Octopus Overlords

Given the radicalization of the Republican Party, and the influence of far right hardliners through the Speaker deal, I believe it is a very real possibility that the Republicans force a US default. The fact that they are discussing payment prioritization adds even more to the likelihood:



A large number would just prefer to burn it all down as they aren’t interested in governing anyway.

All of this is pretty unsurprising unfortunately. The chances for a major crisis has been brewing for years. I don't think anyone can even guess at what is going to happen in any shape. What's striking is for awhile the GOP was party over country. It has devolved into people over party over country. McCarthy wanted the Speakership so much that he put his personal ambitions over the well-being of hundreds of millions of people. Maybe another Speaker would have been in the same spot with these radicals but he is the one who owns it.

McCarthy is also famously stupid. He probably still believes he can ride this tiger leopard.

Yeah, to me the only question is whether Biden will: (1) go the platinum coin route; (2) declare the debt ceiling unconstitutional and authorize continued payments; or (3) let the U.S. default and hope for the best.

If they actually do this, how could any of them expect to stay in office? This idiocy would harm real people. I would think recall elections would be rife.

Jaymann wrote: ↑Sat Jan 14, 2023 1:28 pm If they actually do this, how could any of them expect to stay in office? This idiocy would harm real people. I would think recall elections would be rife.

A large constituency would blame it on the Democrats, and most states don’t have recall elections.

The only shocking thing to me about this seemingly perennial/annual/whatevs "debt ceiling crisis" is that Wall St. has basically ignored it so far. Possibly burned too many times in the past with calling wolf (though I don't remember massive reactions in previous years when it's been an issue, but my memory sucks, so...)

Jaymann wrote: ↑Sat Jan 14, 2023 1:28 pm If they actually do this, how could any of them expect to stay in office? This idiocy would harm real people. I would think recall elections would be rife.

Well for one, I don't think there are any recall elections for representatives.

But beyond that, they may reasonably conclude that the political harm would fall more on Biden than them. It would probably cause enormous economic damage, which tends to hurt the president's party more than the opposition party.

El Guapo wrote: ↑Sat Jan 14, 2023 1:35 pm

Jaymann wrote: ↑Sat Jan 14, 2023 1:28 pm If they actually do this, how could any of them expect to stay in office? This idiocy would harm real people. I would think recall elections would be rife.

Well for one, I don't think there are any recall elections for representatives.

But beyond that, they may reasonably conclude that the political harm would fall more on Biden than them. It would probably cause enormous economic damage, which tends to hurt the president's party more than the opposition party.

This is where we don't know everyone's motives too. There are a fair amount of true "breakers" (using it in the Tim Snyder context here) in the caucus now. It goes beyond not wanting to govern or this sort of calculus. They think we've been grinding debt for too long and we need a major reset. Beyond possible breakers we have a mix of idiots, religious radicals, and plain old power hungry and grifting bad actors. We've had brushes with disaster but the risk of going over the edge is much higher now. We might get there accidentally as well. In any case, we're all just along for the ride.

El Guapo wrote: ↑Sat Jan 14, 2023 1:35 pm

Jaymann wrote: ↑Sat Jan 14, 2023 1:28 pm If they actually do this, how could any of them expect to stay in office? This idiocy would harm real people. I would think recall elections would be rife.

Well for one, I don't think there are any recall elections for representatives.

Yeah, there is no method to recall any member of Congress.

Gold snuck up above $1900.00

El Guapo wrote: ↑Sat Jan 14, 2023 1:35 pm It would probably cause enormous economic damage.

Not just probably. It would be epic.

Financial (and global, not just US) apocalypse.

Carpet_pissr wrote: ↑Sat Jan 14, 2023 11:45 pm

El Guapo wrote: ↑Sat Jan 14, 2023 1:35 pm It would probably cause enormous economic damage.

Not just probably. It would be epic.

Financial (and global, not just US) apocalypse.

I hear that a lot. What would make it an apocalypse?

US and global markets would tank. Our recently slowing inflation would probably spike. Very likely trigger a global recession. Probably Moody’s downgrade, at least. I can’t even think of all the potential direct and immediate ramifications, but probably the scariest would be the more macro effect of the loss of trust in the US as a previously super solid financial institution.

That would be the nastiest and longest lasting effect probably, and of course would have massive political ramifications.

If you (plural) are someone that believes that the US is in a downward spiral, this would be the nail in the coffin.

