Thoughts On A Hostage Crisis

Dw. Dunphy July 22, 2011 2

At roughly 6:15 PM EST on Friday, June 22, having passed the point where legislation could be hammered into shape and a crisis could be averted, John Boehner announced he was walking away from debt talks with President Barack Obama. No deals. The “grand package” that buoyed the markets all week was spurned yet another time. Do take note that Boehner made his announcement on the last day of the week after the financial markets closed. Was this with the knowledge that his actions would likely tank them and, rather than make the Republicans look like the bad guy(s), he waited until they were closed to announce the House had no intention of trying anymore?

I don’t know. In fact, there’s a lot I don’t know beside the gnawing in my gut that’s been there for the past four weeks. I know that I’ve been worrying about this quite visibly, much to the shock of family and friends. They’ve said, in equal measure, that I was crazy to think the country would ever go into default. They’ve said that I’m making myself sick over a charade, a non-starter, and that the last thing politicians really want to do is to piss off rich businessmen who hold the purse-strings to campaign funds.

And even so, here we are. Default has become an inevitability. Hell, the GOP’s rising star in their candidates pool for the 2012 presidential elections, Michele Bachmann, is demanding it and getting public support.

So yes, the stomach ache will continue, as will the questions about how I will handle all my family members who are senior citizens. Will they keep a resident in the nursing home if the checks stop? And to those who would say, “waah, waah, waah, cry me a river. They’re not entitled and a default wouldn’t affect me,” I have a few questions.

1) You’ve expressed no great trust in the banking sector, after all that happened with the housing market, the bad mortgages, and so on?

2) You still put your paycheck in the bank though, right? Or do you get direct deposit?No mattress full of dollar bills?

3) Wait a tick. The FDIC is the federal protection that makes sure that your money doesn’t magically disappear overnight, and if it does, you’re covered from loss or misappropriation. If there is no FDIC manning the office with a default underway, and a hacker just happens to loot the banks, do you still have money in the bank?

4) And what about those credit cards you cut up a year ago, only to reinstate prior to summer for that unforgettable vacation you really couldn’t afford? If those same banks are being threatened with insolvency, they’re going to want that money paid back  right now, and to get it, your once fixed percentage rate doesn’t seem so anchored anymore.

Nauseous yet? Nauseous enough to let go of your Tea Party talking points? See, this does affect you. It affects you directly, and you can blame any or all of the parties involved. I, in fact, have chosen to blame the Democrats if you can believe that, but not for the reasons you might assume. When Pres. Obama was elected, he came in with a Democratic super-majority, and for several months, the party did drunken victory dances and “in your face” swipes.

When they stopped showboating, they immediately splintered, fractured and squandered the gift the American people gave them. They split off into Blue Dogs, Red Dogs, Green Dogs, Purple Dogs, and Puce Dogs and left the power of a unified front behind to save their own sorry hides in 2010 re-election peep shows. That weakened front left huge holes behind, enough to let the Tea Party through, and the TP is a Borg Collective, no splintering, fracturing or compromising. All within have been assimilated. So we can call the TP a bunch of big-eared, idiot inbreds bent on taking the country back to a gentler, simpler time when the poor and elderly had the good sense to just die already, and a black man’s place was nowhere near a White House, but the Dems allowed it to happen. Their short-term impotence has cost them dearly.

So what if the Republicans will suffer dearly in 2012? It’s still 2011. That means we have more than a year’s worth of suffering now.

You say that what the Tea Party is about is not wisdom. I say otherwise. I say they are wise and Machiavellian at the same time. Think about this: No senior citizen is going to vote to repeal Social Security, and senior citizens are still the largest voting bloc in the country, getting bigger by the Boomer. No career politician is going to want his face plastered all over a proposal to kill the New Deal policies. So, how do you kill the New Deal without being blamed for it, and without the input from the seniors who will kick you to the curb if you try?

You starve it to death, kind of like what would happen if we go into a default. There — problem solved. All the social violence you crave without getting the blood on your hands.

So can everyone please stop telling me I’m crazy, paranoid, worrying about nothing, and that everything is going to resolve itself? Can everyone just listen to me for a moment and believe me when I say, prepare yourself? This is happening. I’ve been wrong before but I don’t think I am this time and, God help me, there will be no sweetness or victory in my having “told you so.”

