Saturday, July 16, 2011

50/50 the USA defaults

The US could very well led by the Republicans to make a deal caused a sovereign default right? I had assume that nobody would be stupid here but it has just dawned on me that enough GOPers have acquired religion, foremost among them, the Tea Party group. Religion, the sort that we often see around us is not reasonable or rational.

A reader commented thus on Edward Harrison's blog.

Your remarks, especially concerning Mr. Cantor, show that you do not understand the temper of the American times. We've had it with this crap. We are not going deeper in debt. We are not accepting higher taxes in any form. It's that simple. Let the cards fall where they may.

"Let the cards fall where they may". Brave and courageous words to some, but the most frightening utterance for those who know what could arise from a default.

We shall see if Americans need to learn some lessons the hard way. We will all get dragged along into it. I noticed many locals are reading Barry Eichengreen, "Exorbitant Privilege, The Rise and Fall of the Dollar" given what the tea leaves are saying about the times.

The rational analysis is easy. The President had already warned Cantor before he stormed out of the last meeting over this issue. If the US defaults, taxes are effectively going up, which is anathema to the GOP. So why not deal? Problem is, this is no longer rational. Perhaps enough people want to do government a different way. They are taking Reagan to the extreme when nobody knew his private thoughts, much less he is no longer alive to consult with. America in the 80s and now is different.

Secure your seat belts, check that the air bag is still working. You might need it this time. We will find out if Americans live down their epithet for being stupid. Of course this is oversimplifying the most complex society in history.

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