Also, if you are legit in the ‘burn it all down’ camp I can’t think of a more powerful blow.

Alefroth wrote: ↑Sat Jan 14, 2023 11:54 pm

Carpet_pissr wrote: ↑Sat Jan 14, 2023 11:45 pm

El Guapo wrote: ↑Sat Jan 14, 2023 1:35 pm It would probably cause enormous economic damage.

Not just probably. It would be epic.

Financial (and global, not just US) apocalypse.

I hear that a lot. What would make it an apocalypse?

The reason that everything Carpet_pissr says will happen will happen is that US government debt is the ultimate safe investment. If it's suddenly not safe for the first time in history, that knocks the pins out from under everything. The dollar could very well lose its almighty-ness to the euro or the renmibi.

That all still seems pretty abstract to me. What impacts would an average American see? Higher prices? Lay-offs? How quickly would things get bad?

Alefroth wrote: ↑Sun Jan 15, 2023 4:22 am That all still seems pretty abstract to me. What impacts would an average American see? Higher prices? Lay-offs? How quickly would things get bad?

No one knows how fast - could be very, could be a slow burn. A lot depends on what Congress is doing and how long the situation drags out.

Carpet_pissr wrote: ↑Sun Jan 15, 2023 12:11 am US and global markets would tank. Our recently slowing inflation would probably spike. Very likely trigger a global recession.

Probably Moody’s downgrade, at least. I can’t even think of all the potential direct and immediate ramifications, but probably the scariest would be the more macro effect of the loss of trust in the US as a previously super solid financial institution.

That would be the nastiest and longest lasting effect probably, and of course would have massive political ramifications.

If you (plural) are someone that believes that the US is in a downward spiral, this would be the nail in the coffin.

Also, if you are legit in the ‘burn it all down’ camp I can’t think of a more powerful blow.

+1 except for the inflation bit...I think it'd probably be a worse problem - deflation - but that's just gut talking. I can't even imagine what the world without a stable US dollar & t-bill looks like. It could spark a major world-wide financial crisis. That's why even the kook's plan starts with paying the interest first. They need to avoid a technical or real default by any means. If they did screw that up it could lead to a contagion of defaults and financial meltdowns. Several large banks have been announcing they're laying off and prioritizing cash for a coming recession. That's probably half horseshit. They're likely at least in part hedging against this nonsense.

Anyway there are a few top line scenarios and the economic outcomes I'd imagine:

1) pay interest and cut spending suddenly

It comes down to how big a chop it is but that'll probably begin an actual recession because we're probably skating close to that line right now anyway.

2) don't pay interest - cut spending suddenly

Potential global financial meltdown and immediate recession and potential long lasting depression - way worse than 2008. The ends of this scenario are all bad. Very bad.

3) regular order

Everything is fine because there is no real crisis except what is being manufactured by these utter idiots.

Handicapping the scenarios is tough. My gut is 1 is most likely, 3 is second, and 2 a distant third. We should be 3 with sane Republicans and Democrats in the House agreeing to a compromise. There aren't any but 1 or 2 pre-crazy times 'moderates' left in the GOP but enough non-complete idiots to get it done. The issue is McCarthy even in the new rules package still wields significant ability to stymie deal making outside his control to stop this. Why would he? Because he would be probably ejected immediately and god knows we're now in the people over party over country era now. I've been chewing on the idea for a few days about what democracy acting like an autocracy means at some level (and still need to think that idea through!). But that idea might map into this situation.

So back to inflation - that'll depend on what happens with growth and the strength of the dollar. That's going to be some balance between recession bringing deflationary pressure and the dollar potentially devaluating due to credit downgrades/default (in practice that'll have the same effect as growth inflation). Where does that balance fall? Who the hell knows.

As to the global picture it gets even more uncertain. The current world order is built out of a now obviously fragile ecosystem of global supply chain flows where no one country can meet all its own needs in all areas. Even including critical flows. And it's not built on goodwill and hugs. It is built on the US dollar. What happens if the grease (US dollars) thins out? As an aside this "math" likely has been part of the reason we've seen some countries trying to dilute into a basket of currencies to try to move away from this risk.

Carpet_pissr wrote: ↑Sun Jan 15, 2023 12:11 am US and global markets would tank. Our recently slowing inflation would probably spike. Very likely trigger a global recession.

