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Budget Brinksmanship is Baaack!

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Here we go again. Washington, and to a lesser degree, Mr. Market are all a twitter over the display of macho in the latest round of the Team Dem versus Team Republican professional wrestling bout budget battle.

In case you’ve managed to tune it out thus far, the Treasury will run into debt ceiling limits around mid-October, so Something Must Be Done. And the current version of attempted Republican hostage-taking is to insist Obamacare be delayed a year or weakened in other respects. This Washington Post piece describes how the Republican see their strategy:

To be clear, the GOP leadership has always considered the debt ceiling, not the CR (continuing resolution), to be the place most appropriate to use its leverage. First, if the CR gets passed the threat of a government shutdown and the risk the GOP will be blamed for it goes away…

It is also important to keep in mind that what the House sends over to the Senate to start the bidding isn’t all that critical. If the hard liners want to lard it up with Obamacare defunding and every other shiny object, there is little downside. What is critical is what the Senate does with it and how the House responds to whatever comes back. Sen. Ted Cruz (R-Tex.) and the other members of the shutdown squad don’t have a lot of allies. Unless something changes, there aren’t enough R’s to block a CR that doesn’t include their pet defunding plan. What comes back to the House therefore will in all likelihood not have a defunding measure. At that point the real fight will occur: Can the GOP leadership get 218 votes to keep the government running and then pivot to the debt/Obamacare showdown?

Then the familiar drill will repeat itself. The White House will press for closed door negotiations. The House will insist on regular order. And then we are back to a three-sided face-off and a real test for Senate Dems. Will they stick by the “no changes on Obamacare” edict from the White House or will there be a deal in there.

The New York Times editorial today bemoans how those reckless meanie Republicans are willing to cause a huge train wreck (and arguably hurt themselves worse than the Dems) to force some sort of concession because they haven’t been attentive enough to the calendar and they really might have a shutdown. Key sections:

Until now, the only House Republicans pushing for a government shutdown and debt crisis were a few dozen on the radical right, the ones Senator Harry Reid, the majority leader, referred to as “the anarchists.” On Wednesday, however, the full Republican caucus, leadership and all, joined the anarchy movement, announcing plans to demand the defunding of health care reform as the price for keeping the government open past Sept. 30…

What is worse, the House leadership also announced plans to make a series of demands of the White House in exchange for raising the debt ceiling in mid-October, threatening a government default if they don’t get their way. The demands, announced by the majority leader, Eric Cantor, are a goodie-bag of Republican priorities: approving the Keystone XL oil pipeline, delaying health reform by a year, and changing the tax code in ways that will undoubtedly benefit corporations and the wealthy….

As a strategy, the House plan makes little sense. After the House takes its vote this week to approve a temporary resolution that pays for the government to keep running through mid-December — but defunds the health law — the measure will go to the Senate. Assuming 60 votes can be found to beat back the inevitable filibuster from Republicans like Mike Lee or Ted Cruz, the Senate will almost certainly approve the resolution minus the defunding language, sending the bill right back to the House. Nothing will have changed, except that there will be only a day or two left before the government’s financing runs out…(Their tactics will never turn back health reform, but fighting that battle means Democrats are unlikely to stop the destructive sequester cuts for another year.)

Mr. Boehner is playing the dangerous game of trying to placate the extremists for a few days. But, in the end, the burden will be squarely on his shoulders. If he allows the entire House, including Democrats, to vote on straightforward measures to pay for the government and raise the debt limit, the double crisis will instantly end. If he does not, he will give free rein to his party’s worst impulses.

Now all this pearl-clutching perpetuates the canard that Obama could be forced to shut the government down to preserve cash in order to avoid defaulting on Treasuries. No, folks, even if the Republicans miscalculate, Obama can easily prevent a crisis, so if the government indeed were to shut down, it’s entirely his doing. Ditto with diluting or delaying Obamacare or making any other concession.

