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July 14, 2011

That Ineffable, Elusive Scent of DOOM

DOOOOM

It chafes His Majesty when the plebs speak out of turn, and it it is simply an act of lèse majesté when mere Congressmen presume to question the motives and actions of the Royal Person.

I must say that I don't find President Obama's legendary peevishness and thin-skinnedness to be imperial so much as pedagogic -- he's got the manners, attitudes, and air of a hack college professor who is being forced to teach a classful of (to him) stupid undergrads. He hates the work, finds it unworthy of his intelligence, and it really irks him to be questioned or interrupted by his students while he's lecturing them. He takes every disagreement as a personal insult; indeed, considers criticism from his perceived underlings as presumption.

Why are the Republicans balking on the debt deal? Because the deal President Obama is offering is to the left of even the Simpson-Bowles plan that the President himself commissioned. If you look at the nuts and bolts of the deal rather than the media spin, you see that the President is offering almost nothing while demanding almost everything. Keith Hennessey writes: "[U]nlike the Bowles-Simpson package, the deal they’re being offered by the President is such a bad one that it’s not really a tough call."

Andy sends word that the fan who caught Derek Jeter's 3000th hit owes $150K in college loans. Add that to the bill the IRS is trying to serve him with, and it just seems like a pretty high price for an afternoon at the ballpark.

The Government's Four-Decade Financial Experiment. A little taste:

In 1970, Treasury debt held by the public (“Treasury debt”) was $290 billion. Agency debt was small by comparison: it totaled only $44 billion.

But by 2006, at the height of the housing bubble, while Treasury debt was up to $4.9 trillion, agency debt had inflated to $6.5 trillion. Treasury debt had increased 17 times during these years, but agency debt had multiplied 148 times!

At the end of 2010, Treasury debt was $9.4 trillion, and agency debt was $7.5 trillion.

PIMCO chief Bill Gross warns US not to mess with the debt-ceiling. Given Gross's business, I'd be just a little skeptical of his motives here. Yes, bond markets may get spooked if the budget negotiations drag on; but any bondholder who hasn't already priced-in higher volatility on US Treasuries is being irresponsible. Raising the debt-celing without forcing spending cuts actually makes the US debt picture worse, not better, and therefore raises the specter of an even bigger default down the road.

Speaking of bond-ratings: The bond ratings agencies are getting louder about downgrading US debt. This probably should have been done a year or two ago, in my opinion. US debt is not triple-A debt -- our financial situation is so dire that it's absurd to put a gold-plated rating on our bonds. We benefit from being the default reserve currency for the world and for being a "safe haven", but simply being the least worst basket-case isn't a justification for carrying a triple-A debt-rating.

Italy's costs to borrow are skyrocketing. This provides a good example of how quickly bond markets can turn against you. A month ago, no one was talking about Italy's sovereign debt. Now....

One of the arguments made against pension reform is that pensioners contribute back to the local economy where they live. This is true, in the sense that they must do all the things any person must do to live: buy food, pay bills, etc. It's also beside the point. First, many pensioners do not retire in the same place that is paying their pension, so no money goes back to the taxpayer who laid it out in many cases; and the net cost to taxpayers for a retiree's pension is far higher than the contribution the pensioner makes back to the economy in retirement.

The Minnesota state shutdown has finally started to bite: MillerCoors products can no longer be sold in the state because the business's license expired. But actually, it didn't expire -- MillerCoors paid the bill in plenty of time, but paid too much, at which point some dimwit state bureaucrat sent the payment back to them without issuing a new license. So this is a story of state governmental incompetence, not of private-sector foot-dragging. Yet this is also supposed to prove how indispensible the state governmental apparatus is...somehow.

UPDATE 1: Most of us saw this coming - last week's jobless numbers revised upward from 418K to 427K.

UPDATE 2: America the broken. I would only answer, as VDH often says, that decline is a choice, not a destiny.


Redneck cats don't give a damn what outsiders think of their yard.


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posted by Monty at 08:55 AM

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