There was no hope once the politicians and media were fully on board with the “default” meme. There was never any possibility of a debt default. The government has plenty of money to cover debt service, which requires less than 10% of average monthly tax revenues. It could also have rolled over any bonds which came due. The only thing it could not have done was issue new debt in excess of the limit. True default was never a risk (not that it would have been the end of the world, anyway; the US has defaulted before). But when even the Wall Street Journal adopted that language (their article today about the congressional deal on “reopening” the government and increasing the debt ceiling began with “A potentially crippling U.S. debt default was averted late Wednesday…” there was no hope left. We all knew that the Republicans would cave. They always do. But they were not able to extract a single concession from Obama and Reid. Truly pitiful.
Coincidentally, this afternoon I attended a speech given by Robert Guest, US editor for The Economist magazine. Before launching into what was actually a rather interesting talk he treated us to a diatribe about the pending “default”, comparing the Congress to a bunch of petulant teenagers (OK, that’s actually not too far off the mark). Nothing he said was correct. Quelle surprise.
– Samizdata commenter ‘Laird’
Didn’t The Economist – a magazine dedicated to free markets and classical liberalism – endorse Obama as a candidate for president.
I honestly can’t remember when I last read The Economist, even a free copy in the doctors office. They are so irredeemably statist there’s no point.
+1 Laird – spot-on.
The Republicans caved, just as I and everyone else predicted. Full marks to Speaker Boehner for holding it together as long as he did, but even he could not stand fast against the growing tide of RINO p*ssies who were more worried that the press were saying mean things about them than they are the future of the Republic.
Spending continues as-before, borrowing continues as-before, Obamacare continues as-before, and the Republicans are dumb enough to believe promises of bi-partisan budget talks, sometime by-me-by, made by an administration that just showed them that there is no such thing as bi-partisanship with them. They’re like the battered wife that just keeps going back, because he promises that this time, he’ll change.
We’re lost. We have an administration that’s turned into a monarchy and an opposition that won’t oppose. We’re broke, and we’re done, and all that we can look forward to is more of the same.
Shame about that.
llater,
llamas
So their strategy is… more spending, more debt…for ever?
I’m sure there is a flaw in that plan somewhere, I just can’t quite put my finger on it.
The big Wall Street people (Claude B. Jamie Dimon and others)were all in Washington D.C. pushing the line of Comrade Barack.
The alliance between the (subsidised) bankers and the Reds continues (the Republicans never had a chance) – and it will continue till the Reds decide the Wall Street crowd are no longer useful – then they (the Wall Street crowd) will be moved from from the Fattening House to….
The SLAUGHTER HOUSE.
Chip – I can not resist the open gaol concerning my dear friends the Economist magazine people…..
Yes they did endorse Comrade Barack – TWICE
Against the ultra moderate John McCain and Mitt Romney.
And in the present conflict the Economist magazine people were pushing for the debt limit not just to be raised – but to be ABOLISHED. So that Comrade Barack Obama could borrow and spend whatever he wanted to.
Stand prepared for them to start pushing “immigration reform” – not libertarian immigration, but endless welfare immigrants with the vote.
And they will also push “universal pre school” – i.e. Comrade Barack’s plan for the Federal government to control children (almost from birth). “Social Justice is glorious, Barack Obama is The One” will chant the four year olds.
The Economist magazine people are dreadful – just dreadful.
Last week they had a fawning obituary for Communist General Giap.
No obituary for the British commander of the Royal Navy during the Falklands War or for the commander of the Royal Air Force in the Falklands war (both of whom died recently).
But General Giap gets an obituary – claiming that he fought for “freedom”.
Tell that to the Boat People.
The Economist magazine is vile – the doctor is insulting his patients by having it in the office.
“But it will reform Paul”.
Perhaps it will reform – perhaps tomorrow it will come out in support of Ted Cruz, Mike Lee and (above all) Rand Paul.
But I am sick of waiting for it to reform.
If someone tells me he is a supporter of the “free market – rolling back the state” I am inclined to believe them.
But if everything they do (for years) is devoted to achieving the OPPOSITE – then I do not believe them any more
Isn’t Boehner one of the RINOs?
There is an excellent article here about defaults down the ages, starting in the very earliest years of the Republic (back when Alexander Hamilton, causer of many of America’s subsequent ills, was Treasury Secretary):
“How can a creditor cry foul when the government to which he is lending has repeatedly said that the value of the money he lent will shrink?”
