The debt ceiling debate as viewed from Europe

Here’s what Germany’s largest daily newspaper Bild Zeitung has to say about the politics in the US around the debt ceiling:

"Playing poker is part of politics, as is theatrical posturing. That’s fair enough. But what America is currently exhibiting is the worst kind of absurd theatrics. And the whole world is being held hostage.

"Irrespective of what the correct fiscal and economic policy should be for the most powerful country on earth, it’s simply not possible to stop taking on new debt overnight. Most importantly, the Republicans have turned a dispute over a technicality into a religious war, which no longer has any relation to a reasonable dispute between the elected government and the opposition."

"If it continues like this, the US will be bankrupt within a few days. It would cause a global shockwave like the one which followed the Lehman bankruptcy in 2008, which triggered the worst economic crisis since the war. Except it would be much worse than the Lehman bankruptcy. The political climate in the US has been poisoned to a degree that is hard for us (Germans) to imagine. But we should all fear the consequences."

The conservative daily Die Welt writes disparagingly:

While Europe’s chaos is obvious to the Europeans and the rest of the world, there are few signs of self-doubt or self-awareness in the US. In the middle of the poker game between the two political parties to prevent a national default on Aug. 2, polls show that 77 percent of Americans believe that they live in the world’s greatest system of government. Just as many are convinced that life is only worth living as an American.

A lot more of that from other German dailies here: ‘The US Is Holding the Whole World Hostage’ – Spiegel


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About Edward Harrison

I am a banking and finance specialist at the economic consultancy Global Macro Advisors. Previously, I worked at Deutsche Bank, Bain, the Corporate Executive Board and Yahoo. I have a BA in Economics from Dartmouth College and an MBA in Finance from Columbia University. As to ideology, I would call myself a libertarian realist - believer in the primacy of markets over a statist approach. However, I am no ideologue who believes that markets can solve all problems. Having lived in a lot of different places, I tend to take a global approach to economics and politics. I started my career as a diplomat in the foreign service and speak German, Dutch, Swedish, Spanish and French as well as English and can read a number of other European languages. I enjoy a good debate on these issues and I hope you enjoy my blogs. Please do sign up for the Email and RSS feeds on my blog pages. Cheers. Edward


  1. Francois T

    77 percent of Americans believe that they live in the world’s greatest system of government. Just as many are convinced that life is only worth living as an American.

    Gee! Talk about screwed up reasoning and total absence of logic! If life was only worth living as an American, why don’t we witness a tsunami of suicides from across the rest of the world?

    Hey! If we default the 2nd of August, how far out will it be to live in the US of A?

    1. Jim

      I’d rather live in the US than in the EU, where overpaid technocrats in Brussels are trying to impose an ill-advised fiscal union on voters overwhelmingly against it.

      1. Alex SL

        …because US politicians never do anything that US voters did not want them to do, right?

      2. Diego Méndez

        Sometimes, I wonder if there is any fool in the world believing all that BS about the voters’ will and representatives bringing the voice and the choice of the people into Congress, etc.

        Jim, thank you for enlightening me.

      3. KFritz

        Paul Krugman criticized the Brussels bureaucrats while they were considering, and as they implemented the monetary union–not because he detests bureaucrats, but because the Brussels bureaucrats were overreaching. Creating a monetary union when the EU wasn’t ready for it economically or politically.

        Seems Dr. K was correct.

  2. IF

    Yves, I am quite amused that you started citing the leading Springer tabloids. Shows you have an open mind. But then again they represent what the little man is supposed to be thinking in Germany. Just like Murdoch’s press in the UK.

    Ignoring all that, they make sense this time. And people there just don’t understand why somebody feels the need to be potentially so self destructive for so little reason. You would think that self preservation instincts are higher than that. But I often noticed that American born friends simply could not imagine bad things happening to them emotionally (could rationalize it though, as they are smart). Exceptionalism ingrained by birth, not as a pursuit. Personally, I am tired by all this and want to ignore it. But I know it is better to digg in. Maybe CR is wrong after all and it is not just show? Europe certainly doesn’t need distraction right now.

  3. duffolonious

    I hope this isn’t what CalculatedRisk worried about: that the Republican house needs a “Lehman moment” (financial pressures from the real world) – to show that, yes, when we don’t raise the debt limit bad things can happen.

    So Aug. 5th the debt limit gets raised. Sunrise. Sunset.

    1. Mark P.

      Ah, duffolonious, the human comedy.

      OF COURSE, some of the Republican house — more precisely, those recently voted in on the back of deeply-felt ideological convictions by Tea Party-affiliated voters — WILL very much need a “Lehman moment” to make them realize that their ideological convictions don’t come without a price in the real world.

      EVEN THEN, faced with the real-world price, and with blandishments from their weaker Republican colleagues to compromise, some of those Tea Party-affiliated House members will proudly and bravely continue to remain true to their ideologies and will refuse to compromise.

