Dean Baker: Wall Street will not let Republicans pull the debt ceiling trigger

[cal04]

By Dean Baker
http://www.michaelmoore.com/words/mike-friends-blog/wall-street-will-not-let-republicans
http://www.guardian.co.uk/commentisfree/cifamerica/2011/jul/16/debt-ceiling-negotiations

The tension is building in the budget talks as the calendar closes in on the August 2 drop-dead date. According to Treasury Secretary Geithner, this is the date where the government would no longer have the money to pay its bills and a default on the debt would be looming.

As many have noted, including me, a default on the debt would be an absolute disaster for the financial system. We would see the same sort of freeze-up of lending as we did after the collapse of Lehman in September of 2008, although this time would almost certainly be much worse.

With US government debt no longer the rock-solid pillar of the world financial system, banks would instantly lose much of their capital. They would not only have to write-down the value of government debt, but also all the assets backed by the government, like mortgage-backed securities issued by Fannie Mae and Freddie Mac.

(snip)
The bottom line is that the debt ceiling is a gun pointed first and foremost at Wall Street's head. And, there is no way on earth that Wall Street is going to let the Republicans pull the trigger.

[midnight]

1. It's almost laughable that it is time budgeted, but not financially budgeted for

about how we pay for this countries expenses....

[PSPS]

2. He's right. This is all theater so obama can "compromise" social security away.

[indepat]

4. A rare bingo on just the fifth number called

:thumbsup: :patriot:

[TheWraith]

10. Bullshit.

And yet, when people come here day after day and spew nasty bullshit, they never come back and apologize when they're proven wrong, over and over again.

[Faygo Kid]

3. I've said that all along. No way will Wall Street let the tea partiers rule.

The teabaggers are useful idiots, and that's all. Obama will carve up Social Security and Medicare, the debt ceiling will get done, and back to business as usual.

[chill_wind]

5. Kyl is saying as much this morning. Major climb-down.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=433&topic_id=712910&mesg_id=712920

[roguevalley]

6. the writer is delusional. wall street can't make the tea baggers

do squat. if enough of them say no nothing wall street will say or do will matter. they bought a mad dog and they still think it will walk on a leash. Fuck them for making this possible.

[Jim Lane]

11. But not all the Republicans in office are Teahadists

One possible outcome is a compromise that has the support of most of the Democrats (minus the genuine progressives) plus the "mainstream" Republicans who feel compelled to do the bidding of their corporate paymasters. The bill is opposed by the Teahadists on the right (opposed to any debt-ceiling increase) and by Democratic wing of the Democratic Party on the left (opposed to the cuts in Social Security/Medicare/Medicaid and in discretionary social programs).

The Republicans have generally voted in lockstep. Because of the strong pressures on them from both directions, however, this issue could be an exception to that rule.

[OutNow]

7. Weimar Republic - A History Lesson

The brown shirts were on the march against the liberal educated class. The central government was unable to cope with mounting economic problems. That's OK, the liberals thought; the Nazis are a creation of the conservative business ruling class and there's no way they will let the Nazi storm troopers get out of control and ruin the country. No way! If it gets too bad the conservative business class will save our democracy at least.

Hint - when you start believing that Wall Street will stop the teabaggers, you are repeating history and I, for one, don't want to see that repetition.

[socialist_n_TN]

8. Well, they ARE proto fascists, BUT

I don't think that they have the support that the Brown Shirts had at the end of the Weimar Republic. They're also older than the Brown Shirts were and consequently less energetic. And that WILL make a difference if Wall Street doesn't hire mercenaries to bolster their numbers.

In short, I appreciate the comparison and it IS somewhat apt, but I don't think it follows here. I think Wall Street is still in control. At this time.

[RickFromMN]

9. I agree with your sentiment. The Tea Party is a monster that can't be controlled.

Hitler had a solution for reigning in the brown shirts (SA).

During the Night of the Long Knives the SS and the Gestapo eliminated the problem, violently.

The SS was an offshoot of the SA.
It would be akin to an offshoot of the Tea Party turning against other Tea Party members.

Emotionally, I think of the Tea Party as a unified block. Intellectually, I know it is not.
Which offshoot of the Tea Party may become the SS equivalent?

Hopefully our country is beyond real violence like they had in Germany.
Hopefully the Tea Party are all words, and won't really become violent when stepped on,
even if the ones doing the stepping on are other Tea Party members.
I don't wish to read horror stories like the Night of the Long Knives happening here.

[OutNow]

12. The Economy Hasn't Exploded Yet

Yes, the teabaggers aren't violence-prone yet. I believe it is because our economy hasn't had a major explosion on the scale of that experienced by he Wiemar republic. Yet. But the the Reich Wing in this country is trying its best to cause economic chaos. During Wiemar, the Germans could not pay off their massive debt and the French occupied the Ruhr to gain control of factories and their revenue. What will happen when China can't collect what it's owed to them if/when the USA defaults due to its massive debts?

I know this comparison is just speculation, but I recently finished reading "In the Garden of Beasts: Love, Terror, and an American Family in Hitler's Berlin" by Erik Larson. It really creeped me out.

[some guy]

13. What a fucked up conversation

this whole thread is.

Will the heartless psychopathic greed heads rein in the heartless psychopathic idiots, and which side should we hope prevails?

this country is so fucking done.