My God, you are an idiot.

[sgtclub]

Originally Posted by Adder

Nah. Ratings don't mean much for sovereign debt.

Are you serious here?

[sgtclub]

Originally Posted by Sidd Finch

The debt crisis was very much on my mind this weekend, and I can only wonder how people can just assume that the debt ceiling will be raised. Club, for example, has seemed very sanguine about that.

30 years ago, we saw the advent of the "starve the beast" movement -- Rs who thought you could reduce the size of government (evil, evil government) by lowering taxes and therefore reducing the money available. They were obviously wrong, and they proved it themselves by ramping up deficit spending. (All hail the great fiscal conservatives -- Reagan, Bush, Bush -- who brought us the notion of borrow-and-spend).

Now, a more radical anti-government group is firmly in power among the Rs. And they have the best opportunity ever to truly "starve the beast." Failure to raise the debt ceiling would cripple the US government. And also the US economy, but they've managed to ignore that or convince themselves otherwise.

Sure, we've averted disaster every other time. But, as they say, past performance is no guarantee of future results.

It will be raised. The debt ceiling is the Rs leverage to get real on spending cuts. Otherwise, we would just be kicking the can down the road. I have no problem with them using this for leverage. However, I do not think they should be taking tax increases off the table.

Those of you (not you Sidd) who think that this crisis is all the Rs fault are guilty of the same idiocy as the Fox news watchers you mock. Tell me please, for example, why it is reasonable for the Ds to demand that the debt ceiling be raised to an amount sufficient to get us past the 2012 elections? Is that not playing politics with the issue?

[Adder]

Originally Posted by sgtclub

Are you serious here?

Yes. Here's Krugman (most recent I'm aware of). Mike Konczal. Megan McArdle has made the same point before (when she wanted to counter Krugman complaining about rating agency threats) before deciding the opposite, apparently. I'm sure you can find more if you look.

[Gattigap]

Originally Posted by sgtclub

It will be raised. The debt ceiling is the Rs leverage to get real on spending cuts. Otherwise, we would just be kicking the can down the road. I have no problem with them using this for leverage. However, I do not think they should be taking tax increases off the table.

Those of you (not you Sidd) who think that this crisis is all the Rs fault are guilty of the same idiocy as the Fox news watchers you mock. Tell me please, for example, why it is reasonable for the Ds to demand that the debt ceiling be raised to an amount sufficient to get us past the 2012 elections? Is that not playing politics with the issue?

The threat of failing to raise the debt ceiling is akin to driving your car at a brick wall. Certainly, it focuses the mind and makes possible tough choices that you may not consider when driving down an empty freeway. And that's good, but it doesn't erase the fact that you're driving your car at a fucking brick wall.

The problem with using this technique as a means to change policy is that people will find it tempting to do it again, and again. Which is fine, so long as each and every time, you decide to steer away from the brick wall.

Do you think that putting our little brick wall exercise off until after campaign season is irresponsible politics? Or is the adrenaline kick simply too enticing?

[sgtclub]

Originally Posted by Adder

Yes. Here's Krugman (most recent I'm aware of). Mike Konczal. Megan McArdle has made the same point before (when she wanted to counter Krugman complaining about rating agency threats) before deciding the opposite, apparently. I'm sure you can find more if you look.

All Krugman is suggesting is that the market doesn't pay attention to the ratings when it comes to sovereign debt.

My point is different. There are many funds, especially pension funds, who are limited in the types of investments (or the amount of investments) they can make in various rated securities. A dip in ratings should effect demand for USTs.

[Adder]

Originally Posted by sgtclub

The debt ceiling is the Rs leverage to get real on spending cuts.

Which is why they are jumping on Reid's reported offer of $2.7 trillion in spending cuts and no new revenue?

I suspect Yglesias is right.

Those of you (not you Sidd) who think that this crisis is all the Rs fault are guilty of the same idiocy as the Fox news watchers you mock.

By crisis I assume you mean the Rs saying no to everything the Dems offer, even though it meets the Rs stated goals?

Tell me please, for example, why it is reasonable for the Ds to demand that the debt ceiling be raised to an amount sufficient to get us past the 2012 elections? Is that not playing politics with the issue?

Because you think they will be better placed to deal with this issue next fall?? In the middle of a presidential election, everyone's going to sit down and hash out a better-reasoned agreement?

I guess that fits with the other absurdity I've been hearing from commentators on the right over the last few days, that there just isn't time to do anything other than a short term extension, even though discussions have been going on for months.

I'm sorry, but actually addressing policy problems is never "playing politics." I'm amazed that you can't see that.

[sgtclub]

Originally Posted by Gattigap

The threat of failing to raise the debt ceiling is akin to driving your car at a brick wall. Certainly, it focuses the mind and makes possible tough choices that you may not consider when driving down an empty freeway. And that's good, but it doesn't erase the fact that you're driving your car at a fucking brick wall.

The problem with using this technique as a means to change policy is that people will find it tempting to do it again, and again. Which is fine, so long as each and every time, you decide to steer away from the brick wall.

Do you think that putting our little brick wall exercise off until after campaign season is irresponsible politics? Or is the adrenaline kick simply too enticing?

I have no idea what you are talking about.

[Adder]

Originally Posted by Gattigap

The threat of failing to raise the debt ceiling is akin to driving your car at a brick wall. Certainly, it focuses the mind and makes possible tough choices that you may not consider when driving down an empty freeway. And that's good, but it doesn't erase the fact that you're driving your car at a fucking brick wall.

Except that right now, one party and it's loudest supporters are saying, "nah, that wall is just paper painted like bricks, we don't need to slow down until we are well past it and approaching the steel-reinforced concrete wall another half mile down the road."