      One of the more amusing facts of human nature is that many people would rather die than change their beliefs.

      1. Sufferin' Succotash

        I suspect a good many of those Tea Partier constituents simply don’t care what happens as long as the Government keeps its hands off their Medicare. After all, it’s not really “their” country any longer anyway [insert dog whistle] and it’s getting less and less so every year. So why should matter to them whether the nation’s finances circle the bowl or not?

      2. S.D. Jeffries

        Blaming the opposition party is certainly easier than disavowing one’s ideology. If the debt ceiling is raised, look for Republicans to blame Obama for the continuing economic slowdown. If the debt ceiling is not raised, look for the Republicans to blame Obama for the ensuing catastrophic repercussions. Look for Obama to blame no one and the Democrats to lose the senate and possibly the presidency in 2012.

        1. John L

          Except, nearly 70% of the American public already blame the Republicans for getting us to this point, and if the debt ceiling isn’t raised they’re more than ready to blame the GOP for the disaster that follows. Sure the GOP will try and call it the “Obama Depression” or something like that, but unless they’ve got a mind-wipe ray everyone’s already seen how immobile they have been on making even the slightest compromise that would avoid this whole problem.

  4. Cathryn Mataga

    I gotta’ admit. There’s a part of me that just wants this thing explode — just to see what happens. All the warnings of another Lehman and all that, well, we’ll see. My guess is the USA defaults or delays payments a few days or weeks and the whole thing results in a massive snooze, relative to the fevered rhetoric.

    1. JasonRines

      Well, it ia going to hurt either way. Shall we have several more years of water torture or rip the band-aid off? The world is hawish and impatient. Outside of the very connected politically, I can relate.

      The deck must be shuffled to ever return to organic growth. Start with energy and open up competition and move on to restart manufacturing.

      Then the younger can at least afford to take our elders in.

  5. /L

    While EUropé as usual have shackled itself in austerity idiocy, no leadership what so ever. With the German mercantile müsterknabe as leader as usual waiting for USA to fuel the global economy with deficit spending so the European mercantile müsterknabes can have export growth.

    Why doesn’t Europe do something for a change and ramp up spending big time when USA do have a massive balance sheet recession? As a minor kick back for all the times US saved EUropes as.

    1. Leverage

      Well, while I agree to somepoint:
      – Half of Europe is itself in a massive balance-sheet recession, and soon balance-sheet depression as insolvency spreads because stupid policies.
      – Exports are not gonna save USA, and can’t without diminishing imports, weakened dollar, which at the same time will hurt costs (at least in the beginning) with things like oil.

  6. Birch

    If we all completely ignored the debt ceiling theatrics, wouldn’t they just deal with it and get on with things? I mean, the only reason this is an issue is because they are getting so much attention, just like todlers. “Look mom, look mom, I’m going to drown myself in a bucket! Look mom, LOOOOOOOOOK~!!!!!”

    They crave attention over useless non-issues so they can do the real damage where no one is looking.

    1. Valissa

      Yup! I’ve developed this theory that many people are addicted to the adrenalin rush from all the sturm and drang. It’s similar to why people get caught up in soap operas, only on a larger scale… To quote a recent article “everyone swims about in a protoplasmic gloop of titillating supposition.” People have been complaining and wailing about their politicians ever since they existed. None of us can do anything about it, so why stess?

      1. MyLessThanPrimeBeef

        We need better actors…in Hollywood and DC, to make them more watchable.

        As usually, the rating agencies are slow – they are only just beginning to threaten to lower them to NW, Not Watchable.

        The next lower rating would be SI – sleep inducing.

        1. and i

          “Victory breeds hatred, for the vanquished is stricken with suffering; but the tranquil man lives in happiness, disregarding both victory and defeat.”

          —Buddha, The Dhammapada, verse 201.

          1. MyLessThanPrimeBeef

            Thanks for the reminder.

            It’s like the story of the Taoist Farmer (the story was told in Charlie Wilson’s War as a Zen story, I think):


          2. MyLessThanPrimeBeef

            Sorry. Clicked and pasted the wrong section.

            Here you go:

            Among the people who lived close to the border, there was a man who led a righteous life. Without reason, his horse escaped, and fled into barbarian territory. Everyone pitied him, but the old man said : “what makes you think this is not a good thing?”

            Several months later, his horse returned, accompanied by a superb barbarian stallion. Everyone congratulated him. But the old man said: “what makes you think this is cannot be a bad thing?”

            The family was richer from a good horse, his son enjoyed riding it. He fell and broke his hip. Everyone pitied him, but the old man said: “what makes you think this is not a good thing!”

            One year later, a large party of barbarians entered the border. All the valid men drew their bows and went to battle. From the people living around the border, nine out of ten died. But just because he was lame, the old man and his son were both spared.

