Wednesday, September 18, 2013

GOP still wants to hold nation's solvency hostage over Obamacare

This is indeed a time to say “No, no”.  Maybe the GOP has a fixation on depilatories.

Seriously, this morning President Obama had to state in a press conference that the ability of the United States to pay bills for debts it has already incurred cannot be made a bargaining chip in making public policy.

He had to say that in January, and Congress did “kick the can down the road” by suspending the debt ceiling, so to speak, for a while.  But now the “drop dead date” is said to be October 18, 2013, a Friday.

Some more radical financial columnists have warned that if the US defaults, the rest of the world would somehow nullify the dollar as a reserve currency, throwing the US into another sudden financial liquidity crisis, dwarfing 2008.  

President Obama spoke right after both John Boehner and Eric Cantor spoke, broadcast by CNN, and tried to link the budget negotiations, continuing resolutions to continue the government after the fiscal year ends Sept. 30, and even extending the debt ceiling to “defunding Obamacare”.

This kind of behavior is about as reckless as it gets.

Curiously, Wall Street boomed today as the Fed said it wouldn’t stop bond purchases.  But what happens after Oct. 18? 

According to Porter Stansberry and others, the real problem is that the Fed can print as much currency as it wants.  There’s really no reason to default, except that the dollars would be worth less.  That’s why China and others could suddenly stop accepting them. 

If the Fed can’t borrow because of Congress’s intransigence over Obamacare, can it just print the money it wants?  Them what happens?

I wrote about this yesterday here.  And it blows up today.  I have been Libertarian to Republican most of my life, but I have never favored anarchy.  
The New York Times has just posted major coverage on this showdown today, but the most telling is the intra-party bullying within the GOP, editorial this morning in print, here

It’s frightening to see the GOP hold a whole economy hostage over “mandatory insurance” (which even the GOP says is all right when states do it). It’s true, there is a problem that some employers have an unwieldy incentive to hire fewer people or make them part time. 

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