That's my secret hope for how this plays out. I still can't fathom why the party of Wall Street has no appreciation of what US bonds mean to the financial system.
That's my secret hope for how this plays out. I still can't fathom why the party of Wall Street has no appreciation of what US bonds mean to the financial system.
I suspect that their secret hope is that Biden pulls some stunt (like minting a Trillion Dollar Coin) that saves the economy but allows them to paint his action as an overreach.
It's the tragedy of the commons. They want "someone else" to fix the mess, while they go on TV and posture for the MAGA. Remember when Republicans liked to think of themselves as the party of grown-ups? Heck, toddlers have more maturity than this crowd.
I think it's a bit more complicated than all that. With the party re-alignments going on, much of the well-to-do are now Democrats. * It's the super-wealthy crypto-libertarian types (think Kochs) that, apparently, still want to ride the MAGA tiger.
I agree, though, it must be interesting to see how the situation today rattles around in the heads of the latter. One possibility is that, like so many in the elite GOPe class, they've lost control of the tiger.
They do not understand how the world works. Far Right media has brainwashed millions of their supporters and they believe that, with them, they can make fascism work this time, with them in control.
"We're the biggest economy in the world, they need us." Actually, if you voluntarily default your sovereign debt, no they don't. You think inflation is bad now, wait until the dollar is almost worthless. Can't wait to see how this is Biden's fault.
Agree - they may need us but as soon as we show we are not reliable, the next tier of bonds move to the front. This is more or less what happened with soybeans. The Chinese found another supplier.
Except that there is no other supplier - not like the US, the deepest and most liquid treasury market BY FAR in the world. There is no ECB central bank bonds (it's all individual countries with their own idiosyncrasies), JCB is buying most of its countries bonds and they're practicing yield curve control, China has a very small, liquid bond market and capital controls. The whole entire system is built around the USD and USTs.
The entire global economy would seize up. UST are used for collateral for around 75% of the world's trade. They are considered risk-free. If everyone had to re-evaluate that risk given a default, it would be chaos. All global trade would immediately cease until pricing could be figured out. The USD, which typically moves in tenths of one percent per day might drop 20% overnight. Hundreds of thousands (millions?) of companies worldwide would instantly be insolvent.
It would be the equivalent of COVID by 5x or 10x, and there's not much the Fed could do about it. You can't pump USD into a system that doesn't trust the USD.
Sure but do we really want to risk it? By the way, there are bonds denominated in Euros. So we could finally create the straw that broke the camel's back. I worked for a US insurer who sold bonds denominated in Euros. Again - let't not think we are so unique.
The party of Wall Street is populated with Lauren Boeberts.
I saw a Katy Porter interview in which she described having to work in the same space as Lauren Boebert as a major professional challenge. It blew my mind that I had never considered what that must be like, for a principled brainiac like Katy Porter to be on the same functional plane as an amoral idiot like Boebert and the rest of the Miscreant Gang of Unfortunates. ItтАЩs like an alternate universe.
You would think their donors would be checking with their own financial advisors before letting this go further. This is making the Nihilists in The Great Lebowski look like reasonable people.
That's my secret hope for how this plays out. I still can't fathom why the party of Wall Street has no appreciation of what US bonds mean to the financial system.
I suspect that their secret hope is that Biden pulls some stunt (like minting a Trillion Dollar Coin) that saves the economy but allows them to paint his action as an overreach.
It's the tragedy of the commons. They want "someone else" to fix the mess, while they go on TV and posture for the MAGA. Remember when Republicans liked to think of themselves as the party of grown-ups? Heck, toddlers have more maturity than this crowd.
I think it's a bit more complicated than all that. With the party re-alignments going on, much of the well-to-do are now Democrats. * It's the super-wealthy crypto-libertarian types (think Kochs) that, apparently, still want to ride the MAGA tiger.
I agree, though, it must be interesting to see how the situation today rattles around in the heads of the latter. One possibility is that, like so many in the elite GOPe class, they've lost control of the tiger.
*See, for example, Packer's take on this: https://www.theatlantic.com/magazine/archive/2021/07/george-packer-four-americas/619012/
They do not understand how the world works. Far Right media has brainwashed millions of their supporters and they believe that, with them, they can make fascism work this time, with them in control.
"We're the biggest economy in the world, they need us." Actually, if you voluntarily default your sovereign debt, no they don't. You think inflation is bad now, wait until the dollar is almost worthless. Can't wait to see how this is Biden's fault.
Agree - they may need us but as soon as we show we are not reliable, the next tier of bonds move to the front. This is more or less what happened with soybeans. The Chinese found another supplier.
Except that there is no other supplier - not like the US, the deepest and most liquid treasury market BY FAR in the world. There is no ECB central bank bonds (it's all individual countries with their own idiosyncrasies), JCB is buying most of its countries bonds and they're practicing yield curve control, China has a very small, liquid bond market and capital controls. The whole entire system is built around the USD and USTs.
The entire global economy would seize up. UST are used for collateral for around 75% of the world's trade. They are considered risk-free. If everyone had to re-evaluate that risk given a default, it would be chaos. All global trade would immediately cease until pricing could be figured out. The USD, which typically moves in tenths of one percent per day might drop 20% overnight. Hundreds of thousands (millions?) of companies worldwide would instantly be insolvent.
It would be the equivalent of COVID by 5x or 10x, and there's not much the Fed could do about it. You can't pump USD into a system that doesn't trust the USD.
Yeah, but there was that drag queen story hour, so what are ya' gonna' do. /s
Yeah, it won't be their fault. The Democrats made 'em do it. /s
Sure but do we really want to risk it? By the way, there are bonds denominated in Euros. So we could finally create the straw that broke the camel's back. I worked for a US insurer who sold bonds denominated in Euros. Again - let't not think we are so unique.
I'm saying we absolutely should NOT risk it.
And yes, there are all kinds of bonds denominated in EUR, but they are not generally used globally as collateral.
The party of Wall Street is populated with Lauren Boeberts.
I saw a Katy Porter interview in which she described having to work in the same space as Lauren Boebert as a major professional challenge. It blew my mind that I had never considered what that must be like, for a principled brainiac like Katy Porter to be on the same functional plane as an amoral idiot like Boebert and the rest of the Miscreant Gang of Unfortunates. ItтАЩs like an alternate universe.
You would think their donors would be checking with their own financial advisors before letting this go further. This is making the Nihilists in The Great Lebowski look like reasonable people.
We believe in nozhing, Lebowski. Nozhing. And tomorrow we come back and we cut off your chonson!
lmao
It's always nice when we can break with the doom, gloom, and despair and find something to laugh about.
Must be exhausting. :)