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A week ago, George Will advised Tim Pawlenty that now was the moment for him to make his move. On ABC’s This Week, Pawlenty did so. He got in the “let’s play chicken with the debt limit” car and headed it straight towards the cliff, joining the growing list of Tea-GOP presidential wannabes who should never be given a license to drive.
Pawlenty’s first response to Christiane Amanpour’s question whether we should raise the debt limit was a seemingly unqualified, “I don’t think we should raise the debt limit.” He then followed with the usual rhetoric on spending.
“Really, not raise it,” she asked? Pawlenty replied by saying “there are serious people challenging the premise [that we have to raise it],” then follwed with a duck: “we don’t really know what would happen.” He then repeated that “serious people” have “written thoughtfully” minimizing the risks.
(As in “we have top men working on this.” “Who?” “Top men.”)
Then Tim gave us this assurance: We don’t need to worry about any impact on our international credit standing, because we can always pay foreign creditors with the revenues we have. Are you listening, Wall Street? Pension funds?
So who are these “serious people” minimizing the risks? In a previous post, I noted that the Tea-GOP Zombies were tapping right wing media/”think tank” hacks to invent reasons why we shouldn’t worry too much about risking a default on the national debt. Their argument had evolved to note we’d have enough incoming revenues to pay interest on the debt, while failing to mention that meant something else would not be covered. Tim didn’t mention that either, and Christiane did not think to ask what those other things might be.
Now Pawlenty is taking the “pay the bond holders first” argument one step further: Pay the foreign bond holders first.
Sooner or later, everyone else who has to wait in line behind the Chinese and European banks is going to catch on that the Tea-GOP Zombies, including the supposedlly “moderate” Tim Pawlenty, are okay driving them off the cliff. And they’re going to conclude that this entire Zombie party should not be given a driver’s license.
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I am thinking of a great African slogan proposed by Idi Amin, America is for Americans. We should pay Americans (people) first, corporations, foreigners and other governments second.
This is an interesting concept, Tim. Try running it by Bill Gross at PIMCO.
Admittedly, PIMCO is a subsidiary of Munich-based Allianz, so maybe they’d also be at the front of the line, ahead of us real Americans.
Not to blog-wh*re, but a back of the envelope calculation shows that the AAA rating of US debt, which would go down to the tubes regardless of what Pawlenty’s `top men’ say, has a value about $10,000 per person. This would be destroyed, possibly forever, by a US default.
Former Governor Gutshot has no problems with destroying the lives and futures of millions of people simply to further his own political ambitions:
http://my.firedoglake.com/phoenix/2009/11/28/governor-gutshots-grotesque-legacy-minnesota-trashed/
http://my.firedoglake.com/phoenix/2010/03/15/gutshot-tim-pawlenty-leaves-minnesota-bleeding-justice-system-edition/
oyyyyyyyyyyyyy
the stoooopit it burns
help us lord of the universe
It’s missing the point. The suggestion is to get PR (under the rationale of “There is No Such Thing As Bad PR”).
TimmyP is just flapping his lips to get attention. Pay no attention to his behavior, because if we do, he’ll just say even more stupid and outrageous things.
Hmm… on second thoughts give him lots of attention. The more stupid and outrageous things said, the quicker hubris will strike, and he will self-destruct, and others will rush to say ever more stupid and outrageous things just to get attention (aka: The Limburger effect, although it’s more like the Limburger affect).
Pass the popcorn. It’s go to be a fun election season. I suspect (and hope) we’re beginning to see the implosion of the R’s up-and-coming “leaders”.
Why does Tim Pawlenty hate America?
What are the mechanics of the results of not raising the debt limit (this is a serious question)? Does the government default and have to pay creditors immediately? Are SS, Medicare, and Medicaid payments stopped immediately? Are military payment commitments stopped (both payroll and vendors)? I’ve gotta get going, but it would be nice to know what would happen and in what order and over what time period. It sounds as if this politician expects an immediate default.