Joe Firestone describes how the mouthpiece of Democratic orthodoxy, Ezra Klein, is “terrified” because Boehner has lost control of the rank and file, which is determined to play hardball, and Obama is similarly refusing to negotiate. This is from his transcript of a Chris Hayes segment with the young Ezra and Robert Costa:

Ezra: no. the white house has complete religion on the debt ceiling. they believe not just about this negotiation, but about as a matter of presidential legacy. if they are the white house remembered for permitting the debt ceiling to become a routine matter of hostage taking in american politics, imagine you just think there’s a 10% chance of any debt ceiling negotiation going on. it’s not very big, but over ten years, it’s going to go wrong. this white house does not want their legacy to be they set in motion the chain of events that led to america’s role as an economic corner stone of the world being degraded. so they believe not just as matter of this negotiation, but all negotiations going forward. they need to break this habit now and that’s why i am scared going into this. nobody believes we’re likely to go over the debt ceiling, but if you look at the positions on the table now, the white house’s we will not negotiate and boehner’s, right now, the only thing that is there is the default.

Joe points out the last time we had a budget staredown, the blogosphere debated various ways to circumvent a debt ceiling. No less than Ezra’s fellow mouthpiece of professional lefie thinking, Matt Yglesias, came out in favor of the MMT crowd’s favorite idea, the platinum coin. But here’s a full list of the ways out of this impasse:

1. a selective default strategy by the Executive, prioritizing not paying for things that Congress needed, and perhaps not paying debt to the Fed when it falls due and working with the Fed to get the $1.6 Trillion in bonds that it was holding canceled;

2. an exploding option involving selling a 90-day option to the Fed for purchasing some Federal property for $ 2 Trillion. Then when Congress lifts the debt ceiling, the Treasury could buy back the option for one dollar, or the Fed could simply let the option expire;

3. using the authority of a 1996 law to mint proof platinum coins with arbitrary face values in the trillions of dollars to fill the Treasury General Account (TGA) with enough money to cease issuing debt instruments, and even enough to pay off the existing debt; and

4. using the authority of the 14th Amendment to keep issuing debt in defiance of the debt ceiling, while declaring that the debt ceiling legislation was unconstitutional because it violated the 14th Amendment in the context of Congressional appropriations passed after the debt ceiling mandating deficit spending.

Since, the summer of 2011, beowulf has offered yet a fifth option for getting around the debt ceiling by issuing consols. Consols are debt instruments that pay a fixed rate on interest in perpetuity, but never promise principal repayment at a maturity date.

The debt ceiling law is written in such a way that what counts against the ceiling is the principal repayment guaranteed by the instrument. Since consols provide no principal repayment, one can have unlimited consol issuance without increasing the debt-subject-to-the-limit.

Of all the items on the list, option 1 looks far and away the most likely, although an Administration with more guts might try a bit of option 2 along with it. Unlike a platinum coin, which just sounds too weird to people who haven’t heard about the idea (and the Administration would need to be selling it hard now to see if it could legitimate it in the court of public opinion), options are something the public hears about regularly and sounds less gimmicky. But the larger point is that this budgetary Battle of the Titans is a phony war. Obama can finesse the Republicans if he needs to. But both sides seem quite convinced the other will bear the brunt of the public opprobrium that would result from a government closure (see the Atlantic for a rundown; many of the points it makes are valid, but I disagree about the Clinton margin of victory being a meaningful indicator; Bob Dole ran a world-class terrible campaign).

So hang tight for way too much unnecessary melodrama over the next month. It’s another round of watching the two parties play chicken, with each posturing that it won’t be the one to steer out of the impending crash. The fact is that Obama really wants his Grand Bargain. All of this high drama is necessary for him to pretend to his base that he was forced to do what he’s been trying to do for years: sacrifice old people since he perversely believes that “reforming” Social Security and Medicare will get him brownie points in the presidential legacy ledger. This staged impasse is hard to take it as seriously until there’s evidence that this iteration of budget farce really is different from its predecessors.

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75 comments

  1. Ned Ludd

    I think Obama is aiming a little higher than “brownie points in the presidential legacy ledger.”

    According to a CNN analysis of 12 years of federal financial records, former President Bill Clinton had his most active and profitable year on the lecture circuit in 2012, delivering 73 speeches for $17 million from mid-January 2012 through mid-January 2013. That brought his total haul in speaking fees since leaving the White House to $106 million. […]

    In 12 years as a private citizen, Clinton has delivered 544 paid speeches and earned an average of $195,000 per event.

    Obama’s primary goal is to out-earn Bill Clinton, once he leaves office. He will already be richly rewarded for defending and enriching Wall Street, passing tax cuts for the wealthy, forcing people to buy junk health insurance, and helping to privatize the public school system. The more he can cut Social Security and Medicare, the more money that will flow into his pocket.