          3. Anonymous Jones

            I’ve paraphrased the “we’ll see” story a few times here.

            Like pretty much everything else, you and I like this story because it fits into our pre-existing beliefs about the universe.

            The story otherwise falls on deaf ears.

            Evangelism for the “truth” is (i) partly delusional and (ii) certainly doomed to failure.

            So why do I still try? No idea. I’m an idiot, I guess.

            On the other hand, I still love hearing that story!

  7. /L

    Right wing utopians want to make USA a third world country and the really scary thing is that a Democratic president is playing along with it. No real resistance anywhere in established media.

    Another round of the Dark Ages are already here. 150 years from now the technical and cultural advancements of the west and its short mild attempt on democracy during the 20th century will be long forgotten. Right wing Tea Party devotes will rule the world we did knew for 1000 years. Then its time for the next ice age. (-:

    Evil for sure will rule if good men and woman do nothing.

      1. Jim

        What is more evil, (i) Borrowing 42% of what you spend, (ii) imposing a national sales tax, which will exacerbate income/wealth inequality that has already reached levels not seen since 1929, or (iii) cutting entitlements, which will exacerbate income/wealth inequality that has already reached levels not seen since 1929.

        1. alex

          Or you could go with the budget proposed by the Congressional Progressive Caucus, not kill old people, _and_ reduce the deficit faster than anything that either Obama or the Repubs have proposed.

          Of course that would demonstrate both fiscal responsibility and government “for the people”, so that caucus is obviously a bunch of dangerous radicals. Where’s Joe McCarthy when you need him?

          1. Ransome

            Just sign a contract when you apply for Medicare that you promise to die within 15 years. Hopefully cheaply. I actually predict that suicide will be the leading cause of death in the elderly. The Boomers are not selfish. My uncle did it rather than go on dialysis and he was a doctor. Scott Nearing did it at the age of 100 (buy the book). There is actually a guy on the radio that is working his way out the door. Ryan and the 2% will be pleased.

            Living with Lou: Dudley Clendinen on a Good, Short Life.
            audio clips:

      2. davidgmills

        Or what you could do is return to the days before the creation of the Federal Reserve and the Income Tax Amendment and return the creation of the currency to the government rather than the banks where it now stands.

        We could do like Lincoln did and print US Treasury Notes instead of Federal Reserve notes and not borrow from the Federal Reserve and not pay interest on the debt to the Federal Reserve.

        That would of course return the country to something similar to what the founders intended. They did not want to owe the Bank of England (a private bank) so I doubt they would have wanted to owe the Federal Reserve either.

  8. Eagle

    Ironically, they are playing into the Republicans’ hands by increasing pressure on Obama – there is absolutely no chance that coupon payments will be missed as a result of not raising the debt ceiling.

  9. view of the european crisis from the US

    Yves, I find it difficult to see why you are lending credence to this sanctimonious, two-faced twoddle.

    As an American I know that the present situation “looks” terrible to outsiders but I will not be lectured about what may go wrong in my own house from a people whose house is already in the process of burning to the ground. Have the Germans any idea how ridiculous their own inter-European bickering looks to us on this side of the Atlantic? Is this America-bashing all a way for them to distract the public’s attention from what is happening around them?

    Quite frankly I’ve had just about enough of the Germans. I hear them now lecturing the poor Greeks and Spaniards about their profligate ways, but I didn’t hear them complaining when Germans were employed making exports to send to Greece and Spain displacing local workers, or when their banks were making profits providing the financing for those very same deals to those very same spendthrifts. All you hear is them now refusing to help pick up the tab for a mess they did very well out of.

    Sure, it doesn’t help my case that the Greeks have acted contemptibly. But the fact remains: a monetary union without fiscal union is like a car without brakes, it doesn’t make sense and its downright dangerous to anyone else on the road, particularly when labor mobility is as linguistically and culturally constrained as it is in Europe.

    We may argue over here about who gets the wheel but at least we’re not riding in a death trap thinking we among all the other passengers will be fine when the crash comes because we’re on the side with the airbags. Even with airbags, crashes are damned bloody affairs and its time for Chancellor Merkel to dig deep and do her duty.

    Anyway, if she doesn’t, I suggest we call in our Marshall Plan debt. 50 years of uncollected interest and principal payments from Germany ought to keep the US government funded for at least a little while longer…

    1. MyLessThanPrimeBeef

      Speaking of cars without brakes, what do you do when the transmission is not working?

      Do you step on the gas pedal to try to get the car moving?

      Step on it again and again?

      Or do you pull over and stop in a safe place, then call a tow truck and have someone who knows take a look at it? If it’s a quality shop, you can even take a nap in the lounge while you wait.

      It’s an unnecessary waste of energy to try to stimulate the car.

