Mr. Sensitive

September 27, 2013

There Will Be No U.S. Debt Default

Filed under: Uncategorized — lbej @ 13:14

Let’s just get this out of the way right now: the financial markets—stocks, bonds, futures, options, all of it—do not care about this government shutdown/debt ceiling nonsense.  Markets don’t care, and neither should anyone else, and let me tell you why: the United States will not default on its debt.  We may get a government shutdown, however brief, if House Republicans hate health care reform so much that they’re willing to lose control of the lower chamber in 2014 just to pitch a fit about it.  Now it’s looking like Boehner may get a clean CR to avoid a shutdown next week because he’s convinced the lunatics in his caucus that they have more leverage over the debt ceiling, despite the fact that the White House is refusing to stake the full faith and credit of the United State on the outcome of budget squabbles.  The reality is that Boehner and the corporatists he represents aren’t willing to do that any more than Obama is, but they can’t tell the crazies that—not yet, anyway.  If the House and Senate agree to avert a government shutdown next week, it will be because Boehner tricked the crazies into fighting the wrong battle.  I don’t envy the corporatists the meltdown they’ll have when the teabaggers figure it out, but ultimately, that’s what happens when you get into bed with anti-everything whackos in order to win a presidential election that you instead lose.  So here are my predictions for the coming showdown:

  1. We may or may not get a shutdown next week.  I’m leaning toward no (about 70/30), meaning the House will pass a continuing resolution to fund the government without the anti-Obamacare provisions.
  2. The debt ceiling will be raised, and there will be no U.S. default—this is a guarantee.  There is no chance of a default.  Zero.  The corporatists and richies might be willing to stomach a brief government shutdown—damage to markets should be minimal—but they will absolutely not allow a default.  A U.S. Treasury default would tank global stock and bond markets and while the longer-term economic shockwaves will hurt people at all income and wealth levels, the damage to financial assets will be instant and extreme, meaning the folks who fund the Republican Party will suffer first.  So it’s not happening.  Boehner and the corporatists will vote with Democrats if they have to, party unity be damned.
  3. None of these issues will be solved until the last minute, because the look-at-me prima donnas in both parties won’t get off the stage until they absolutely have to.  The debt ceiling in particular is a fait accompli and everyone in both parties knows it, but they’ll drag out the proceedings anyway because they’re awful, awful people.
  4. There will be no grand bargain and any resolutions will be temporary, as in lasting no more than a year.  The reason is the same as for prediction #3—these grandstanding buffoons will be in false-drama-withdrawal by December, if not before then.

It’s all political theater, and the long-term consequences may be significant, at least in terms of damage to the institutional credibility of the government and its effectiveness as an instrument of the people’s will.  However, there will be zero impact on the multinational corporations whose fortunes are measured by the stock market.  So the market doesn’t care.

Either way, once we get past October 1st I should at least be delivered from the torment of the endless Ted Cruz ‘call now to sign the voice petition and stop Obamacare’ commercials on CNBC.  Does his face always look like that?  He has to have gotten Botox to force his eyebrows into permanent ‘deeply-concerned’ position.  And how can you sign a petition over the phone?  That’s what it says: ‘sign the voice petition.’  Give me a break.  ‘This is our last chance to stop Obamacare,’ the commercial declares.  No, that was last year’s election, which Obama won.  Now get the hell off my TV, Ted.  I never thought it would be possible to miss the Cialis commercials, but you live and learn, I guess.

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