    1. Wat Tyler

      Why is the first comment usually a partisan right-wing rant? Is there a bot or something alerting an intern at the Heritige Foundation or the like when a new post appears? I have noticed this tendency on other leftist blogs as well.

      I suppose this is a compliment to Ives in a backhanded way.

      Jim

      1. Ned Ludd

        Do you have an alternative take on Obama’s motives? Yves posits that Obama is willing to “sacrifice old people since he perversely believes that ‘reforming’ Social Security and Medicare will get him brownie points in the presidential legacy ledger.” I disagree, and in my comment I proposed that Obama was driven by financial gain.

        I think there is voluminous evidence that politicians are rewarded for their corruption and subservience to wealthy elites, and many of the rewards come after they leave political office.

      2. Ned Ludd

        My comment implicitly criticized Obama for “defending and enriching Wall Street, passing tax cuts for the wealthy, forcing people to buy junk health insurance, and helping to privatize the public school system.” In what way does my comment sound like “a partisan right-wing rant” written by “an intern at the Heritage Foundation”? Is the Heritage Foundation now against tax cuts for the wealthy? Are they upset by attempts to privatize the school system? Have they released a manifesto calling for socialized health care?

        Also, what color is the sky in your world?

    2. ifthethunderdontgetya™³²®©

      Obama’s primary goal is to out-earn Bill Clinton, once he leaves office.

      I think this conclusion is inescapable.

      Just look at who he’s picked for his Administration. Corporatists and bankster whores, save for a few people he quickly got rid of.
      ~

    3. Doug Terpstra

      This is a cynical POV, Ned — and deadly accurate. The only speech I ever want to hear from Obama is a plea for leniency at The Hague…(denied!)

    4. vrrm

      Given the content of most such posts, I would jokeingly say that they’re actually liberal agent provocateurs. Only half jokeingly though.

  2. RueTheDay

    Obama needs to stand up and say “By voting on and approving the CR, Congress already voted on and approved the amount by which the national debt will increase. By voting against the debt ceiling bill, they are in effect saying that they do not want to honor the commitment they just made a couple of weeks earlier. I will not stand for that.”

    Seriously.

    Get up there and explain it to the American people.

    It’s like buying a car that gets 25 mpg and has a 20 gallon fuel tank and then demanding that it have a driving range of 600 miles.

    The GOP has been allowed to spread misinformation about the debt ceiling for far too long, it’s time to stop it.

    1. LucyLulu

      Americans aren’t getting the message.

      According to polls, they overwhelmingly support BOTH America should pay all her bills AND should not raise the debt ceiling.

        1. MyLessThanPrimeBeef

          If that’s what Americans want – pay the invoices due our military-security-financial-agricultural-industrial complex, because I think that where most of the money is going.

          1. LucyLulu

            I agree that we spend way too much on “national security” and it’s the first place we should slash expenses. It’s time to shore up the home front. Somebody should tell McCain we can’t project the image of a superpower if we’re falling apart at home.

            But most of our money on the military/industrial complex? As stated in another article posted by Yves today, the total numbers are understated, with Homeland Defense and NSA, etc., being spread into “other” categories, but social spending still comprises the majority of our spending at 60% (35% of revenue comes from payroll taxes). The “great recession” has contributed to a significant rise, along with retirement of baby boomers (some earlier than planned). It was under 40% at the turn of the century (2000), and with our aging population, is expected to continue to rise. This is what the Obama and the right are using to justify the “grand bargain” we’re going to get stuck with.

            Since no platinum coin will be minted, the best we could do is to provide fiscal stimulus. The ASCE has predicted a loss of $3T by 2020 unless we invest $1T in infrastructure. That would be a great place to start to provide jobs and a boost to the economy. Investment in green technology and general R&D would also be both short term stimulus and long-term investments in our future. I also believe we need to give Obamacare time to show its inherent problems (private profits). The national infrastructure then can be used as a launching point to provide a more efficient national plan, i.e. single-payer, as the country will be used to the idea of “socialized medicine” (even if it’s not, that’s what they’ve been told…… can use it to promote single payer universal coverage as minor change, grin).

            http://www.usgovernmentspending.com/federal_budget

        1. rodnchance

          Since when have you or any other con-servative cared about what this or any other democratic president thinks.
          The republic party has turned themselves into a anarchist and subversive party. Fellow travelers one and all, is this not correct, comrade?