As Food Stamp Recipients Hit New Record, 400 Americans Account For 10% Of Capital Gains
Submitted by Tyler Durden on 05/03/2011 00:47 -0400
Today SNAP released the most recent food stamp numbers. Not surprisingly, we just saw another all time high 44.2 million poverty-level Americans relying on government funding for day to day sustenance. Granted the number appears to be plateauing, so all those who bought the change if not the ho[y]pe, can rejoice as it may start declining next month: a development that is sure to be herald for Obama a 4th Putin-esque term. That said, another number that has to be kept in perspective and for which we have to thank none other than Pauly-K is that offsetting these 44.2 million of impoverished Americans who can get a tax refund for writing off the American dream, are 400 Americans who accounted for 10%, or $91 billion of total, in capital gains taxes, or said otherwise, 400 US taxpayers account for 10% of all capital gains in 2007! We are currently going through old issues of Pravda to see if the Communist empire ever achieved this kind of social disparity between the nomenklatura and the proletariat (it didn’t). If we find confirmation we will post it, and lose a sizable bet which will certainly deny us any possibility of every being among the abovementioned 400.
First, the latest SNAP:
And second, at a factor of 110,500 to 1, here are the 400 people who not only account for 10% of all US capital gains taxes (Taleb was right), but end up paying a whopping (sarcasm inluded) 17% in taxes on it.
zero hedge
Just been rereading Blowback by Chambers Johnson and was caught up by this fact:
‘On March 16, 2006, Congress raised the national debt limit from $8.2 trillion to $8.96 trillion. This was the fourth time since George W. Bush took office that it had to be raised.’
Sorry, NEMEISIS was the book. got mixed up
Maybe NOT raising the debt limit would have serious consequences.
But I say let’s default.
As soon as we can hit rock bottom, the sooner we can rebuild. Instead of this slow and painful decline into slavery/indentured servitude.
Why is there debt? Military spending. Corporate welfare. A tax code written by the rich and for the rich.
Maybe these things can be fixed when the debt ceiling is reached and maybe people will wake up.
I know, a lot of maybes. But considering the current path we are on, can it really be that much worse?
I am not a Constitutional scholar but doesn’t the 14th. Amendment prohibit default on the national debt? Since we print our own currency we can always pay our debts. As someone said in an earlier post we only incur debt we we borrow not when we print money.
So say what he isn’t saying. The money the Obama Administration has borrowed from the Social Security Trust Fund and the federal employee pension fund will never be repaid? Investors in Abu Dhabi, Hong Kong, and Zurich will get what they’re owed, but American workers who paid into government-run programs to provide modest incomes for themselves when they no longer work will get a sneer from their betters and nothing else?
Tim Pawlenty just proved he is unfit to govern.
Scarecrow is just so quick & so perceptive! Like all the Firepups.
Key is not so much Pawlenty flapping his gums as bond market reaction. Bond traders will in fact go berserk if news spreads widely that Republican presidential candidate wants to pay foreign bondholders before US bondholders. If this bullshit isn’t corrected by the time Asian markets open at 8 pm tonight (or 9 pm, depending on summer daylight time), watch the bond markets go berserk. Huge volatility. Never good for managing your credit risk or for monetary policy.
Volatility will skyrocket, but prices & yields might see-saw all night and all day tomorrow as Asians & Europeans pour money into US Treasuries (driving prices up and yields — interest rates — down). Then the roller-coaster will scream in the opposite direction on Tuesday when US markets reopen after 3-day weekend and US holders dump their treasuries. Can you say chaos?
Let’s see, if I’m Goldman Sachs, maybe I can get an overseas bank to take my bonds and then let them sell them to the treasury. What an asshole. The market will crash before you can execute this kind of nonsense. Proof positive Pawlaenty isn’t smart enough to be Pres. O wait, Bush was pres.