“The Economist”?
Is that another hobby magazine like RC modeler or New Republic?
Gah. I am going to complement my Tea Party bumper sticker with one that says “F**K DC”.
@ Alisa, who wrote “Isn’t Boehner one of the RINOs?”
Well, yes, he is, but in this case he actually did a good job (IMHO) leading his delegation according to its desires and not according to his. I’m sure that if it had been up to him, he would have swooned much earlier, but in this case he stayed the course because that’s what enough of his delgation wanted. Once it becasme clear that he no longer had the votes to hold the House, he folded – maybe a little bit too quickly, perhaps. Fair enough.
The real p*ssies are the Republican members of the house who sold out their party in the hope that the nasty reporters would stop being so mean about them. They will shortly find out, as so many times before, that the reporters hate Republicans no matter what they do. They should have stood firm, since they were going to be vilified anyway, and forced the Executive to Execute. Even the halt and lame could figure out that President Obama would never, ever allow a default on debt service – he needs that AAA rating too badly, for all the future borrowing he needs to do. He Would Have Blinked. But they never learn – the perfect example is right across the aisle from them – the Democrats never fold, and are whipped into voting the party line no matter what, and they always win when they do.
My Congressman voted for this abomination – he’s already had the e-mail telling him we will never vote for him again. Fat lot of difference that will make – by the time of the next election, we will be so far gone that it won’t matter who we vote for. The systemic statists have taken over.
The newspapers are full of advice on how to reduce your income to take full advanatge of Obamacare subsidies. Do you think a system that encourages that sort of thinking bodes well for the nation’s future? ‘Work less, so you can get more free stuff from the Gummint’ strike you as sound policy for a booming GDP?
Me, neither.
llater,
llamas
Next election? That point came unremarked a great many years ago.
Thanks, Llamas.
Anyone has a link handy to the voting record on this?
He Would Have Blinked.
I’m not so sure about that. Not to disagree with your larger points but I’m not sure Obama really comprehends the realities of the things he says or the actions he performs. In his perverse sort of logic, I think he would’ve been happy to let the shutdown occur if he thought it would be to his political advantage. With the Media covering for him, what could he lose?
Alisa, this link should help.
My girl, Michele, came through as expected.
I yield to no one in my judgment of the current President, personally, and the administration assembled and acting under his authority:
Arrogance
Incompetence
Deceit
However “let us be absolutely clear”
The President does not set the levels of appropriations for the activities of the federal government.
The President does not establish the spending authority for those appropriations.
Both of those items, appropriations and spending, are initiated by and controlled by the legislative branch, which in theory, represents the American electorate who have assigned particular functions to the federal government for purposes of furtherance of particular interests within that electorate.
Sorry hit wrong button:
The electorate appears to want more functions from the federal government than they are willing to pay for in taxes or reduced standards of living.
Perhaps the electorate is too “Politically Ignorant” to effectively conduct the Democratic process for a Republican form of government, as has been, and is being argued in various fora. But it is what it is, and does what it does, and will continue to do so until enough of its members form perceptions of the functions of the federal government which differ substantially from the perceptions which are determining current events.
Thanks Jdm, it does.
I’m aware that the President does not personally set spending or appropriations. I just used him as convenient shorthand for ‘the troika of Democrat leaders who drove us headlong into this ravine.’ It is (effectively) the case anyway – Reid and Pelosi are totally his creatures, and would have done anything he told them to do.
As I said – He Would Have Blinked. On the default issue, at least. Without continued borrowing, he’s got nothing. He would have done anything necessary to continue the debt service while trying to negotiate a debt-ceiling increase. Anything. But, of course, he didn’t have to, because the Republicans lost their spine – as they always do.
The voting graphic at the site that Jdm linked is a perfect illustration of what a Democrat thinks that bi-partisanship means. I could not have graffed it better myself.
llater,
llamas
The Congress maladministers America as Congressman are effwits who can’t get a job elsewhere.
The left are masters of incrementalism. “Compromise” they cry. But the “conservative” position is to resist change. So “compromise” is between change and no change so that becomes some change. But the left have learned to ask for “lots of change” then “compromise” so we get change. Change of the worst kind.
I would like to see some of this “compromise” move in the direction of greater freedom. I don’t think it can be done with conservatives.
