junior treasury notes
here's a wacky concept to cope with perennial debt ceiling crap:
the treasury can issue a raft of "junior" treasury notes -- they pay interest and principal just as traditional treasuries, except that any interest and/or principal payments are legally suspended whenever the secretary of treasury declares a period of extraordinary measures. back interest and principal are of course paid if and when this period is lifted.
this has all the advantages of "selective default" except that it really isn't a default and the only investors who suffer are those who sign up for the risk.
of course, treasury will have to accept a higher interest rate on this notes to compensate investors for the risk.
and investors who can put up with payment delays during silly season will earn more interest for nothing, really, because the risk is really illusory.
moreover, what will happen is that some rich fund will snap them all up and then lobby congress to resolve the debt limit crap once and for all so they can flip the notes for a big profit, making some rich bastard even richer over all this.
but hey, if it fixes the problem once and for all....
of course, it's great if the politics of debt ceiling talk is such that republicans can't really pull that card this time. but eventually they will pull that card if they can....