Who gets paid first
I think that the outlines are emerging of what the Rs have in mind for August, when the crunch comes and the US cannot meet all of its obligations. Their idea is that we pay creditors first, in order to avoid hurting our credit rating, and to avoid downstream dislocations as creditors the US can’t pay are forced in turn to default on counterparties, their creditors. Sure, Pawlenty only mentions paying foreign creditors first, but if he, or the other Rs who are pushing the idea that we can go into national bankruptcy without serious dislocation, were ever asked in detail, I’m sure he would include domestic creditors as well among thaose who would be paid first in any scenario in which the US can’t meet all of its obligations.
So, if they plan to pay creditors scrupulously, who do they plan to not pay when there isn’t enough money to pay everyone? Well, there’s the govt payroll. Probably not, though useful as a hostage, at least the paychecks of selected depts. There’s govt contractors. Probably not, for the same reason that they won’t want downstream counterparties hurt by failing to pay creditors scrupulously.
That leaves SocSec, Medicare, and Medicaid. Their plan is to let the crunch, the point at which the US cannot meet all of its obligations, make their point that the social safety net is a luxury we can’t afford. The US has to meet its other obligations, lest its credit rating or the jobs situation suffer catastrophic harm, but the social safety net can go hang, well, at least in comparison to these other obligations, it can go hang.
No, their intention will not be to just end these programs completely and immediately. But they will offer to relent on the ceiling to allow continued borrowing only in exchange for “reforming” the safety net into a form that will gradually sunset itself.
Intgeresting point. But even assuming you can do that, you would have to print one hell of a lot of money and that will cause problems with inflation and confidence in the dollar, IMO.
I think any scheme is unworkable. If you cannot issue more bonds then you are stuck with printing money. If that happens no one is going to want the dollar as it becomes worthless as no one is backing it. Wall Street will not allow this to happen in the end. The loss of confidence will crash the markets and long before it gets to the end point. Heaven help us it the repugs are this stupid.
Tim thinks wealthy GOPers and banks will go for this? Tim thinks American First Tea Baggers will go for this which audience is he trying to piss off more his poltical contributors or likely GOP Primary voters?
A week ago, George Will advised Tim Pawlenty that now was the moment for him to make his move.
This is a move?
As crazy/irresponsible as these people are, that may seem a plausible strategy to them.
This is a giant game of chicken and we are the chicks. But Wall Street fat cats have skin in the game too. So we will have to see who breaks first. I have to believe in the end someone will, or else we both run off the cliff and there will be a giant shit storm.
Brilliant, isn’t it?
Many if not all American banks have T-Bills listed as assets if those assets become debt well remember the bank bailout the Fed gave banks tons of T-bills in exchange for face value on their worse loans?
How many banks would have to stop lending if T-Bills become worthless?
Not sure these people care what the Constitution says, anymore. I agree there’s no rationl reason a country sovereign in its own currency should ever default. We’re not Greece, stuck in the Euro, but these people want us to act as though we are. And then they warn, “look out! we could become Greece!”
The US has all sorts of obligations (payroll, payments to contractors for goods or services, safety net payouts, etc. , etc.) other than just straight debt service and repayment, whihch are only a fraction of what the US spends. Money could be redirected from these other obligations to debt service, and make it unnecessary to fail any debt service obligation even as these other obligations go unmet. We don’t need to bring in printing money as an alternative.
I have no doubt it is plausible to the less intelligent of them and Pawlenty seems to be one of them. But I have to believe there are real finacial people out there who know this can’t work and they will call a halt to it, I hope I hope.
That could work for…. I don’t think very long. Stop paying contractors they will stop working and lay off people. Then you have no more tax money either. How long does that take? A day and a half or a month? Then try to claw your way back?? Look what happened in the financial crisis. We are still paying for that one. No good choices here.
My concern is that it has gone past a merely plausible strategy they might adopt, to being the strategy they have adopted. It’s largely the statements such as these by Pawlenty, who is far from alone in such claims of the manageability of a national bankruptcy, that make me think we have to assume at this point that this is their operating strategy, not a mere plausible possiblility.