    2. NotTimothyGeithner

      Explaining it to the American people doesn’t matter, partially because much of the budget process has been done quietly at night.

      Since the Budget Reform Act of 192?, the President would send a budget to Congress, and Congress would mess with it so everyone could have a win. Congress knocks down of a couple of planned “increases” to say they are holding the line on spending while they add local projects to the main budget. Newt shut down the government because he thought he would win, but the argument between Bill and Newt was still around Clinton’s original budget.

      Obama is the first President to just stop doing this aspect of the job. The GAO doesn’t have the staff or resources to provide the number of individual budgets 435 members might request. They can provide answers and projections. The OMB does, and since the President appoints the bosses of the various organizations which actually spend the money, he knows* what the budget is better than anyone. The main issue is the President is obsessed with headlines numbers and can’t move beyond cutting spending while the Federal Reserve is more or less giving money to rich people every day. Congress and the United States are almost too big to get 218 people to work together with the presence of an individual actor who wields enormous power. From the vantage point of the GOP incumbents, they need to find a way to make it look like they are doing a good job on behalf of their constituents, and Obama isn’t buying them off with bridges and so forth, the way it has always been done. Its basically how they sold Obama-care. Its not a perfect process, but there were enough goodies or appearances of goodies to buy people or convince to go away long enough to get it through.

      Right now, they aren’t local news stories about how much better the President’s budget is for the district because there is no President’s budget. Even strong fiscal hawks will flip out at the Tea Baggers when they find out the federal money which helps put on the air show or whatever is going to be cut because they make a killing that day. Women chatter when they get their hair done, but they don’t talk about dry issues such as the debt ceiling. They do talk about public schools, parks, roads, trash pickup, and so forth. Right now the only story is both sides have embraced deficit obsession, but the GOP wants to cut SNAP and the Democrats are largely nebulous but seem dedicated to more wars despite the United States not having enough money for nice things.

      The American people in an age where they don’t approve of military spending, the NSA, and haven’t seen the benefits of the recent increases in federal spending except through a more brutal and militarized police force aren’t going to listen to a boring discussion when the President has had no problem cutting food stamps while building play grounds for the NSA. The question for the American people becomes “why are we spending money on arms dealers and war mongers.” This is the current situation.

      This is why the treasury needs to mint the platinum coin and be done with the nonsense.

      *The person who knows works for the President.

      1. MyLessThanPrimeBeef

        I agree.

        This is the only question that matters – why are we spending money on the military-security-financial-industrial-agricultural-complex?

        The answer seems to be ‘we should not and let’s take that money and help our brothers and sisters in need. No need for a platinum coin. We have enough money.’

      2. winstongator

        Where is your proof that Obama does not submit budgets? I was curious and within 10 seconds:
        Republicans Debt-Ceiling Strategy Relies on Obama Budget

        Senate Republicans have a strategy for lifting the U.S. borrowing limit: offer what President Barack Obama asked for in his budget, then dare him to refuse.

        I think the retirees that make up most of the Tea Party do talk about nebulous ideas, and do not really care about parks, roads, or bridges. You seem to think that TPers are dealing rationally, when many don’t realize that Medicare is a government program!

        What happened was that Obama negotiated from a self-inflicted position of weakness. He tried to work with Republicans and they took advantage. He should have realized quickly that they are not working in good faith and just stand his ground. Republicans keep using brinksmanship because it has been working. They’ll keep using it until it doesn’t.

    3. Doug Terpstra

      You’re confusing Obama with someone who cares and who actually wants to do what he promised. Yes, Obama should and could do a lot of things, but he always does exactly the opposite…every time. That’s Yves’ point here, and it should be abundantly clear to anyone paying attention to Obama’s actions for the last 4.66 years (but who’s counting). He wants, needs this crisis for the Grand Betrayal, his legacy—cutting Social Security and Medicare for the relentless, insatiable kleptocracy—where Clinton and GWB tried and failed.

      Don’t expect a reasoned and impassioned appeal for a principled, moral solution from the Great Deceiver. Pointing out what Obama should do is like advising a scorpion. It’s time to put down the hopium pipe. Joe Firestone too. Obama and his Dixiecratic Party are well beyond redemption.