  10. RueTheDay

    I would not have said this a few weeks ago, and I’m still uncomfortable saying it now, but there is a real chance that Aug 2 will come and go with no debt ceiling increase. Not 50% or anything close to it IMO, but still a real chance that can’t be ignored.

    House Republicans are gearing up to introduce a Balanced Budget Amendment bill early next week along with a debt ceiling increase bill tied to $2.4 Trillion in cuts and passage of the Balanced Budget Amendment, early next week. Obviously a constitutional amendment has zero chance of passing 2/3 Congress and being ratified by 3/4 of states, but the fact that they’re still playing these silly games THIS LATE in the process is unsettling.

    You have a number of Republicans who won’t vote for a debt ceiling increase under any circumstances, and considerably more who will not vote for one that includes any tax increases. You have quite a few Democrats who won’t vote for any that includes significant Medicare or SS cuts. Almost everyone is looking at the McConnell plan as the failsafe without seriously considering the mechanics of how it would be implemented. They’re setting themselves up for a big, unintended blowup IMO. Like someone who deftly escapes a mugging only to step in front of a moving bus that they never saw coming.

    1. Cedric Regula

      I liked this headline. The brand is getting known. As if Bush wasn’t enough already.

      •IT’S OFFICIAL: The Whole World Thinks Republicans Are Dangerous Maniacs Threatening Everyone – Business Insider

      1. alex

        IT’S OFFICIAL: The Whole World Thinks Republicans Are Dangerous Maniacs Threatening Everyone

        With a great title like that I had to include a link:

        Just as interesting is that even Grover Norquist thinks they’re nuts!

        The lunatics took over the asylum a long time ago, but now the slightly less insane are calling the other inmates crazy.

    2. Mark P.

      RueTheDay wrote: ‘I would not have said this a few weeks ago, and I’m still uncomfortable saying it now … Almost everyone is looking at the McConnell plan as the failsafe without seriously considering the mechanics … They’re setting themselves up for a big, unintended blowup….”


  11. alex

    Bild Zeitung: “the Republicans have turned a dispute over a technicality into a religious war, which no longer has any relation to a reasonable dispute between the elected government and the opposition”

    Sounds like those German reporters understand American politics better than American reporters.

  12. Diego Méndez

    I am afraid governance problems should be read out as widespread in present-day Western democracies, and not as US-specific or EU-specific.

    Democracies have been getting ever more dysfunctional since the demise of the Soviet Union.

    Democracy is a flower. You have to take care of it. Policians are pissing on it.

    Things will get ugly.

    1. Sufferin' Succotash

      Dmitry Orlov on the Soviet-U.S. symmetries.

      One could make a case that the democracies stayed together for the sake of the Cold War.
      For that matter, it’s possible the U.S stayed together for that reason. Minus the Cold War, there was really no compelling rationale for the country to remain in one piece.

      1. Mark P.

        Orlov’s presentation makes good points about US vs. USSR ‘collapse preparedness,’ But to the extent that he’s doing more than righteously rubbing our Yankee noses in our own sh*t, Orlov is probably over-generalizing from his experience as an erstwhile Soviet citizen.

        Yeah, empires all collapse. Yeah, the US is a hegemon and will collapse at some point — maybe some point real soon — and there’s no argument about that. And, yeah, the US also seems big and unwieldy like the USSR was.

        But it’s not as big and unwieldy, since the Soviet Union covered thirteen contiguous time zones, making it the largest empire geographically in history. In fact, the Soviet Union was something of a historical outlier altogether — most especially in how it just evaporated in two dozen months in 1989-1991.

        Most empires take a while to deflate. Sometimes a long while: the Roman empire split into two halves; almost a thousand years later the eastern half was still up and running in Constantinople. The British empire needed at least a half-century to draw down. The Austro-Hungarian empire took three decades or so to fall apart.

        True, a republic’s rot and decay typically begins a long while back, till one day a large, precipitating shock — a great military defeat, barbarians at the gates, massive famine, like that — reveals the reality. And yeah, that rot and decay may be where the US is at now, so that suddenly the loss of the dollar’s global reserve currency status will tip us over and we’ll collapse abruptly like the Soviet Union did.

        But quite likely not. The US is unlike the Soviet Union in not being some synthetically assembled union of smaller states, but rather one of the oldest nations in the world — older than European countries like Germany and Italy, which were only unified in the 19th century — and it’s grown organically.(Cancerously? Mileages will vary there.)

        Furthermore, if the history of how most empires fall is anything to go by, if the US is in process of decline and fall, that process will likely drag on till 2060-80.

        God help us.

        And so the perfectly understandable desire for financial and social apocalypse displayed by many here.

