We are already starting to see what happens
when a political party is hijacked by people who are crazy AND stupid (NYT link):
Even though many on Wall Street believe that a default remains unlikely, the financial markets are starting to become agitated. Volatility in stocks has soared, and some investors say stock prices are falling because a United States default could severely raise companies’ costs of doing business.
In the Treasury market, investors are starting to sell, fearing that the government will not make good on some interest payments that will be due next month. And complex financial instruments that will pay out if the United States defaults have become twice as expensive to buy as they were at the start of the year.
Analysts say the signs of panic are small for now.
“The metaphor is a pile of sand,” said Mark Zandi, the chief economist at Moody’s Analytics. “You keep putting one piece of sand on the pile, nothing happens, and then, all of the sudden it just caves.”
Several traders and bankers, including Mr. Zandi, said the imminence of a possible default was already damaging the United States’ standing as the most creditworthy country in the world. The tarnished reputation may linger, even if the government reaches a deal, and especially if the country’s financial books remain unbalanced.
“Our aura is diminished. You know people really view the U.S. as the AAA, the gold standard, and I think we’re tarnishing that,” Mr. Zandi said.
The government began preparing for much tougher borrowing conditions in the years since the financial crisis, shifting toward issuing longer-term debt. This was especially needed because much of the debt issued to cover the financial crisis of 2008 was short-term debt.
The United States still enjoys low borrowing costs — below 3 percent on a 10-year-note — but there is fear that the theatrics around the current debate will increase those costs. Low national borrowing costs translate into lower borrowing costs for American corporations and individuals.
You'd think the crazies that have hijacked the Republican party would listen to their deity, Ronald Reagan:
These reactionaries who control the Republican Party now like to talk about how the Federal budget is just like a household one. But when someone running a household finds himself $20,000 in credit card debt, he doesn't stop paying the mortgage and tell his child who has cystic fibrosis that he can't afford her treatment anymore and tell his boss he can't come to work because he can't buy gasoline and instead has to send all that money to Capital One so that he can pay off $25,000 by the end of next month. What he does is cut out luxuries -- the lattes he buys on his way to work, his gym membership, the weekly dinners at Enzo's Casa La Expensive. He decides what he really needs and comes up with a plan to pay off his debt over the long haul. And he considers taking a second job on weekends or setting up a small business to bring in some extra money. Perhaps his wife decides that now that the sick child seems to be doing OK, she can go back to work. Because if it's important to him to pay off that debt, he's going to go at it from both the spending and the revenue side.
But for today's Republicans, it all has to be from the spending side. And it all has to be taken from the elderly and the poor, which is like the fictional guy I cited above deciding that he has to pay off his debt by stopping his child's treatments and medications because he simply can't wake up without a Starbuck's venti latte with an extra shot of espresso every morning and working out at home is for wusses. Yesterday I posted
about freshman Republicans who are still bringing home the bacon to their home states because one state's pork is another state's vital project. They refuse to cut their own projects. They refuse to cut the military, despite the trillions being spent on two pointless wars and military actions that always threaten to become a third. They refuse to ask the population equivalent of the guy for whom a thermos of coffee from home isn't good enough because he's rather sacrifice his kid's lifesaving meds than give up his Starbuck's to do without the latte and kick in a few more pennies. If this country is like a household, and it's like the family I created for illustration purposes, then the Republicans and their rich donors are like the father in this fictional family if his attitude were "If the kid dies, she dies. She costs me too much money anyway. And oh, Mom? We can't afford to have you live here anymore. Your stuff will be out by the curb tomorrow."
Labels: brinksmanship, economic death watch, Greedy Republican Bastards, Ronald Reagan