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Old 10-02-2013, 11:52 AM
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Rebels Without a Clue

By PAUL KRUGMAN
Published: September 29, 2013

This may be the way the world ends — not with a bang but with a temper tantrum.

O.K., a temporary government shutdown — which became almost inevitable after Sunday’s House vote to provide government funding only on unacceptable conditions — wouldn’t be the end of the world. But a U.S. government default, which will happen unless Congress raises the debt ceiling soon, might cause financial catastrophe. Unfortunately, many Republicans either don’t understand this or don’t care.

Let’s talk first about the economics.

After the government shutdowns of 1995 and 1996 many observers concluded that such events, while clearly bad, aren’t catastrophes: essential services continue, and the result is a major nuisance but no lasting harm. That’s still partly true, but it’s important to note that the Clinton-era shutdowns took place against the background of a booming economy. Today we have a weak economy, with falling government spending one main cause of that weakness. A shutdown would amount to a further economic hit, which could become a big deal if the shutdown went on for a long time.

Still, a government shutdown looks benign compared with the possibility that Congress might refuse to raise the debt ceiling.

First of all, hitting the ceiling would force a huge, immediate spending cut, almost surely pushing America back into recession. Beyond that, failure to raise the ceiling would mean missed payments on existing U.S. government debt. And that might have terrifying consequences.

Why? Financial markets have long treated U.S. bonds as the ultimate safe asset; the assumption that America will always honor its debts is the bedrock on which the world financial system rests. In particular, Treasury bills — short-term U.S. bonds — are what investors demand when they want absolutely solid collateral against loans. Treasury bills are so essential for this role that in times of severe stress they sometimes pay slightly negative interest rates — that is, they’re treated as being better than cash.

Now suppose it became clear that U.S. bonds weren’t safe, that America couldn’t be counted on to honor its debts after all. Suddenly, the whole system would be disrupted. Maybe, if we were lucky, financial institutions would quickly cobble together alternative arrangements. But it looks quite possible that default would create a huge financial crisis, dwarfing the crisis set off by the failure of Lehman Brothers five years ago.

No sane political system would run this kind of risk. But we don’t have a sane political system; we have a system in which a substantial number of Republicans believe that they can force President Obama to cancel health reform by threatening a government shutdown, a debt default, or both, and in which Republican leaders who know better are afraid to level with the party’s delusional wing. For they are delusional, about both the economics and the politics.

On the economics: Republican radicals generally reject the scientific consensus on climate change; many of them reject the theory of evolution, too. So why expect them to believe expert warnings about the dangers of default? Sure enough, they don’t: the G.O.P. caucus contains a significant number of “default deniers,” who simply dismiss warnings about the dangers of failing to honor our debts.

Meanwhile, on the politics, reasonable people know that Mr. Obama can’t and won’t let himself be blackmailed in this way, and not just because health reform is his key policy legacy. After all, once he starts making concessions to people who threaten to blow up the world economy unless they get what they want, he might as well tear up the Constitution. But Republican radicals — and even some leaders — still insist that Mr. Obama will cave in to their demands.

So how does this end? The votes to fund the government and raise the debt ceiling are there, and always have been: every Democrat in the House would vote for the necessary measures, and so would enough Republicans. The problem is that G.O.P. leaders, fearing the wrath of the radicals, haven’t been willing to allow such votes. What would change their minds?

Ironically, considering who got us into our economic mess, the most plausible answer is that Wall Street will come to the rescue — that the big money will tell Republican leaders that they have to put an end to the nonsense.

But what if even the plutocrats lack the power to rein in the radicals? In that case, Mr. Obama will either let default happen or find some way of defying the blackmailers, trading a financial crisis for a constitutional crisis.

This all sounds crazy, because it is. But the craziness, ultimately, resides not in the situation but in the minds of our politicians and the people who vote for them. Default is not in our stars, but in ourselves.

from: http://www.nytimes.com/2013/09/30/opinion/krugman-rebels-without-a-clue.html?src=me#h[]

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Old 10-02-2013, 12:16 PM
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Paul Krugman?