        1. Diego Méndez


          while Orlov’s work sounds overblown, it does make sense. The US has lost much of its manufacturing base in just 30 years, and a monetary crisis (e.g. China selling all its dollars while it invades Taiwan) would mean a collapse of the US economy (and chaos in almost every country).

          Monetary crises are *fast*. If you tried to prevent China from re-unifying its own country (which is like 5 milleania old, it sounds so pitiful to hear an American saying the US is one of the oldest nation…) with the threat of nuclear weapons, which country would support your position? Would the US people even support that stance? Would you kill millions and expose millions of US citizens to annihilation in order to maintain unfair, illegitimate, unmatched military superiority?

          Of course not, especially when China can sink your economy in hours.

          Now imagine for a moment that Hawaii and Puerto Rico decided to jump overboard and get independent (and out of that US collapse). What would prevent other states from improving their (fiscal, economic and even military/strategic) position through independence? If people have to choose between being US and poor or independent and rich, what will they do in the land of money-über-alles?

          OK, all this belongs in the fantasy realm. But Orlov wrote this in 2006, and it seems more plausible with every passing year.

          1. Mark Pontin

            “…it sounds so pitiful to hear an American saying the US is one of the oldest nation”

            I’m not an American, as it happens. I merely point out something that most people tend to forget: that the U.S. is in fact older and of longer standing than much of “Old Europe.”

            Of course, all this is as nothing next to the 5000 years of Chinese history. Although, too, that 5,000 history didn’t help the Chinese one bit in the 19th century and the first half of the 20th against the European powers and Japan.

            “while Orlov’s work sounds overblown, it does make sense.’

            I was familiar with the old Soviet Union and I’ve also known Orlov’s work for a while, and I do not rule Orlov out as entirely unrealistic. Here’s what makes most sense in Orlov’s collapse scenario, IMO.

            The USSR collapsed because the vast majority of its citizens ceased to believe in it, except inasmuch as it was clearly a vast social dungheap in which they merely existed with their shitty exploding televisions and Trabant motor cars, while the Party-connected elite prospered. A large number of Soviet citizens, so to speak, had ’emigrated internally’long before the actual collapse in 1989-91.

            IN the U.S. today, we are seeing that a little of that. They call it the American dream because you have to be asleep to believe in it, George Carlin used to say. Today, quite a few U.S. citizens have woken up, seen that the system works against them, and have ’emigrated internally.’ Enough do that and the U.S. ends, just like the USSR did.

            But I think it will be gradual and mostly Orlov is just led by his own experience: when you lived through the abrupt evaporation of the vastest empire in history, as he did, it colors everything. For the rest ….

            “…a monetary crisis (e.g. China selling all its dollars while it invades Taiwan) would mean a collapse of the US economy (and chaos in almost every country)…”

            Come on. This would trigger a functional collapse of the Chinese economy, too, and Taiwan is simply not that urgent a matter to the Chinese that they’d destroy everything they’ve built so far, precipitate a very nasty war, and simultaneously earn the enmity of the rest of the world by causing (as you suggest)global financial chaos.

            Most people — and most Americans — overrate military power, which is usually too blunt an instrument to do much of what needs to be done. Still, if I was a Chinese strategist, the last thing I’d want to do is to force the U.S. into a position in which it falls back on relying on its vast military preponderance and starts hammering around with that — the largest blunt instrument in history, in effect — in order to get its way.

  13. Susan the other

    Profit uber alles. And never give up. Even when you have nothing to give up…. er especially when you have nothing to give up.

  14. Leverage

    While I agree with the whole premise and the titular: “IT’S OFFICIAL: The Whole World Thinks Republicans Are Dangerous Maniacs Threatening Everyone” it’s quite funny (include democrats too, anyway), europeans (and specially the germans) shouldn’t open their mouth much.

    Must I remind that Germany was saying that a default should be allowed? Why they think a default of Greece (soon to be followed by Ireland, Portugal, Spain, Italy, France and almost anybody not monetary sovereign) would be less dangerous than a failure to rise the debt ceiling of the US (which anyway will keep paying it’s debt)?

    BTW, before someone accuses me of “defending the banks” I couldn’t care less about the default et al. and I even agree, if the banks follow, but I’m just point out this whole charade and hypocrisy of accusing others of playing with fire, when your house is burning. After all neoliberal elites in Brussels and Frankfurt are number one austerians.

    World upside down: the blame game for not doing what it has to be done to the other side of the Atlantic, while both sides engage in the same suicidal policies: saving banks and austerity.

  15. Because

    I suspect war time government is coming to America in the next 2-10 years ala Civil War and WWII. Capital has overinvested for short term gains overseas to much and not enough at home.

    Once government siezes capital markets, the game ends. All capital will be repatrioted home as will the multi-nationals. Globalism will be destroyed and a new militarism based on conquest will begin.