  3. LucyLulu

    The latest rumors on the Hill is that the leadership in the House has scapegoated Cruz to take the fall if there’s a govt shutdown or we default. They’ve labeled Cruz as the crazy goon who’s going to implode and take everyone else down with him. Boehner and Cantor have been around long enough to know this is a train wreck waiting to happen and its going to hit them hard if it does (harder than Obama). The pressure is on Cruz big time and he’s backed down, pissing off House Tea Partiers but they’re becoming resigned to the fact that they can’t win without Senate support.

    That doesn’t mean there won’t be a Grand Bargain tucked into the deal though. Democrats are already talking about the tough votes on entitlement reform they’re going to have to take.

    The deal is already baked into the cake. No shutdown or default. Yes grand bargain (and Obamacare, possibly postponed but probably not). Obama wins this round. The 99% lose, as always.

    1. LucyLulu

      I’m curious to see what the Senate does with the House food stamp bill….. after the extraordinarily generous farm bill.
      Despite record droughts last year, farmers posted sizeable profits, and will be guaranteed no more than 10% losses in any year, indefinitely into the future. Who wouldn’t love that deal?

      1. John

        With the new farm bill those Red State Christian farmers won’t need God anymore since Washington has answered all their prayers.

        Maybe they will turn Blue.

  4. TC

    “Something Must Be Done” Yes, the president need move to have the debt ceiling declared unconstitutional on account of the 14th amendment.

    Then, when so-called “Mr. Market” threatens to throttle the U.S. Treasury, all the president need do is throw Yellen out of contention and bring in a Hamiltonian willing to SEIZE THE FED and turn it into a National Bank providing credit to finance investments venturing to increase the nation’s capital stock in all its forms (material and human). For good measure, direct the Congress to impose a 1% #WallStreetSalesTax to stabilize federal revenues.

    Finally, beef up his own security, because the deep state surely will take a pop.

    1. MyLessThanPrimeBeef

      If he can beef up his own security, he should just take money from our military-security-agricultural-financial-industrial-complex and give it to the people.

    2. Banger

      Yes. I just want to back up your idea. However, the power-relations in Washington won’t allow such a solution. Besides, Mr. Obama knows very well he is not in charge of his security and has relatively little control over it as a practical matter.

  5. clarence swinney

    Give it a Chance!
    HIGH HEALTH CARE COSTS
    Polls for decades ranged in 70% to reform high health care costs.
    Presidents and Congresses have tried to do it but failed. President Obama did get a program through Congress with goal of providing more effective health Care at a lower cost. He got promises from many organizations to work to reduce costs.—American Medical Assn—National Hospital Assn–
    American Pharmaceutical Assn.
    Total cost in 2012 was $2807B and increase was 3.9 or lowest increase in 53 years.
    It is expected to rise to 6.1% in 2014 and 5.8% in 2015 as the result of millions of uninsured
    at public exchanges and in Medicaid.
    We rank 37TH on World Health Forum for efficiency and number one on costs.
    We spend 17.6% of GDP and number two is Netherlands which spends 12% of GDP.
    The proof will take a few years to evaluate cost effectiveness of Health Care under Obamacare.

    1. Jim Haygood

      From the NYT editorial quoted above:

      Republican priorities: … delaying health reform by a year …

      So, entrenching a broken ‘insurance’ based system that consumes a larger share of GDP than anywhere else in the freaking world qualifies as ‘reform’?

      HA HA HA

      Gotta admire the relentless memesmanship of Pravda on the Hudson.

      Hoping I can pick up some nice used electronics at their bankruptcy sale …

    2. John

      Costs are going down because no one can afford to go get any health care despite paying a fortune in extortion money to the health insurance companies.

  6. psychohistorian

    So here we have a country that is in free fall from the overextension of empire and as it comes crashing down the congresscritters, true to their puppet masters, shows the public its latest iteration of kabuki cover for the stench of America dying.

    Pass the popcorn.

  7. F. Beard

    But didn’t Alexander Hamilton say a national debt would be a national blessing? Yes, a blessing to the banks and the rich but a curse to everyone else.

    We should mint the platinum coin but we should also plan on eliminating the government-enforced monopoly that fiat has for the payment of private debts. Who can legitimately object to that?

    And don’t get me started on the government-backed counterfeiting cartel, the banks. Oops! Too late!

  8. jfleni

    This is really a great opportunity!

    Let the R-nuts defeat ObamaCare, which is a looming disaster anyway, and then push Medicare for all (what they should have done in the first place). In addition, increase SS and Medicare income limits 10 percent a year for five years.