Even more probative, in my mind, was the largely ignored counterarguemt of a few weeks ago by Robt Rubin, in which he made the case that default to creditors would be inseperable from any failure of the US to meet all of its obligations. Who was that argument directed against, if not R leaders whom Rubin was convinced, weeks ago, had adopted the scheme I outline as their strategy.
I agree that they’re not going to stop paying contractors, and they probably won’t touch payroll obligations either. I think that they will argue that the social safety net is the low-hanging fruit, the only thng that can be sacrificed to keep us from the worse outcomes that result from not paying creditors, contractors and the federal payroll — disastrously worse credit terms for the US, and disastrously worse unemployment.
Like I said, I have no doubt there are those less intelligent among them who believe it is a really great strategy but if push comes to shove, the smarter of them will tell them to stop this shit. I think the strategy is to force the dems and O to give up more spending cuts, a game of chicken. If the dems do that then we all lose. We are the chicks. So we lose either way.
Don’t we do that now. The Fed gives makes money cheap at this point and we do not have an inflation problem. I am sure that it’s coming when the next bubble bursts. My point though if the 14th. Amendment prohibits default all the deficit talk is bullshit. IMHO
You’re right, they have to keep their “moderates” on board to maintain the refusal to raise the debt ceiling. And, absolutely, one of the reasons their moderates have been on board with the refusal to raise the ceiling so far, is that they imagine that this is just a hostage-taking, that they will get a ransom from the Ds, but, just as in the great govt shutdown non-event, never have to make good on the threat to kill the hostage.
But I thought that Pawlenty was one of their “moderates”? What’s he doing talking about the manageability of national bankruptcy?
My concern, raised by this statement of Pawlenty’s, plus similar from all sorts of their supposed “moderates” (their radicals are beyond speaking in pragmatic terms of manageability of national bankruptcy. They think we are already morally bankrupt to engage in deficit spending, and that actual bankruptcy would have a purifying effect, that harder credit terms would be a good thing, because then we won’t be able to “borrow and spend”.), is that these moderates are on to a more dangerous rationale for continuing to support their radicals in refusing to raise the debt ceiling. The concern is that they’ve convinced themselves that national bankruptcy would be safe, could be managed without hurting our creditworthiness or downstream counterparties and thus the wider economy, because they are confident that the order of the US meeting its obligations can be managed so that only the social safety net will be affected. At that point, the point at which the US fails to send out the first SocSec checks, their confidence in the first line of rationalization, that this is just a hostage-taking scenario, kicks back in, because they believe that the Ds will quickly cave after the first SocSec checks are stopped. They look to a managed, orderly, dismantling of the safety net, and they see the Ds agreeing to that in the face of this crisis they will create.
Thanks for that info linked there,
I’m suspicious of too little personality challanged types, So that insipid uninteresting little drip, doesn’t seem so much like polenta, as some other much less wholesome… semi fluid residue, I feel sorry for the deer, and side with hunters who know better, “Don’t kill what you can’t use”. His behavior is classic bad.
Wikipedia notes: that he has “converted” from Roman Catholicism to an “interdenominational church which has got many former Catholics in it,” by way of an Evangelical Christian (wife’s ) faith… (Corn mush enough, where’s the core principals?)
The rotten repubs figure to put some shrimpy nerdish clone who wont seem too dangerous, like a trojan horse, ( pet horse for a gift, so inocuous… ) in these days it’s expected, IE: changey. But what a pathetic field of candidates…
As I understand it, PIMCO has taken a net short position on treasury bonds lately, which might allow them to actually profit from a default. Who knows but what they’d cheer Pawlenty on to default?
Sounds like something a governor who refused to fund infrasture repairs –even after the Mississippi interstate bridge came down killing 13 and injuring over a hundred– would think. Or be persuaded to think.
Great grasp of consequences.