    A liquidation will not do the trick. Whether the slow, snail pace speed of now or all at one of the free marketers. America’s middle class will see their wealth completely destroyed. All government programs that benefitted them destroyed. A way of life destroyed. I laugh at Austrian and Keynesians who think their little intellectual theories will save them. Massive fiscal stimulus won’t, nor will a liquidation. This is the consenquence of globalism and internationalism.

    Finally after the government siezes capital markets at the request of the now deposed middle class, they will begin massive pumps of investment into the US economy. Re-industrialization, forced conservation/environmental policies and massive public works. The American war machine will be rebuilt for destruction ala the Roman legions. Countries like China and Brazil could be destroyed in the wink of a eye. They will reraise a new generation of capitalist and the reborn middle class with all the protections they want. America will be reborn.

    But at a cost. Much like the cost that ended the Roman Republic. I think we could even come to a point, the current “founding fathers” are repudiated completely and the men that bring the next transformation the new and “real” founding fathers. As has been posted on this site before, the American revolution is not what it seems and pseudo-rightists who whine about freemasonry, do not even understand they are basically ridiculing themselves. Freemasonry’s role in developing “monotheistic capitalism” as America’s engine is badly underplayed. Even though you had Jefferson worry about this “problem”, he rather banged slaves and was all talk(would have made a good college professor).

    So we have the end of America v1. The beginnings of America v2. I see the Washington Mall being razed and new structures being built in its place. I see a patriotic rally with the new “founders” waving in the distance. Cheering economic revival and the destruction of our enemies overseas. Cheering the liqidation of half of Asia and the sucking dry the oil wells of the middle east. The crowd will cheer and cheer and cheer some more.

    Then steps out a man, who is the Washington of the group. He wears sunglasses and open polo shirt while looking smooth in slack jeans. Once a office equipment salesman and University of Wisconsin poiltical science grad, he became a major player in the party’s rise to power. The collapse unlocked abilities he never knew he had. But he drove the party to new heights while seizing power in the xx elections.

    Americans had finally found their Caeser.

    1. MyLessThanPrimeBeef

      Julius Caesar would have succeeded in becoming an emperor had he had McConnell in the Senate to cede legislative power to the executive branch.

      The McConnell plan seems like a bad precedent.

    2. Ransome

      Sounds like the turner diaries with an additional chapter added. The 2% have already left the airport for an unknown country owned by the Nature Conservancy. After liquidating his fund overnight, J looks over his shoulder and says I hope they don’t think I stored the gold in the US.

    3. Mark P.

      ‘The American war machine will be rebuilt for destruction a la the Roman legions. Countries like China and Brazil could be destroyed in the wink of a eye.’

      Horse manure. It’s the 21st century; you may have noticed that fact yourself.

      Since Hiroshima and Nagasaki, there’ve been eight or nine major wars (depending how you count) where one or both sides possessed nuclear weapons. So nuclear deterrence clearly doesn’t work very well. Still, as problematic as such deterrence is, nuclear arms provide any state with a high degree of destructive parity against an opponent with superior military resources, and nuclear deterrence works with high reliability in this one context.

      In our own past, in fact, this exact line of reasoning dictated Eisenhower’s New Look national security policy in 1954, when nuclear weapons first became central to U.S. strategic doctrine. As Eisenhower’s Secretary of State, John Foster Dulles, explained: “We cannot build a 20,000 mile Maginot Line or match the Red armies.” Though we’ve forgotten it now, the U.S. confronted numerically superior Soviet and Chinese conventional forces at that time. Hence, Dulles proposed that America embrace asymmetry and nuclear arms, with their “vast new possibilities to stop open aggression before it starts.”

      What worked for the U.S. in the 1950s works for smaller states like North Korea and Iran today. Increasingly, it’ll be the case that it’s the U.S. and other major powers that find themselves deterred by smaller states’ nuclear weapons. Simultaneously, cruise missile technology is getting democratized — for instance, Hezbollah already has more of the things than most nation states. This, in turn, increasingly means that U.S. air carriers and similar ‘big platform’ weapon systems are increasingly just big, slow-moving targets. Altogether, your vision of fascist U.S. legions conquering the world simply can’t play out.

      Will all this be a stable world? Hell, no. Will nuclear weapons prevent all wars between great powers like the US and China? Again, no.

      But what 21st century great power war will increasingly look like is covert sabotage of the infrastructure of your opponent’s civilization, exploiting the targeting specificity that new technologies will allow.

      Think Stuxnet, the currently ongoing assassinations of Iranian nuclear scientists, cyber-attacks on key infrastructure, targeted drone and cruise missile attacks, special forces strikes as with the bin Laden execution, engineered bioweapons, etcetera.

      1. Anonymous Jones

        Great comment. Your analysis is clearly trying to avoid “fighting the last war” with the focus on new technologies at the end.

        Of all the things you failed to mention, however, is (IMO) one of the most significant.

