Krugman: Boehner/Cantor "running scared of a large faction of the party that is indeed insane.”

[pampango]

Add me to the chorus of those puzzled by the lack of market alarm over the possibility of U.S. default, induced by failure to raise the debt ceiling. The best story I’ve heard came from a government official who put it something like this: “Business types come to Washington, and they talk to Boehner, or Paul Ryan, or Eric Cantor – all of whom are very hard line, but not insane. So they go home reassured. What they don’t realize is that those guys aren’t in control, and that they’re running scared of a large faction of the party that is indeed insane.”

That makes sense to me; if most political reporters are still in denial over the real state of affairs, one can imagine that businesspeople are having an even harder time realizing the extent to which the inmates have taken over the asylum.

If the feds are forced to slash spending, one way or another (and probably semi-randomly) to match receipts, that’s about $600 billion in cuts at an annual rate, or 4 percent of GDP. That’s a huge case of unintended austerity, quite aside from the disruptions, surely enough to push us back into recession if it lasts for any length of time.

So I’m not at all sure that we’re looking at an interest rate spike; maybe even the opposite. But for sure we should be looking at a plunging dollar, and probably carnage in the stock market too.

http://krugman.blogs.nytimes.com/2013/09/25/default-notes/?_r=0

Not to nitpick Dr. Krugman but I don't see a tea party-induced slashing of federal spending as "unintended" austerity. In the FOX/tea party world they live in, a new recession and collapsing stock market are good signs for their party's prospects in 2014. The fact that it is terrible for the country is irrelevant to them.

[HERVEPA]

1. The world is indeed insane if one can be more insame than Cantor

[BumRushDaShow]

2. It'll be the battle of the billionaires

The Rockefeller billionaires versus the Koch Brothers billionaires, for which way this goes.

[gordianot]

3. Buisness people should have a talk with the Koch brothers, and others who created the Tea-Party.

Every time they do business with those who fund this nonsense they cut their own throat. While they are at it they also need to check their own backyard with the Chamber of Commerce who also enables the crazies.

Fact is without a middle class there is not a demand for what you sell and you cannot make a living off the 1%.

[mindwalker_i]

4. one of the first comments

> The Republicans have spoken, and the position is green eggs and ham, except for SNAP recipients.

I think the Repubs don't want to default on the debt because it'll make them look like dicks. However, they want to please their base, at least to some extent, by being dicks.

[pampango]

5. Krugman seems to think that the latter group of repubs (those that want to please their base by

being dicks) will win out, as they have done frequently under Boehner's "leadership".

[newfie11]

6. Voted for by insane voters