    Of course, it will never pass the House, but as the R-nuts parade around in their jockstraps babbling “free enterprise” theology, everybody (even the poor fools in Hillbill Heaven) will know who tied to fix our real problems and where the blame for not fixing them really lies, and a severe defeat for the R-nuts could be in the cards for the next Congress.

    That is “realpolitick” if Barry Bubba can ever find his unmentionables.

  9. Gaius Publius

    Nice piece. As to this:

    … since he perversely believes that “reforming” Social Security and Medicare will get him brownie points in the presidential legacy ledger.

    Or more to the point, get that Barack H. Obama Presidential Library and Storm Door Centre funded and built.

    Legacy Libraries don’t build themselves, you know; and $500,000-per-speech Thank You checks still need a hand to hold the pen.

    Not snark.

    GP

    1. Yves Smith Post author

      I was trying to be ironic, but I think I channeled the British version….so yes, Obama is clearly serving his owners corporate backers.

      1. F. Beard

        serving his owners corporate backers. Yves Smith

        Ha! Ha! That would sting any self-respecting man with a recent history of slavery in his family but I suppose the Kenyan is immune to such insults.

          1. F. Beard

            As far as his black ancestry is concerned, he’s Kenyan, not American.

            Get it now? Or are you just being your usual obstructionist self? Keep playing the fool, will you? When it might become your second nature? (Assuming it isn’t already.)

            1. AbyNormal

              Congradulations fb…your finally revealing the depths of your pain and the cruelty you’ll execute to deny it.

              1. F. Beard

                You think I’m picking on poor retarded Beefy? Is that it?

                Also, I don’t deny I’m often in pain (mostly a headache an inch or two behind my forehead) but the highs can be splendid – even without drugs or alcohol – as is my current condition.

                I’ll admit to a bit of cruelty too but only in defense. All I really want to do is advocate for ethical money creation and just restitution but WITHOUT plagiarizing the Bible and I get piled on by Beefy and Skippity-do-da for my troubles.

                But it’s been instructive! :)

                1. MyLessThanPrimeBeef

                  Maybe Lambert or Yves will take over entertaining you today, as I will be busy this afternoon with reading up on the story of why the Mayans believed their Maize God had to be sacrificed and eaten so Mayans everywhere could live…anyway, that was before the Conquistadors showed up.

                  Maybe that’s why Mexico and Guatemala do not have as many ‘foreigners’ as they would have had otherwise.

                  1. F. Beard

                    Oh gee, Beefy. You’ve totally destroyed my faith with that zinger! /sarc

                    (See Aby? He’s not so dumb. But he’s kinda cruel too, no? Trying to destroy my faith? Or maybe he’s just being cruel in defense?)

                    But remember we are all descended from Noah and even Adam and Eve or at least their sons Abel and Cain performed animal and plant sacrifices, respectively.

                    But for a more general reply read the book Eternity in their Hearts.

                    Btw, how funny will you find it if those Mayans took advantage of what little light they had to be saved while you reject a veritable supernova in comparison?

      2. MyLessThanPrimeBeef

        Public funding is good. It attacks the front end.

        We need to plug the back end as well; otherwise, it’s business as usual.

  10. Susan the other

    The first obligations we should eliminate in the event of a shutdown are: all military expenditures; all agricultural subsidies; all government drug coverage to big Pharma; all contract obligations between the government and private “health” insurance thieves; all oil and natgas exploration subsidies; all subsidies to higher ed; etc, etc.

    1. MyLessThanPrimeBeef

      Totally agree.

      ‘Is this the NSA? Sorry to tell you this, but the government can run short of money from time to time, and so, to be prudent, we are not funding you this month nor any time in the future. Best wishes!’

    2. enouf

      I like to refer to all those you mention as the;

      ‘L. M. N. O. P. Industrial Complex’

      Lawyer
      Military
      Nuclear
      Oil / Oligarchical
      Pharmaceutical / Plutocratic

      I’m sure this string of letters can be extended out to each end of the alphabet …but it kind of has a nice ring to it, doesn’t it? ;-)

      Perhaps this below (or some semblance of it) was already posted here…

      http://www.washingtonsblog.com/2013/09/big-banks-manipulated-gold-and-silver-markets.html

      …and now, for a nice musical interlude;
      https://www.youtube.com/watch?v=DR91Rj1ZN1M
      “donny darco mad world”

      Love

      p.s. I never saw the movie, just heard the song somewhere and sought it out, …but the snippets/scenes seem apropos for these times.