        Mechanized, highly productive surveillance will shift the power dynamics not just of major warfare but of guerrilla tactics as well.

        1. Mark Pontin

          Absolutely. Almost anybody can play.

          Still, one of the most interesting things right now is that — contrary to many predictions from the ‘fourth generation warfare’ crowd — ‘anybody’ includes great states. It turns out that great states have great resources for unconventional warfare if they can make the conceptual and logistical leap.

          And the U.S. and China are both working on it. For example, that’s why (besides whatever electoral political calculations were involved for the Obama administration)David Petraeus has been moved to the position of CIA chief.

  16. PQS

    “But what America is currently exhibiting is the worst kind of absurd theatrics”

    As much as I hate the cowering Democrats, and their King of Capitulation, Barack Obama, I have to disagree with this point. There is a particular group exhibiting the worst kind of absurd theatrics, and it isn’t anyone with a D behind their name….in fact, it is the very same group of people who have screamed for two years about birth certificates, and death panels, and all manner of nonsense, enabled in their psychoses by the Media.

    I suppose I should be grateful that it took the German media this long to notice just how many crazy people are hogging the spotlight in America….

  17. Birch

    If the U.S. defaults, wouldn’t that be a fantastic precedent for the rest of the world? How could anyone pretend, then, that Greece shouldn’t default, or all of Africa, or the indebted millions of individuals with hardly anything to lose? Do the Republicans realize they’re playing with potential Jubilee? They probably do, which is why I expect this whole thing is a hoax.

    I’d like to believe that something could change on Aug. 2, but I might as well believe Jesus’ll show up that day and go apeshit on the moneychangers again.

    Chuckle, shake you head, and moooo’ve along.

    1. Sufferin' Succotash

      “Do the Republicans realize they’re playing with potential Jubilee? They probably do, which is why I expect this whole thing is a hoax.”

      Some of them do, but the majority hasn’t a clue about the possible consequences of a default. The degree to which much of the country’s political class(including quite a few Democrats)is insulated from reality is still not sufficiently appreciated by those of us outside that class. These jokers haven’t a thought in their heads that hasn’t been put there by consultants, pollsters, lobbyists, and think tanks. So it’s not surprising that there’s not much in the way of independent judgement there either.

    2. Leverage

      Ah yeah, have you read ‘Debt: The First 5,000 Years’ (by David Graeber) recently?

      The abuse of power by creditors (or debtors) can have unpredictable consequences in society, and some creditors are actually abusing their power too much, if it breaks down this could be a paradigm of shift like there has been other times in history of humanity.

      We have to take in mind that we only started to use a pure virtual credit system since early 70’s, after having used mostly a bullion based one for centuries, both systems have their own peculiarities and characteristics and it may take time until cultural patterns and structures evolve to exploit and balance these institutional and power structures.

      This crisis may be one of the first steeps with global impact.

  18. Edwardo

    There is no chance of a default. None, zero, nada. The government has the funds to pay its interest obligations on the principal they owe, and if necessary. and it will be, by design, they will take those funds from government programs as per the dictates of the 14th Amendment.

    That is what will transpire assuming they don’t reach an agreement. However the agreement will do the exact same thing as it will involve decimating those very same government operations that will be plundered if there isn’t an agreement. That’s what I call checkmate, mate. Heads I win, tails you lose.

    My bet is that they will come to an agreement because Obama is just another neo-liberal shyster sellout. The third rails of U.S. politics were thought to be certain entitlements and military spending. In retrospect it will be clear that when the chips were down it was the latter not the former.

    1. and i

      I agree, mostly, the German press needs to study up on American Kabuki.

      “The third rails of U.S. politics were thought to be certain entitlements and military spending. In retrospect it will be clear that when the chips were down it was the latter not the former.”

      I would not agree that the chips are down. Obama is using this crock of sh@t to chip away at people’s social security while Boner, Cantor, and McConnell are simply incredibly vain and very pleased people are paying them any attention at all. It’s like an episode of Happy Days without the capri pants.

      “Obama storms out”. Puh-leeze.

    2. Valissa

      “My bet is that they will come to an agreement” because they all need campaign funds and they mostly get them from the banks and other big corporations. Even among the other groups like unions and lawyers, they’re going to want to see the debt ceiling raised. Seriously, are there any lobbyists that are pushing for the debt ceiling NOT to be raised? We know from the Tom Ferguson report that Yves posted a while ago that all the committee chairs and sub-committe chairs in both parties need to pay up big time to keep their positions.

      What we’re seeing is kabuki. The Germans have their own form of kabuki, as do the French, etc, etc.

    3. Mark P.

      Thank you, Edwardo.

      That said, while other commentators correctly point out this is all a game, there’s a strong likelihood that some of the junior players don’t understand that or don’t accept it. Hence, a not totally trivial chance exists that more could get out of control than the conventional wisdom now expects.