Probably Moody’s downgrade, at least. I can’t even think of all the potential direct and immediate ramifications, but probably the scariest would be the more macro effect of the loss of trust in the US as a previously super solid financial institution.

That would be the nastiest and longest lasting effect probably, and of course would have massive political ramifications.

If you (plural) are someone that believes that the US is in a downward spiral, this would be the nail in the coffin.

Also, if you are legit in the ‘burn it all down’ camp I can’t think of a more powerful blow.

+1 except for the inflation bit...I think it'd probably be a worse problem - deflation - but that's just gut talking. I can't even imagine what the world without a stable US dollar & t-bill looks like. It could spark a major world-wide financial crisis. That's why even the kook's plan starts with paying the interest first. They need to avoid a technical or real default by any means. If they did screw that up it could lead to a contagion of defaults and financial meltdowns. Several large banks have been announcing they're laying off and prioritizing cash for a coming recession. That's probably half horseshit. They're likely at least in part hedging against this nonsense.

Anyway there are a few top line scenarios and the economic outcomes I'd imagine:

1) pay interest and cut spending suddenly

It comes down to how big a chop it is but that'll probably begin an actual recession because we're probably skating close to that line right now anyway.

2) don't pay interest - cut spending suddenly

Potential global financial meltdown and immediate recession and potential long lasting depression - way worse than 2008. The ends of this scenario are all bad. Very bad.

3) regular order

Everything is fine because there is no real crisis except what is being manufactured by these utter idiots.

Handicapping the scenarios is tough. My gut is 1 is most likely, 3 is second, and 2 a distant third. We should be 3 with sane Republicans and Democrats in the House agreeing to a compromise. There aren't any but 1 or 2 pre-crazy times 'moderates' left in the GOP but enough non-complete idiots to get it done. The issue is McCarthy even in the new rules package still wields significant ability to stymie deal making outside his control to stop this. Why would he? Because he would be probably ejected immediately and god knows we're now in the people over party over country era now. I've been chewing on the idea for a few days about what democracy acting like an autocracy means at some level (and still need to think that idea through!). But that idea might map into this situation.

So back to inflation - that'll depend on what happens with growth and the strength of the dollar. That's going to be some balance between recession bringing deflationary pressure and the dollar potentially devaluating due to credit downgrades/default (in practice that'll have the same effect as growth inflation). Where does that balance fall? Who the hell knows.

As to the global picture it gets even more uncertain. The current world order is built out of a now obviously fragile ecosystem of global supply chain flows where no one country can meet all its own needs in all areas. Even including critical flows. And it's not built on goodwill and hugs. It is built on the US dollar. What happens if the grease (US dollars) thins out? As an aside this "math" likely has been part of the reason we've seen some countries trying to dilute into a basket of currencies to try to move away from this risk.

Alefroth wrote: ↑Sun Jan 15, 2023 4:22 am That all still seems pretty abstract to me. What impacts would an average American see? Higher prices? Lay-offs? How quickly would things get bad?

This is one of the biggest problems that makes this so dangerous. It's abstractness gives it more space to become reality IMO. It is hard to push back when you have a risk that is so hard to pin down and communicate. On top, there is just a lot of uncertainty. Unnecessary uncertainty at that. Even the specter of this probably is causing layoffs as we speak.

It seems like the financial sector would be able to apply significant pressure to help prevent this from happening.

Alefroth wrote: ↑Sun Jan 15, 2023 2:36 pm It seems like the financial sector would be able to apply significant pressure to help prevent this from happening.

True but that's also terrible. Like we need those rent seeking vampires using this to grab even more power.

It will certainly be interesting to see how the "Burn it All Down" caucus responds when the financial sector tells them how it's going to be. Something tells me they're going to magically get on board and pivot on to something else.

Smoove_B wrote: ↑Sun Jan 15, 2023 2:59 pm It will certainly be interesting to see how the "Burn it All Down" caucus responds when the financial sector tells them how it's going to be. Something tells me they're going to magically get on board and pivot on to something else.

FWIW there is something for us to learn here on this front. How much of this is grift? Still there could be real risk because some of these folks may be true believers. A lot of them gave the financial guys the finger too awhile back and are fundraising via small dollars.

Well yeah, they've got bigger priorities. Like arming the brown shirt kids with automatic rifles to shoot down the Jewish space lasers.

