From Ezra Klein’s Wonkblog today:
Banks are dumping T-bills. “With Washington’s fiscal standoff still unresolved, large financial firms have been unloading investments once considered pristine, suggesting a wild week ahead for markets. Banks are dumping short-term government debt, usually one of the most plain-vanilla investments available, amid fears that Congress and the White House won’t reach an agreement by Thursday to raise the debt ceiling…Senior Treasury officials convened by phone Sunday afternoon to discuss the evolving market conditions, an agency official said…The Securities and Exchange Commission is monitoring bank capital levels and the amount of short-term Treasurys held by financial firms, among other things.” Damian Paletta and Dan Strumpf in The Wall Street Journal.
World should ‘de-Americanise’, says China following default fears. “In China, Xinhua, the official government news agency, said that as American politicians continued to flounder over a deal to break the impasse, “it is perhaps a good time for the befuddled world to start considering building a de-Americanised world”…Xinhua attacked America’s pre-eminent position in the world, adding that “such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated”.” Philip Sherwell and Malcolm Moore in The Telegraph (UK).
The US would be the first major Western sovereign default since 1933 Germany. “Reneging on its debt obligations would make the U.S. the first major Western government to default since Nazi Germany 80 years ago. Germany unilaterally ceased payments on long-term borrowings on May 6, 1933, three months after Adolf Hitler was installed as Chancellor. The default helped cement Hitler’s power base following years of political instability as the Weimar Republic struggled with its crushing debts. “These are generally catastrophic economic events,” said Professor Eugene N. White, an economics historian at Rutgers University in New Brunswick, New Jersey. “There is no happy ending.”” John Glover in Bloomberg.
You can have wealth concentrated in the hands of a few, or democracy. But you cannot have both.
Whatever Works 
Yep, Thursday approaches and these are signs not that damage will be done but that it already has been done. Our reputation for political and financial stability is tarnished. That being the case, it is time I submit that the president announce his intention to use the 14th amendment as authority to pay the nation’s bills if the GOP continues to insist on extortion. His principal reason for not doing so before now was that it would undermine confidence in the normal process, a confidence that now appears to be gone anyway.
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Well shit, Jim. You just came up with a method that I can’t really say is unconstitutional.
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Wonder if that’s Boehner’s plan? Let Obama do it and let him off the hook?
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No, I don’t think it’s Boehner’s plan in the sense that he wants it to go that way. I think he actually wants to avoid damaging the country financially but is helpless to control the Tea Party. Boehner’s position as speaker is looking weaker by the day. What happens when that becomes an accepted fact, I wonder?
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Such a band of crazy folks we have holding our government hostage. This is terrifying indeed.
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Ignorance is always dangerous – giving power to the ignorant is suicide. So there we are . . . old saying something like ‘people get the government they deserve”. It’s a stupid saying (see repressive dictatorships) but I’d say it applies to the US.
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Ah, but the majority of people didn’t vote in these turkeys. Sadly, enough did. But the majority — the same folks who voted in Al Gore and not Bush, do not deserve what we got.
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Amusing how this is being portrayed as a conflict between two “sides” needing to “negotiate.” It’s as if the mugger holding a gun to your head and saying, “You hand me your wallet and in return I won’t pull the trigger,” somehow makes the robbery an equitable exchange between two rational parties.
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Yep! That’s exactly what Obama and Dems are doing by refusing to even entertain the notion of negotiating.
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Dems should never negotiate with the Repubs on the debt ceiling for the same reason one never negotiates with kidnappers: the next time their demands will escalate. And escalate again the time after that; it will never end.
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Most Americans say the same thing about the Dems and we’ve the proof, ala the skyrocketing deficit due to spending, to back up our claim.
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Right now we need deficit spending to get us out of the hole dug by the Repubs when they tanked the economy.
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Exactly right, ojmo, except it ain’t “amusing”, it’s disgusting.
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Yes, that’s what I meant: amusing in a disgusting way.
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Debt ceiling, debt ceiling. Wolf, wolf. Debt ceiling, debt ceiling. Wolf, wolf……………..Really,are you fucking kidding me?
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T4T – do you really think those warning of default are ‘crying wolf’???
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Yep, until the apocalypse happens it just sounds like “the sky is falling”. Truth be told, the system is broken and needs to crash for something new to arise from the ashes. You’d think we would all learn from history. Umm, not so much. You should check out this book. Im not sure if I recommended it before but it is brilliant, illuminating and sobering.
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t4t – No, you haven’t recommended it before (or I didn’t remember!) I just looked at Wright’s books at Amazon and you have now hooked me. I have to read this and his ‘What is America’, which sounds fascinating – they’re on the wish list now!
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