      And history shows, in fact, that these kinds of staged power confrontations can spin catatrophically out of control.

      It’s an overblown comparison — I hope — but nobody wanted World War One and none of the major European players initially thought they were doing anything more than maintaining the alliances and treaties they’d signed in order to play the ‘balance of power’ game. Nevertheless, at each critical juncture a smaller player failed to back off and the responsible bigger powers failed to rein their allies in. And then, when the major players realized where things could actually be going, they tried to pull back and found that they could not.

  19. Psychoanalystus

    Don’t worry about it! Nothing bad will happen. It’s all just a reality show. Just enjoy!


    1. Skippy

      Exactly…as it is end of financial year, down under, its car upgrade time.

      Skippy…its feeling like Germany around here now days, everyone is worried about scratching each others paint work at kids football or the shops….FTW!

      PS. Mean while, I’m making rhubarb & strawberry pie to chill out, after wife yelling at me for letting our 7 seater German Vunder cars side mirror come to close to a bus…(maniacal laughter).

  20. bob goodwin

    The crisis was not ‘triggered’ by either Lehman or by negotiations over the debt ceiling. It was triggered by debt deflation and later by transfer of private debt to public debt.

    1. Anonymous Jones

      Sorry, buddy. The word “trigger” sorta refers to firing the gun, not constructing it or dealing with the consequences of its bullet’s trajectory.

      Move along now…

  21. Skippy

    GDP = Gross Delusional Product, should mean were psychologically headed for more inflation, of such.

    Skippy…War time economics was to high, a high, monkey brains and meth / speed / illusion of control thingy. Slowing down, is not possible to an addict, and only 1 in 10 never re-offend whence out of rehab.

  22. Jason

    I wonder at the stupidity of all this, but am not too surprised. After all, we live in an age of mediocrity where every little issue is a major challenge (what to do about Libya; 20 guys in Afghanistan don’t like us so let’s bomb the shit out of them; Saddam Hussein was dishonest to us and didn’t like us either so we must attack now; should we risk offending god by allowing homosexuals to marry). Now we got an arbitrary limit set for spending, which is most likely un-constitutional, certainly stupid, and might bring us to temporarily defaulting on debt obligations which will have major repercussions unless Treasury can think up some sort of scheme to keep the funds flowing (and they most likely will with the aid of the Federal Reserve (and rightfully so!)).

    What a waste of energy (kinetic through wasted actions; potential through the squandering of intellects that should be focused on real issues).

    What does surprise me is that people will actually worry about what someone else is ‘getting away with’, i.e. entitlements, to such a point that they would take food out of their own parent’s mouths just to make sure that someone isn’t getting something for nothing, especially some black person. This is Republicanism and is why I could never be one.

    On the other hand, I could never be a Democrat because they speak out of both sides of their mouths and are often just enablers for the Republicans. I could never belong or associate with such a group of fools.

  23. Psychoanalystus

    Don’t sweat it, my friends! It’s just a video game.
    We’ll all come back as billionaires in the next level…


    1. Charlotte Winslow

      LOL. Unfortunately in the next level a loaf of bread costs $1 million.

      Why can’t we shave a bit off the budget by outsourcing our politicians? We could get corrupt incompetent morons in third world countries at a fraction of the cost.

  24. Deb Schultz

    Charlotte, an excellent idea! Maybe we could trade the pols for docs and engineers.

  25. Sauron

    If only someone proposed a cap on crazy and ceiling on stupidity–I’d vote for that.

    Incidentally, the glass houses response to criticism is an argument ad hominem. Doesn’t mean it’s not valid criticism.

  26. Philip Pilkington

    I had a few drinks with a shrink friend of mine yesterday. We were talking about recent developments in the US. I brought up the ‘paranoid style’ in American politics (that is, using extreme fear to gather political support). He told me that he views much in US politics as completely psychotic in that the lack of reality and the volume at which such delusion is voiced is reminiscent of severe mental disorder.

    I rather liked the commentary on ‘Have I Got News For You’ — a British TV panel show satarising politics. There Ian Hislop — editor of Private Eye — said that US politics was unique in that it was a strange theater in which one side tells a massive lie and the other tries to argue reasonably while accepting the massive lie as the frame of the debate.

    1. anon48

      “I had a few drinks with a shrink friend of mine yesterday. We were talking about recent developments in the US. I brought up the ‘paranoid style’ in American politics (that is, using extreme fear to gather political support). He told me that he views much in US politics as completely psychotic in that the lack of reality and the volume at which such delusion is voiced is reminiscent of severe mental disorder.”

      Wish I was a fly on the wall. That conversation must have been a real hoot. Couple of stuffy know –it-alls…the shrink and the economissed. Throw in a priest and it has the makings of a decent joke.

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