Jaymann wrote: ↑Sun Jan 15, 2023 3:04 pm Well yeah, they've got bigger priorities. Like arming the brown shirt kids with automatic rifles to shoot down the Jewish space lasers.

Also, Hunter Biden is not going to investigate himself.

Alefroth wrote: ↑Sun Jan 15, 2023 2:36 pm It seems like the financial sector would be able to apply significant pressure to help prevent this from happening.

The problem is is that you have enough end time believers in the Republican Party who would happily help God along because they feel He isn’t moving fast enough for them.

Boebert: "We know that we are in the last of the last days. But it's not a time to complain about it. It's not a time to get upset about it. It's a time to know that you were called to be a part of these last days. You get to have a role in ushering in the second coming of Jesus."

That means in my view what is most likely is a standoff where McCarthy cuts everything back except defence and a few other small things to do just enough for Maga to be happy and demands the Democrats sign on to counter the rebels on his own party.

That way if the Democrats are stupid enough to sign on then it’s their fault for the cuts. If they don’t, it’s their fault for not signing on.

We saw this in the UK in Teresa Mays minority government. She would get a deal with the EU on Brexit; the sever all ties rebels would block her and then the opposition parties wouldn’t give her the votes so as to maintain their own bases.

Smoove_B wrote: ↑Sun Jan 15, 2023 2:59 pm It will certainly be interesting to see how the "Burn it All Down" caucus responds when the financial sector tells them how it's going to be. Something tells me they're going to magically get on board and pivot on to something else.

There is no problem some super sized tax cuts for the super rich can’t solve!

Biden is not playing the Republicans’ games - a thread:



https://www.editorialboard.com/this-isn ... ite-house/

I hope he keeps it up.

Grifman wrote: ↑Mon Feb 06, 2023 6:45 pm Biden is not playing the Republicans’ games - a thread:



https://www.editorialboard.com/this-isn ... ite-house/

CNBC has the financial chair on trying to take Biden to task not negotiating future spending cuts. Not sure how much all the conservative spin they have on in the mornings filters to the populace. (McCarthy seems to be on weekly nowadays and was on monthly before becoming speaker. I don't recall Pelosi appearing once, ever and Jefferies has yet appear. Jordan is also a regular. Both will be on today)

It's preaching to the choir. CNBC has been the voice of the oligarchs for a long-time.

malchior wrote: ↑Tue Feb 07, 2023 11:13 am It's preaching to the choir. CNBC has been the voice of the oligarchs for a long-time.

Aren't they all?

No one is going to give you the education you need to overthrow them.

Isgrimnur wrote: ↑Tue Feb 07, 2023 11:45 am No one is going to give you the education you need to overthrow them.

ChatGPT, you’re our only hope!!

When? New guess is between July and September.

The latest projection notes that the final date will be determined by tax revenues the IRS receives in April. Should those revenues decline significantly from CBO's estimates, "the extraordinary measures could be exhausted sooner, and Treasury could run out of funds before July," CBO director Phillip Swagel said in a statement Wednesday.

Ba-dee-ya

The GOP is going to let us default, aren't they?

House Speaker Kevin McCarthy (R-CA) broke new ground in shamelessness Tuesday, sending President Joe Biden a letter accusing him of holding an “extreme position” on the debt limit because the President has refused to negotiate spending priorities — which Republicans have not produced — so long as the debt ceiling is being used by right-wing members as a bargaining chip.

It’s McCarthy, not Biden, who is determined not to let the impending debt limit deadline pass without using it as leverage to get political concessions from the President. The White House has maintained that the time for such negotiations is when Congress has to pass a budget — as it did last year, and will do later this year — not when it must raise the debt ceiling to avoid sending the country into default on its debts.

In an additional level of unseriousness, McCarthy has still not produced a budget. So he’s scolding Biden for his unwillingness to debate completely unidentified policy planks.

Maybe. It'd be insane considering we're teetering on the edge of a global banking crisis. It totally seems like a great time for a game of chicken.

Honestly, I doubt that the Republicans are capable of passing a bill through the House to avoid default that Biden would sign. As soon as a deal becomes acceptable to Biden it would by that fact immediately become unacceptable to the MAGA wing.

The only plausible way out here is Biden executive action. And even that relies in part on SCOTUS not striking it down.

It seems like we want the 1930s all over again. We can start with an economic depression after these jacked up banks implode when government bond yields go absolutely haywire.