried to cut a reasonable deal and that the Republicans won't do it. Boehner was maybe trying to do the same thing, but if so, he can't do it as well and was undercut by a loose affiliation with the facts. At least Obama and maybe both of them are anticipating that August 3 will come and go and one of them will be forced to back down, and they are playing for that day.

OTOH, I said that Boehner will sound like he's not going giving an inch until the moment he makes a deal.

Re: My God, you are an idiot.
 

Boy that, Clinton, he sure did ignore stuff.

Sidd, please get on Hank to get over this one too. I'd rather have the score keeping, which while juvenile didn't require continue reminders of his insanity.

Re: My God, you are an idiot.
 

Except, of course, that one side is offering closer to balanced budgets and government closer to living within its means, while the other is saying no to anything and everything. Spin game over.

Re: Fine, you guys win
 

But given the attitude of fairies and leprechauns, blah blah blah...


There are those who argue that the stand still in housing construction for the last three years has left us with a big housing deficit. I don't think that's right yet (for a variety of reasons), but it will be right eventually. In other words, when the economy start moving again there will be significant pent up demand for housing.

When that is, of course, no one knows and all of our policy makers are determined to adopt policies that push it out to the future.

Re: My God, you are an idiot.
 

At the risk of stating the obvious, the reason the GOP is picking this fight now is that they understand that what they want is deeply unpopular, and they are hoping to use the leverage from the crisis they created to ram their program through. If they had public support for it, they wouldn't have to contrive this crisis.

Re: My God, you are an idiot.
 

Are you high?

Re: My God, you are an idiot.
 

You think there is public support for slashing medicare, medicaid or social security? Really? You need to read something other than Drudge. Try Fox. Maybe talk to Penske.

Re: My God, you are an idiot.
 

"Slashing"? Let's be accurate. 99.99999999% of the cuts don't even touch immediate recipients. The people who should be mad about the cuts are those in our age category.

I don't hear many 30-50 year olds flipping out about future cuts.

Re: My God, you are an idiot.
 

Obama and Reid wouldn't be screwing their constituencies to meet the GOP somewhere near the middle on spending cuts if the cutters didn't have a point about the need for spending cuts. Additionally, the markets and just about everyone who grasps math and has an eye on the long term is demanding some sort of cuts. These calls are not made without good reason.

Fuck, Pete Peterson, an absolutely unbiased philanthropist, and his institute have been screaming about the need for cuts to preserve the entitlement programs since 2005.

There is public support. It's not as huge as the public that wants unlimited entitlements. But how could it ever be?

You're not crazy enough to argue, "The masses who want the maximum in benefits at least personal cost know best." If we followed that logic we'd have cratered twenty years ago.

Re: My God, you are an idiot.
 

I don't view social security as an "unlimited entitled" or anywhere near it. Living on social security is no cakewalk. Moreover, changes can have complex affects: if you don't start social security until two years later, for example, you're keeping at least some people working in an economy with no jobs. Some of the money you save on social security may go out in unemployment and other programs. I see some changes as needed to account for the changes in the world since the program was developed (65 had a different meaning then, when life expectancies were shorter), but this is more tinkering that radical change.

Medicare and Medicaid are a different issue and have a more significant impact on the long (not short) term budgeting picture. However the recipe for doing something intelligent on Medicare and Medicaid isn't as part of a no-hearings, middle-of-the-summer last minute debt extension. I also don't think the recipe includes this republican party, which had absolutely squat to say about them during health care reform. Indeed, had they bothered to come to the table then, they could have gotten some significant changes in the program in exchange for a few votes.

I still think the Republican party desperately needs a leader who say tell the tea partiers to go screw and come to the table and deal. But Boehner was to be the Speaker of the Tea Party, not the Speaker of the House.