      1. enouf

        I misspelled ‘Donnie’ …and perhaps that music would’ve been better placed in the “Why Louis CK Hates Cell Phones” thread, but i digress …

        Love

  11. Hugh

    This is a manufactured crisis meant to create a shock doctrine moment that the powers that be can use to loot us even more.

    1. Banger

      Shock doctrine is always there along with many other tricks and magical spells. We need to learn them all.

    2. Mark P.

      ‘This is a manufactured crisis meant to create a shock doctrine moment.’

      Quite. It’s about the looting, as always.

  12. Banger

    For what it’s worth, this is yet another example of the highly complicated and fractious political movements that are going on in Washington. It is not just issues between parties or wings of parties but it extends to the usual deal-making, lobbying, PR/Media, bureaucracies, national security apparatus and so on. In a place like Washington politics is based on a series of deals and temporary alliances–I see these deals as falling apart and the alliances are fraying at the edges. What is missing is an overall dynamic to get people to agree on some fundamentals about what direction the governing elites will take us. They don’t know–and their clients don’t know and the people don’t know either so we have mass confusion and pointless “issues.” We are so used to misdirection and not confronting the simple truths of our situation that no faction has been able to seize the day so to speak.

    My guess is that there’s a chance that political alliances that focus on being somewhat truthful have a chance in this situation to shine. I haven’t seen that emerging–mainly, I suspect, because the mainstream media, if is offended by anything it is by the truth. The whole narrative is built on a tissue of easily debunked lies and half-truths. But everyone in the game agrees to function within that context lest the people start to think that all is not as it appears–my instinct tells me there will be a gradual break-out of that narrative in the next couple of years. I think we’re in for a very bumpy ride till then.

  13. LucyLulu

    From article above:
    “Of all the items on the list, option 1 looks far and away the most likely” (i.e. prioritizing payments, perhaps negotiating Fed debt)

    Reported during the last debt ceiling showdown:

    “Treasury officials, however, have long said their existing computer systems make this sort of selective payment impossible.”

    With the massive numbers of checks printed daily, I suspect this is true. Further, it was reported:

    “the government would only pay the bills that come due each day once it has enough cash on hand to pay them…..[snip]

    According to an August report from the Treasury’s Inspector General, agency officials settled on that solution in 2011 only after rejecting other alternatives, such as selling assets, cutting payments across the board or prioritizing payments.

    “Treasury officials told us that organizationally they viewed the option of delaying payments as the least harmful among the options under review,” the report said.”

    Granted, this was under Geithner, but I doubt Obama will change course under Lew. He’s already demonstrated he won’t mint coins or use the 14th Amendment, and he’d find using consuls to be the equivalent (intent, if not technically).

    http://public.cq.com/docs/news/news-000004204742.html

    As posted earlier, I think the debt ceiling will be raised, after onerous concessions are made. But if it isn’t, I presume the US would be downgraded? How would this affect the markets, and more importantly, us peasants?

  14. Paul Tioxon

    There is a distinct lack of vision among the money-minded set, so let me offer a striking option I’d like to call the Hegemon Sale Lease Back Gambit.

    The entire US Military sells off all assets to the Fed, this includes the crown jewels of the nuclear submarine missile fleet. I would say its value is greater than the value of the entire world economy and all of its assets, including HUNDREDS OF TRILLIONS IN DERIVATIVE CONTRACTS OUTSTANDING, by virtue of its well known capacity to blow the world up several times over.

    Since there is no moral equivalent of war yet universally recognized, its value is priceless, considering that nothing other than war motivates and is acknowledge beyond a shadow of doubt.

    I’ll pick a number, say, the putative value of derivative contracts outstanding, $700TRILLION. And this is will be available as a line of credit with an annual lease payment of $1. It sure beats the hell out of a platinum coin, at least we have done a sale lease back of military ordinance with a foreign sovereign, so it’s not like my idea hasn’t been field tested!

  15. Bapoy

    And who will actually accept the platinum coin?

    Also, why make it 1 trillion and not just make it valued at infiniti. That will for sure solve ALL our issues. Maybe we can each have a 1 trillion coin, how happy would that make me. Yeepee…. Does that sound loony or what?

    Back to reality, it’s not “money” the politicians and wealthy want, it’s purchasing power = goods and services. And by the way, the neither the rich nor the government produce those.