Paul Krugman has suggested Medicare and other similar items might be affected. I know I’m trying to avoid any medical appointments scheduled for later this summer as a precaution …
T-Paw loves the non-transparent, unaccountable hedge/private equity funds. Looks to me like a set-up for an even bigger heist than 2008 and T-Paw and friends just can’t wait.
Just beware the “fat cats” that have positioned themselves to try to profit from a default, at the expense of those like the banks that may be stuck …
Now you’ve got it …
The other 98% of us are supposed to be happy Doing Time while the 1%ers use the dynamics of the Enchanted Financial Forest to become the 0.5%ers.
Tim “Deathbridge 07″ Pawlenty.
It seems to me that there is a concerted effort to kill contract laws. We’ve seen corps regularly reneging on retirement benefits, ramped up union-busting on a national scale, the repub goal for gov’t breaching of the social contracts. Bankruptcy laws were altered in the last 10 years to increase liability for individuals. Were there concurrent decreases to liabilities for corporations?
If traditional contracts are no longer enforced, what is left of the rule of law? Is it a conscious scorched earth policy by strange political global reformers, or a international business coup over governments? I just have the sense there’s a coordinated effort.
Defaults are considered something bad because after that you have a hard time borrowing. Because nobody trust you to pay it back.
If on the other hand you pay back the debt by simply switching on the printing press, your lenders get paid back. With nicely colored paper witch is now very little worth, because you printed so much of it.
After that you have a hard time borrowing. Because nobody trust you to pay it back with something valuable.
And additionally you have a hard time buying stuff (e.g. raw materials for your industry) on international markets. Because you have reduced your currency to funny colored paper.
The PTB on Wall Street want the debt limit raised, therefore, it will be raised. All this is kabuki theater(my apologies to the Japanese). The corporate interests are just seeing how much they can get in the negotiations. They want to eliminate Social Security, Food Stamps, Medicaid, Medicare, whatever is left of the New Deal and the Great Society.
They know that the voters will not stand for a total elimination, but they’re seeing how much they can strip. That’s all. Notice the deafening silence from Obama, because he’s one of them. Sooner or later, the Great One will come up with some Great Plan for Shared Sacrifice in a Wonderfully Inspiring Speech.
And millions will be SCREWED!!!
Obama could say that he will not cut Social Security, Medicare, or Medicaid by a penny and win. But he won’t. Because he is a Fascist swine. He’ll wait and see how much he can get away with. Pawlenty is no different. That’s all that’s going on here. Default won’t happen.
Pity. If it did, the whole system would come crashing down sooner. Since I don’t have very far to fall, it wouldn’t hurt me all that much. But I’m not a T-Bond holder.
Correct on all counts, esp. Obummer’s silence.
Republicans have been pointing out that the people most likely to be hurt are those who rely on government government programs like medicaid, social security, government paychecks, and unemployment benefits….a population of Americans for whom they clearly have no concern or respect. Americans are a peaceable lot, but you can only kick a dog so many times before it rises up and bites you in the pants.
We’ve already defaulted at least twice:
1) FDR nationalized gold, thereby defaulting on debts to be paid in gold (not fiat currency) to working class Americans (but not foreign central banks); and
2) Nixon completed FDRs default by reneging on debts owed to foreign central banks.
I don’t understand the machinations of a default well. But it absolutely strikes me as another bailout for Blankfein (in a significant way)… no, thank you!
So B.O. P(aw)lenty wants to pay everybody else and stiff the American
people… Atta boy B.O., that’s thinking outside the box!
ROO ROO ROO LETS DO IT! As the teagops would say.
And please lets leave FDR, Lincoln, Washington, and the rest of the fathers of the Nation alone. You can piss on Nixon all you want and all the wholely owned prezidentes of the republicrats and the demoblicans the playthings(WHORES) of international Banksters,
since the middle sixties. The last American president being JFK
Want to do something for the Nation PASS GLASS-STIEGALL NOW!
Lakonas
Read my diary entry “email to congresswoman Jackson Lee”