As a politician you can’t win when the major news organizations are relentlessly trumpeting the other party’s talking points. The same thing happens every time there’s a shutdown – the public is mostly split at the outset, but eventually it succumbs to the endless stream of propaganda.
Of course the Republicans could have have been better, tactically. Boehner signaled he would cave from the outset, which isn’t exactly good poker. But it wouldn’t have mattered. Perry is right – no matter who you vote for this will continue. Until the money runs out, anyway.
I think he just did.
I’m not halt or lame, but I don’t for a second believe this to be true. In fact, I would say just the opposite. Despite the fact that federal government income is 10-12 times necessary to service the federal debt, Obama would have defaulted anyway. He would have defaulted because it would cause Americans much pain, and he and the press could blame the Republicans.
Obama has only one objective for his second term (in the words of Donald Sensing):
Seen in this light, everything Obama is doing makes perfect sense: ObamaCare, amnesty, NSA / IRS / NPS politicization, federal gov’t shutdown, default, everything.
I’m not sure what the right strategy is. I’m not sure there is one. But I know allowing Obama to default was not it.
Are you KIDDING? A US Federal Government default would be the greatest thing since bacon! Seriously! What that would do to the cost of government borrowing would do more for any pro-liberty agenda than almost anything else I can realistically imagine!
With all due respect, I don’t think you’re considering all of the effects of default. Higher interest rates is only one.
Markets would collapse all over the Western world, destroying a great deal of middle class wealth in the process. The financial system would freeze up, driving more individuals and businesses into bankruptcy. The resulting depression would drive many more Americans (and citizens of other countries caught up in the maelstrom) into government dependency.
But even ignoring these additional effects, the primary effect of default would be to emplace permanent control of the federal and a majority of the state governments into the hands of the Democratic party.
There’s a reason why Obama wanted a default (as long as the Republicans would be blamed for it). This was it.
There are ways around this, but they will never happen as long as the Democratic party controls either the House, Senate, or Presidency.
Michael, if you are saying that The Great Correction is going to hurt a lot of people… well yeah, that is pretty much the idea.
But the truth is this, or something not too dissimilar, *will* happen sooner or later regardless. And you are worried Obama will blame the eeeeevvvil Republicans? Well guess what, he will be half right.
And you know what else? Markets will recover and ‘government dependency’ will not even be an option before that happens.
Which is why a default would be the greatest thing since bacon.
Indeed. PJ O’Rourke pointed this out over a decade ago, and I think it was on here where somebody pointed out that even the Tea Partiers want smaller government provided their entitlements are not touched. The Republicans caved because, deep down, they and their supporters actually want the nice warm fuzzy feeling that somebody else is looking out for them. A minority don’t, but they are very much a minority. The rest are only different from the Democrats in the degree to which they’ll admit it.
Richard Thomas:
Or, as someone pithily observed: democracy is the process of finding a compromise midway between right and wrong.
Michael Kent, I think you overstate the likely effect of a US default. A delay in making an interest payment wouldn’t do much. A principal payment default would be more important, but no one doubts that the US would eventually make the payments due (given the specific circumstances here), so it’s also little more than a timing issue. Given that there is no real alternative to the dollar as the world’s reserve currency (the Euro isn’t ready for prime time, and there is no other possible alternative), in the end the world capital markets would swallow hard and then go back to business as usual. Perhaps a slight blip in interest rates, but I doubt even that would be permanent.
The US has defaulted before. The repudiation of gold payments in 1933 was a substantive default, and unquestionably of greater significance than a mere timing blip, yet our credit wasn’t irredeemably harmed by it. A minor payment delay caused by interparty political squabbles would have even less effect on the world markets.
There was no need for default.
Had the debt limit not been raised the Federal government would still have raised HUNDREDS OF BILLIONS of Dollars MORE in tax than it spends on the national debt.
So default could only occur if Barack Obama had CHOSEN it – nothing to do with not raising the debt limit, a CHOICE (a choice by Obama) to not cut spending on other things (such as Obamacare) in order to honour the bonds and so on.
Of course this is not what the Wall Street bigwigs said – they are government WELFARE QUEENS (totally dependent on the Federal government) and they will say what Barack Obama wants them to say.
As for claims that Tea Party people only want government spending cut that does not effect them – that is not true, many Tea Party people are willing to see programs they benefit from cut as part of an overall deal(for example an end to farm subsidies).