    1. F. Beard

      That coin will enable the onerous debt the banks have driven the population into to be more easily paid off.

      Against that are you? Are you at least being paid by the banks because your family would be on the street otherwise? Or are you just thick-headed and insensitive?

      Or are you the most advanced troll-bot that Peterson or the Koch brothers could fund? If so, I see that serious AI is still a distant dream. No, I don’t actually believe that. Despite your failings, you are surely a human being, Lord help us all.

      1. Bapoy

        Beard,

        Back in 2005, I advised my family and friends not to get into real-estate. I was called loony. Back in 2008, I told many of my friends and family there would be no collapse if banks were allowed to eat their loses. I was called loony.

        Today, I’m saying that the market will self correct again – MUCH harsher than 2008, but it will auto correct nonetheless. You should not be afraid of people like me who want gods hands to deal with it, you should fear a few fools (Fed and Congress) that think they can somehow control our outcome fate. He gave us 2 free passes, 1 in 2000 and one in 2008. As they say, 3rd is the last, we are out of luck. Remember, credit inflates and goes poof – unlike platinum coins. Bapoy is also praying to the lord as well.

        1. F. Beard

          Remember, credit inflates and goes poof – Bapoy

          Yes, it does. And some people like yourself think that one evil – the boom – is countered by another evil – the bust.

          Question: Your loved one is shot by a barbed arrow and you have to treat it. Are you going to pull it out and cause even more damage or use your wits?

          And how do you plan to get rid of “fractional reserve lending”*? Wait till a huge Depression lays waste the economy and start over at the bottom? Is that really the only way? But before you say yes, is it a JUST way?

          *Note to others: Spare me the lectures that banks are not reserve constrained; I know that.

    2. LucyLulu

      “Back to reality, it’s not “money” the politicians and wealthy want, it’s purchasing power = goods and services. And by the way, the neither the rich nor the government produce those.

      Ruh roh. I hope nobody tells the bondholders their paper won’t buy anything.

  16. clarence swinney

    PRESIDENT OBAMA PROMISES
    Cut Bush 1400B Deficit in half in first term—
    Get troops out of Iraq—
    Get out of Afghan in 2014—
    Get Health Care Reform-
    $666 Billion over ten years for Infrastructure Repairs
    Universal access to Kindergarten education funded by new taxes on tobacco
    Repeal automatic cuts by Sequestration.
    Reduce agriculture subsidies for wealthy farm owners.
    Stop individuals from receiving both unemployment and disability payments
    Raise Medicare premiums for wealthy retirees.
    Pass American Jobs Program to create/save 4 million jobs
    Negotiate lower drug prices for Medicare patients
    Limit tax deductions and loopholes for the top 2 percent of income earners
    Cancel Bush Tax Cuts for top 2%
    Make permanent tax credits for low income earners via American Opportunity Tax Credit, Earned
    Income Tax Credit and Child Tax Credit
    Close some loopholes for corporations and lower corporate tax rates
    Suggestion: Cut deep in Pentagon—Means Test Medicare and Social Security
    Great Dreams Mr. President—How many killed by Republicans?

  17. rapierr

    Obama would or could not choose any alternative because there is nobody within 2 degrees of separation from policy in the administration who is able, must less willing,to think outside the box. Obama has no particular expertise on anything and his opinions are shaped entirely by the elite consensus. By definition with these people outside the consensus is disaster and failure. This is especially true in the exercise of power in relation to money and spending. It is here where the financial/corporate world holds total sway and why they don’t want shutdown or budgetary drama what they want less is someone who will go outside the bounds they more and more define.

  18. miasmo

    “the Administration would need to be selling [the platinum coin solution] hard now to see if it could legitimate it in the court of public opinion”

    Why? Won’t the legitimacy in the court of public opinion come when it works and the sky doesn’t fall? The proof will be in the pudding.

  19. TomDority

    What was the name of that coward idiot who had the cowards in congress violate their pledge to uphold the constitution by getting them to sign that idiot’s tax pledge??

    Anyway, there is no better gauge of a politician than to get that tax pledge list and rebroadcast the names and acolytes signed upon it – they are a direct list of plutocrat pawns who operate the myth of ‘anything government is bad’
    Expose these signatures for what they are – a bunch of non-thinking, anti-american cowards of the highest degree. As for the ass-hole who created the pledge – expose him for what he is – the highest symbol of coward and week minded loser that he is.

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