Do you think that putting our little brick wall exercise off until after campaign season is irresponsible politics? Or is the adrenaline kick simply too enticing?

What do you mean but putting it off? The only ones who seem to be contemplating that are McConnell (who got shouted down) and now those house Rs who are talking about a small increase.

Not putting it off is agreeing to one of the several Dem offers that cuts spending, and some of which raise revenues too.

[sgtclub]

Originally Posted by Adder

Which is why they are jumping on Reid's reported offer of $2.7 trillion in spending cuts and no new revenue?

I suspect Yglesias is right.



By crisis I assume you mean the Rs saying no to everything the Dems offer, even though it meets the Rs stated goals?



Because you think they will be better placed to deal with this issue next fall?? In the middle of a presidential election, everyone's going to sit down and hash out a better-reasoned agreement?

I guess that fits with the other absurdity I've been hearing from commentators on the right over the last few days, that there just isn't time to do anything other than a short term extension, even though discussions have been going on for months.

I'm sorry, but actually addressing policy problems is never "playing politics." I'm amazed that you can't see that.

You are rapidly approaching Ty territory in your blindness.

[Adder]

Originally Posted by sgtclub

All Krugman is suggesting is that the market doesn't pay attention to the ratings when it comes to sovereign debt.

My point is different. There are many funds, especially pension funds, who are limited in the types of investments (or the amount of investments) they can make in various rated securities. A dip in ratings should effect demand for USTs.

Your's is an interesting point, although if yields don't change much in response to a change in ratings, who cares? (Actually, the fact that yields don't change is central to his liquidity trap theory).

But perhaps Japan is an inapt example and those various institutional investors were already out of Japanese debt.

[Adder]

Originally Posted by sgtclub

You are rapidly approaching Ty territory in your blindness.

How? I don't see the "playing politics" you see.

[Gattigap]

Originally Posted by sgtclub

I have no idea what you are talking about.

It's a metaphor.

Playing with the nation's credit rating as leverage will work until it doesn't. If it works this time, the temptation will be too strong to keep going back to it as the primary means of policy change.

That's bad.

Given the difficulties in raising the debt ceiling this time around, it seems plausible that it would be even more difficult to do in an election year.

[Sidd Finch]

Originally Posted by sgtclub

It will be raised. The debt ceiling is the Rs leverage to get real on spending cuts. Otherwise, we would just be kicking the can down the road. I have no problem with them using this for leverage. However, I do not think they should be taking tax increases off the table.

Those of you (not you Sidd) who think that this crisis is all the Rs fault are guilty of the same idiocy as the Fox news watchers you mock. Tell me please, for example, why it is reasonable for the Ds to demand that the debt ceiling be raised to an amount sufficient to get us past the 2012 elections? Is that not playing politics with the issue?

It is reasonable for the Ds to demand that the debt ceiling be raised to an amount sufficient to get us past the 2012 elections, because the clusterfuck and gridlock that has been going on for the past few months will be greatly magnified if this happens again and closer to the elections.

It is also reasonable, because a stopgap debt ceiling increase is inconsistent with any serious approach to the deficit -- and I agree that there is nothing wrong with using the current situation to press for such an approach. Why would anyone agree to a deal, if the deal involves putting their balls in the same vise 6 months from now?

Notwithstanding your parenthetical, I do think that the extent of the current crisis, and the seeming inability to resolve it (and any actual failure to resolve it) should be blamed entirely on the Rs. Obama offered something a serious compromise, one that moved him far from the traditional Dem base, and that included the serious entitlement cuts we need. The Rs walked away from the table, either because the dread (but, to any rational person, necessary) "tax increases" were included, or because they expressly want a repeat of this fiasco before the 2012 elections (a very stupid move, for the country and ulimately for them because the reactions are so difficult to gauge). So, rather than let Obama bring the Ds around to a more moderate position, the Rs have decided to retreat to their bunker -- and instead let Harry Ried and Nancy Pelosi take over for the Ds.

In other words, the further left elements, who have long told Obama "don't try to compromise with the Rs, they won't do it," have been proven right.

Stupid. I fear we have missed a critical opportunity to turn the fiscal tide.



ETA: I still think you are too sanguine in saying "it will be raised." I won't bet against that.... but if you give me decent odds I might. If we can't borrow any more money, spending will surely be cut -- no? This is "starve the beast" on steroids, and the radical Rs have demonstrated an ideological zeal sufficient to take it.

[Sidd Finch]

Originally Posted by Gattigap

The threat of failing to raise the debt ceiling is akin to driving your car at a brick wall. Certainly, it focuses the mind and makes possible tough choices that you may not consider when driving down an empty freeway. And that's good, but it doesn't erase the fact that you're driving your car at a fucking brick wall.

The problem with using this technique as a means to change policy is that people will find it tempting to do it again, and again. Which is fine, so long as each and every time, you decide to steer away from the brick wall.

Do you think that putting our little brick wall exercise off until after campaign season is irresponsible politics? Or is the adrenaline kick simply too enticing?

2.

And everyone everywhere can say "but I've always turned before I hit the brick wall." But that doesn't mean that no one --- including people with a long history of turning away in time -- has ever driven into a wall. It just means that the people who did are dead.

[Sidd Finch]

Originally Posted by sgtclub

All Krugman is suggesting is that the market doesn't pay attention to the ratings when it comes to sovereign debt.

My point is different. There are many funds, especially pension funds, who are limited in the types of investments (or the amount of investments) they can make in various rated securities. A dip in ratings should effect demand for USTs.

If we don't default, but the stage is set for this fiasco to repeat in 6 months, or 9 months -- before the 2012 election -- are you confident our bond ratings won't decrease?

What if Bachmann wins the primary?