My God, you are an idiot.

[Adder]

Originally Posted by sgtclub

I agree with you on this, but there is no way they are going to agree on specific cuts, closing tax loopholes, etc. in the next week.

Why not? And what's going to happen in the next few months that is going to make them more likely to agree?

They've been talking specifics for months. Why does it take more months to agree?

which will have far more time to work out the details.

No they won't. Exactly the same thing will happen. They will get to the deadline without an agreement and kick the can down the road.

[LessinSF]

[Adder]

Originally Posted by sgtclub

Do you even read what you post?

Um. They differ in the way you said they agreed earlier but Obama nixed?

[Adder]

Originally Posted by Tyrone Slothrop

eta: On a different point, here's a good Felix Salmon post on the significance of the AAA-rating for US government debt.

Salmon says, "who knows?" which is probably right.

But I think Krugman says it doesn't matter because of his liquidity trap theory (or as DeLong would put it, excess demand for safe financial assets, or Sumner excess demand for money).

Anyway, the point being that the flight to quality means that demand for treasuries way outstrips supply, thus rates "should" be below zero to be market clearing. Thus even if some investors could no longer hold U.S. government bonds because they aren't AAA, there is enough other demand out there for them that rates won't go up.

Is that right? Heck if I know.

But there is an argument that it could be stimulative (somewhere), in as much as if there is some quantity of investor money that is forced out of government bonds and into other investments. I"m not sure what those would be, or that there would be in this country, but at least in theory there is some market for loanable funds somewhere that should benefit, I think.

But the ultimate point is that I don't think the rating agencies really move the market for treasuries. People don't really have much trouble reaching their own judgments about the U.S. government's creditworthiness. We need to worry about spooking the markets, not about pleasing Moody's.

[Tyrone Slothrop]

Originally Posted by sgtclub

Do you even read what you post?

I read all the article, not just what you bolded, which is why I referred to the article's headline:

Debt Deathmatch? Reid And Boehner Introduce Incompatible Plans To Avoid Default

You suggested that the numbers were different and that they would meet in the middle. Obviously, to people like you and me who have read the article, that's not the key difference:

Boehner's plan would initially only increase the debt limit by $1 trillion -- bringing us through early next year -- but give President Obama the authority to raise it into 2012 if and only if Congress passes and he then signs future tax and entitlement legislation that reduces the deficit by at least $1.8 trillion. It likewise includes $1.2 trillion in discretionary spending cuts, and caps spending in out years, which, if exceeded, would trigger automatic cuts to domestic accounts across the board. It guarantees a vote on a Balanced Budget Amendment by year's end. Neither plan touches tax revenue.

Republican aides in both the House and Senate suggest Reid's plan can't pass the House, and likely can't pass the Senate either -- members will oppose it to squeeze Democrats to pass Boehner's plan.

But the White House is pressing House Republicans to pass Reid's plan. And at a press conference with Sen. Chuck Schumer (D-NY), Reid said Boehner's plan can't pass the Senate and even if it could Obama would veto it.

"The Republicans' short-term plan is a non-starter in the Senate and in the White House," Reid said.

But other than that, they're very similar.

[Tyrone Slothrop]

Originally Posted by Adder

But there is an argument that it could be stimulative (somewhere), in as much as if there is some quantity of investor money that is forced out of government bonds and into other investments. I"m not sure what those would be, or that there would be in this country, but at least in theory there is some market for loanable funds somewhere that should benefit, I think.

Respectfully, this is the dumbest thing anyone has said on the board in a while. This is like saying that we'd all be better off if cars stopped working, because some people would bicycle more.

[sgtclub]

Originally Posted by Tyrone Slothrop

I read all the article, not just what you bolded, which is why I referred to the article's headline:

Debt Deathmatch? Reid And Boehner Introduce Incompatible Plans To Avoid Default

You suggested that the numbers were different and that they would meet in the middle. Obviously, to people like you and me who have read the article, that's not the key difference:



But other than that, they're very similar.

I don't think they are incompatible. Reid's plan gets us past the elections; Boehner's does not, and Boehner's has some additional conditions. I suspect the final compromise will be somewhere in between the 2.

[sgtclub]

Originally Posted by Adder

Why not? And what's going to happen in the next few months that is going to make them more likely to agree?

They've been talking specifics for months. Why does it take more months to agree?



No they won't. Exactly the same thing will happen. They will get to the deadline without an agreement and kick the can down the road.

The idea is that they agree to overall numbers now and work out the details later. That would be a step forward, but as I already acknowledged, they will take it to the limit again.

It just hit me why we see things differently. Other than GGG (I think), are all of you guys litigators?

[Adder]

Originally Posted by Tyrone Slothrop

This is like saying that we'd all be better off if cars stopped working, because some people would bicycle more.

Only if you assume that the ratings downgrade is going to have an effect.

[Greedy,Greedy,Greedy]

Originally Posted by Tyrone Slothrop

Respectfully, this is the dumbest thing anyone has said on the board in a while. This is like saying that we'd all be better off if cars stopped working, because some people would bicycle more.

Actually, I think he is circling around but not closing on a key point. There will be a flight of capital out of treasuries, and out of US corporate and municipal bonds. That will benefit companies and governments in other parts of the world. Probably not enough to offset the collapse of equities markets and the grinding to a halt of the financial system, but, in the long term, it will be a big step on the road from the American to the Asian century.

[Adder]

Originally Posted by sgtclub

The idea is that they agree to overall numbers now and work out the details later. That would be a step forward, but as I already acknowledged, they will take it to the limit again.

Though I said something about this before, but don't see it now. Here is Yglesia's with a snippet from Boehner's proposal.

To me, that looks likes like goobbledgook meant to say, "we'll talk about it in November."

Which means that's probably what they will do.

It just hit me why we see things differently. Other than GGG (I think), are all of you guys litigators?

I'm a pseudo litigator who is reminded every time he litigates that I'm not really a litigator.

Note to self: Do not say that to a potential client who calls with a litigation question, even if they are an old friend.

[Adder]

Originally Posted by Greedy,Greedy,Greedy

That will benefit companies and governments in other parts of the world.

I said that, but skeptically because I'm not sure which of them are AAA.

Probably not enough to offset the collapse of equities markets and the grinding to a halt of the financial system

That will not result from a downgrade. It will result from a default, or a market belief that a default is imminent or materially more likely. A downgrade may or may not influence that market belief.

[Greedy,Greedy,Greedy]

Originally Posted by sgtclub

The idea is that they agree to overall numbers now and work out the details later. That would be a step forward, but as I already acknowledged, they will take it to the limit again.

It just hit me why we see things differently. Other than GGG (I think), are all of you guys litigators?

I am not a litigator. You think right, this one time.

[Sidd Finch]

Originally Posted by sgtclub

I agree with you on this, but there is no way they are going to agree on specific cuts, closing tax loopholes, etc. in the next week. So the idea is to agree on the broad strokes and kick the rest to the committees, which will have far more time to work out the details. I assume that committees will not reach agreement until before the next deadline.

The only reason that they've reached the point where you can say "they don' thave time to agree on specific cuts, closing tax loopholes, etc." is because the Rs have consistently refused to discuss tax changes -- to the point of walking out of the Gang of 6, walking out of negotiations with Obama, etc. etc.

[Adder]

Macroeconomics is officially obsolete, "Pelosi: "It Is Clear We Must Enter an Era of Austerity."