But friends, I am becoming alarmed about the debt-ceiling crisis. It's sheer insanity for Congress to hold hostage the economy of the United States for political purposes, just as it is for Obama to let conservatives get away with it. Yes, the deficit has to be dealt with. But the deficit and the debt ceiling are not directly related, so we can take care of the deficit later. Right now we need to raise the damn debt ceiling already, just like we've done routinely throughout both Republican and Democratic administrations. Failing to do so may well be catastrophic, posing an immediate, tangible threat to the United States. Think I'm being dramatic? Well, I do have that tendency, but no, this is the real deal.
Economic theory is complicated, sometimes dull and mostly horseshit. I can say that because I was an econ major. Still, economics can provide limited information about how the world works . I used to understand all those fancy charts, but I let most of that know-how drain out of my brain post-college. So these days, a lot of economic discussions just go right over my head. And since I don't have the patience to re-learn all that crap, I find other economists who make sense to me -- and let them explain what the hell is going on in the world.
Paul Krugman is my favorite economist. Yep, he's a liberal. But what do you know: a study found him to be the most accurate prognosticator of the whole slew of political pundits reviewed. So I'm pretty sure my trust in his analyses is well-founded.
Well, Krugman is worried about the debt ceiling thing. Consequently, so am I.
And it appears that there is more at stake than just dollars. In a grim post on Balkinization, Frank Pasquale -- a law professor at Seton Hall -- compellingly makes the point:
Herd behavior in markets ... creates chaotic and unpredictable outcomes. Suspicions of a government’s insolvency can quickly become a self-fulfilling prophecy. Indebted and politically gridlocked, the US is increasingly vulnerable to speculative attacks on the value of its currency, debt, and manufacturing and service sectors. Once these attacks reach a certain level, they threaten to disrupt supplies of basic resources, and the nation’s ability to support (and thus maintain the loyalty of) its own military and law enforcement personnel. (links in original).Moreover, America's current fetish for Privatization of All Things Government adds an unnerving dimension:
[T]he "revolution in military affairs" in the US has featured increasing "contracting out" of core military capacities. ... Blackwater recently was in the news for "creat[ing] a web of more than 30 shell companies or subsidiaries in part to obtain millions of dollars in American government contracts after the security company came under intense criticism for reckless conduct in Iraq." The trend toward "private security" ultimately portends a market-based outsourcing of sovereignty. If a foreign government (or even coalition of very wealthy persons) were to outbid the increasingly strapped US government for the best technology, its military advantages could fade.(links and citations in original)I don't know about you, but I've got all kinds of seriously creepy post-apocalyptic bad-corporation visions dancing through my head these days in place of fairies and sugarplums.
This could end badly. Very badly, indeed.