Are you posting this as a humorous anecdote? He's the main crackpot of the NY Times. He even makes a few statements on this forum look credible.
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Old 10-02-2013, 12:20 PM
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" it was during the time of Reagan that the country ate the monkey brains."

Government Shutdown - The Reign Of Morons Is Here - Esquire
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Old 10-02-2013, 12:22 PM
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Originally Posted by Air&Road View Post
Paul Krugman?

Are you posting this as a humorous anecdote? He's the main crackpot of the NY Times. He even makes a few statements on this forum look credible.
Crackpot or Nobel Prize winner??
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Old 10-02-2013, 01:38 PM
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Maybe we shouldn't have borrowed our way into this mess in the first place? Perhaps this is time to bite the bullet and try to rise up from the constant cycle of borrowing and increasing the borrowing limit? Maybe the financial world will not be so easily lulled into simply lending and lending and lending money which will force us to spend within our means.

Again, no doubt that it would mean we have to have a problem and some pain to go with it but with the current system of borrowing to pay a debt, it might not be so bad after all. Does this seem like someone borrowing money from a payday lender to pay off another lender and keep increasing the debt? Sure looks like it to me.

Do I believe the showdown is over this? No, not at all. However, this might just be a good side effect that we need in the long run.
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Old 10-02-2013, 01:43 PM
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Crackpot or Nobel Prize winner??
Vladimir Putin is now being promoted in Russia for the Nobel Peace prize for his efforts in the Syrian crisis.
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Old 10-02-2013, 01:50 PM
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Vladimir Putin is now being promoted in Russia for the Nobel Peace prize for his efforts in the Syrian crisis.
I believe that if I offered Putin a few Happy Meals from McDonnalds, he'd trade it. He has asked for 4 but I think he'd settle for 3. I mean, they nominated Obama after 2 weeks in office so what is it worth?
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Old 10-02-2013, 02:02 PM
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I believe that if I offered Putin a few Happy Meals from McDonnalds, he'd trade it. He has asked for 4 but I think he'd settle for 3. I mean, they nominated Obama after 2 weeks in office so what is it worth?
"You'll never find your gold on a sandy beach
You'll never drill for oil on a city street
I know you're looking for a ruby in a mountain of rocks
But there ain't no Coupe de Ville
Hiding at the bottom of a Cracker Jack box"

~~Meatloaf ("Two Out of Three Ain't Bad")
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Old 10-02-2013, 02:08 PM
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Crackpot or Nobel Prize winner??
What does it take to win one of those? HOPE and CHANGE?
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Old 10-02-2013, 02:09 PM
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What does it take to win one of those? HOPE and CHANGE?
Not for an Economics prize.
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Old 10-02-2013, 02:36 PM
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Crackpot or Nobel Prize winner??
Nobel prize in Economics. About on the same level as the nobel peace prize.

- Peter.
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Old 10-02-2013, 02:37 PM
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Originally Posted by Air&Road View Post
Paul Krugman?

Are you posting this as a humorous anecdote? He's the main crackpot of the NY Times. He even makes a few statements on this forum look credible.
......
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Old 10-02-2013, 03:51 PM
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Quote:
Originally Posted by Jim B. View Post
"You'll never find your gold on a sandy beach
You'll never drill for oil on a city street
I know you're looking for a ruby in a mountain of rocks
But there ain't no Coupe de Ville
Hiding at the bottom of a Cracker Jack box"

~~Meatloaf ("Two Out of Three Ain't Bad")
With you, I'd rather have none out of 3. I don't need or want you to want me, need me or love me. OTOH, if you were a legal hottie, we can talk. Age (as long as legal) and race not relevant. Must be female, hot and experienced in bed.
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Old 10-03-2013, 12:10 PM
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PUTIN KERRY 2016
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Old 10-03-2013, 01:05 PM
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Exclamation Huh???!!!

Quote:
Originally Posted by cornemuse View Post
PUTIN KERRY 2016
How come you wanna "Put in" Kerry in 2016???!!

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