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  • http://thevitaminkid.blogspot.com autodidact

    How much income is expected at the Treasury Dept. in August? Let’s call that number A. How much is required to pay interest on US bonds and cut Social Security checks in August? Let’s call that number B. Since A is obviously much larger than B, why would there be a need to default on either of these obligations? As for the rest, obviously there is a shortfall, and there must be some prioritization. Somehow, we are at the point where living within our means is suddenly a ‘”crisis.” Many in this country do not subscribe to that point of view. Many of them voted in the last election. Elections have consequences. 

    Obama promised much, delivered little, and has left $3.6 trillion of debt in his wake, in less than three years. Much of this was delivered to bankers who at best took stupid risks and bankrupted their banks, at worst were crooks who should be in jail. Instead, they were bailed out, and paid themselves extra bonuses. With our money. Obama voted for this as a Senator. He carried it out as President. And we wonder why there is no money to pay all our bills?  

    As the estimable Reverend Wright might have said, “The CHICKENS have come HOME to ROOST! God DAMN this Administration’s spending!” 

    I might add that the debt ceiling was a known quantity, given the level of spending established in the first two years of the Obama regime. Democrats had control of both houses of Congress until early this year. Are they so poor at planning that they could not forsee the need to raise the debt ceiling before the last hour? I wonder why they didn’t. These clowns couldn’t even pass a budget, let alone provide for the debt funding of the massive spending they desired. Massive fail. 

    I refuse to take the kabuki show the Administration is putting on at face value. The rich of the world, who own trillions of our bonds, seem unconcerned. Interest rates on government bonds are lower now than at the start of the year. There is little indication of an increased risk premium (i.e. fear of non-payment) for holding government bonds — which would be evidenced by a spike in interest rates (or to put it another way, a drop in the price of these bonds on the open market). As a non-rich holder of government bonds, savings bonds actually, I think it is more likely I will be repaid if the government stops taking on new debt at the Obama-established rate of 1.5 trillion annually. If the government keeps loading on debt, I’m sure I will be repaid –but it will be payment in more printed money, meaning my inflated dollars will not buy enough to make up for the return in interest. Obamaflation is already hurting the little people the hardest. 

    So, there are two ways to look at this crisis. I see no reason why America held hostage by those who want to restore fiscal balance is worse than the next generation held hostage by a burgeoning debt that will eat away more of their tax dollars in interest payments and require greatly increased taxes on everyone to maintain programs and promises that appear to be needed. To continue at present rates of spending — at the rates Obama endorsed in the budget he delivered in February — is a form of fiscal child abuse. It is really time we face up to the spending problem and stop the metastasis of government. 

    An appeal to the reality-based faction: Take a look at the 6 month or 1 year chart of the ten year bond here: http://www.marketwatch.com/investing/bond/10_year

    In January, the interest rate was about 3.5% on the 10Y Treasury bond. Now the interest rate is 3.0%. Does this look like the “smart money” is concerned about default on their bonds? Concern about the “full faith and credit” of the government? Hardly. Now will people stop running around like their hair is on fire, and constructively bring forth real solutions to reducing government wisely? The people have spoken.

  • http://www.facebook.com/profile.php?id=1070795546 Anonymous

    The checks are not going to stop. We have been through this before. What we haven’t really been through since Woodrow Wilson and or FDR is an attempt to force us to turn our back on the things that have made us great, and to turn us into a copy of Europe…yo’ Greece, Italy & Germany how’s all that socialism working out for you?

    Dw., you aren’t crazy, maybe just buying into a lot of doom & gloom, naysayers and those “American’s” who are afraid of their shadows. Start being a brave American and working towards those things that don’t just promise you a better and bright future, they deliver. Hard work and independence. An ethic that ensures freedom & liberty to those who will be willing to suffer through the hard times and will fight for your God given rights. Remember the right and left, those elected, appointed are our employees. They can’t do a damned thing that we don’t want them to. Remember the key to the survival of this republic is being ever vigilant. 

    God bless you and yours brother, we are all in this together and may God continue to watch over and bless The Republic of The United States of America.