The Republican leadership in House and Senate caved (indeed knew that the whole thing was doomed for the start – which is why they did want to go down this road in the first place) because they know Barack Obama.
Barack Obama HATES the United States of America and the West generally – he would have used the debt limit not being raised as an EXCUSE to inflict maximum amount of harm (via “Emergency Powers” and so on).
As I have already said I would have “gone over the waterfall” anyway – but I have nothing to lose, the Republican leadership (even the RINOs) are not just concerned with their own comfort (although why should they not be concerned with whether their families live or die?) – they STILL THINK THEY CAN GET PAST THIS.
If they just hold things together (so they believe) Barack Obama will eventually go away – and they can rebuild.
They do not understand that Barack Obama is just the tip of the iceberg.
I am now tired of commenting on this matter.
The idea that the deeply indebted US must remove all obstacles to more debt in order to retain credibility is so utterly bizarre that at times I wonder if humanity has been infected with a Stupid Virus and no one noticed.
At least the vote provided a useful sorting mechanism; you know, for when the revolution comes.
“At least the vote provided a useful sorting mechanism…”
Um,…our IRS, HHS,DHS,and NSA have been doing that for some time now.
@Chip, who wrote ‘The idea that the deeply indebted US must remove all obstacles to more debt in order to retain credibility is so utterly bizarre that at times I wonder if humanity has been infected with a Stupid Virus and no one noticed.’
Also known as Drinking Your Way Sober.
It’s not humanity that has the virus. Many/most Americans realize that this is an unsustainable situation and the that the solutions being rammed through the Congress do nothing to improve it and actually make it even worse.
It’s just that President Obama (and his fawning lapdogs in the Congress and the media) honestly believe that winning a Presidential election gives him the sovereign right to do whatever the hell he wants. He thinks, in short, that he was elected King.
Don’t believe me? Just watch his post-vote press conference, in which he said (paraphrasing) “you can disagree all you like, but if you want to change it, you have to win an election.” Apparently, the elections won by every single Congressman and Senator who opposed his wishes count for less than the election that His Royal Highness won.
And this hyperKeynesian madness – the idea that you can spend and borrow your way out of debt, that entitlement spending doesn’t really count as spending, and that Government-created jobs are a benefit and not a cost – that’s what the hell he wants. And we’re going to get it.
He has made himself King. This is not hyperbole. He has forced legislation through Congress which does not meet their rules. He has arbitrarily and unilaterally delayed or suspended parts of the illegitemately-passed laws when they do not suit his political purposes (so much for the law being ‘settled’.) He takes upon himself the mantle of speaking for the Congress on matters of spending and budget – which of course, is the fact as far as the Democratic delegation goes, since they vote his wishes without so much as a single dissenter. And all this is based upon the super-legitimacy which he believes his personal election has given him.
Truly, at this point, L’etat – c’est lui. And his supporters in the Congress are so giddy with what is happening that none has the sense or the caution to step back and say ‘wait a minute. What about the separation of powers? What about the Constitutional position of the chief executive? He’s supposed to be doing, what we tell him to – not the other way about. Is this really a good place to go to?’ No, because it’s their guy doing the winning, they’re all jumping on for the ride. There’s not a competent economist or a historian of parliamentary democracy among them – this is all straightforward, 99 44/100 pure partisan ideology. Our Party, Right or Wrong!
We’re going to be paying the price for this Congress for a long, long time to come. Better hunker down.
llater,
llamas
This is not quite over yet. Merely postponed until January.
Isn’t a key part of the US Fed Government’s long term plan to inflate away the debt they’re racking up? Along with our wealth and livelihoods BTW. Isn’t this why no one in DC is all that worried about just borrowing as much as is needed to buy the next election?
So, on that note, where do you all have your long term savings stashed? What will be most immune from the hyper-inflation that’s coming? Real estate (land with value!)? Stocks/industries that produce staples (and I don’t mean the ones bureaucrats use, although paper pushing appears to be a growth industry world wide)? Gold?
Apologies if such personal financial questions are considered out of bounds here.
Greg, I won’t pretend that I have enough money “stashed away” to qualify as any sort of expert, but FWIW what I have is mostly in real estate or invested overseas via a very geographically diversified insurance company. Oh, and some gold, of course. But don’t take any of that as investment advice.