tag:blogger.com,1999:blog-1331441403058020963.post1318859199853299342..comments2024-03-28T06:49:24.930-04:00Comments on International Political Economy at the University of North Carolina: Beyond HyperboleThomas Oatleyhttp://www.blogger.com/profile/14092437150746625670noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-1331441403058020963.post-52062316628532598872016-10-04T15:19:08.445-04:002016-10-04T15:19:08.445-04:00Did you know that you can earn dollars by locking ...Did you know that you can earn <b>dollars</b> by locking <b>special areas</b> of your blog / site?<br />To start you need to open an account on <b><a href="http://syntaxlinks.com/affiliate-network-reviews/network/14/AdscendMedia/" rel="nofollow">AdscendMedia</a></b> and <b>use their Content Locking plug-in</b>.Bloggerhttps://www.blogger.com/profile/07287821785570247118noreply@blogger.comtag:blogger.com,1999:blog-1331441403058020963.post-52402444935753573412011-07-28T07:45:49.865-04:002011-07-28T07:45:49.865-04:00Holy Pilloried Pile, Batman!
You mean the debt cei...Holy Pilloried Pile, Batman!<br />You mean the debt ceiling was under 1T in 1979? I think I saw somewhere it was about 4T in 1996.<br />Now on our way to 16T.<br /><br />Methinks this aspect of the story is being under-reported.jdwillhttps://www.blogger.com/profile/17525853861064915829noreply@blogger.comtag:blogger.com,1999:blog-1331441403058020963.post-50821940468332821402011-07-19T08:35:40.659-04:002011-07-19T08:35:40.659-04:00Thanks. Simple responses here, maybe another post ...Thanks. Simple responses here, maybe another post on the bigger points you raise.<br /><br />1. I don't disagree that raising the ceiling is better than not. One can share that view without thinking that doomsday is likely if we don't.<br /><br />2. Gold prices? Seems that we ought to see direct evidence in the relevant markets. If people were selling treasuries to buy gold, gold price spikes should be accompanied by govt debt valleys. <br /><br />3. Comparing 1979 to current is apples to oranges. This seems tautological: doesn't apply because it doesn't apply. Why doesn't it apply? <br /><br />4. On your math...My point was that 60 basis points was 6 percent of the current yield. So, a 6 percent increase in the current yield would be zero. Not sure why we would expect rates to increase by 600 percent (as would be implied if we added the 60 basis points to current yield).<br /><br />5. This is indeed THE key point. And it needs further elaboration. Here I will say only that this isn't a debt repudiation nor even an insolvency-based default. No one questions whether the US has the income to service or the intention to service its sovereign debt. What is in question is whether the US government will have the cash on hand to make about $30 billion of interest payments due in August. And even if it doesn't, then this default has zero implications for what happens in September. Yet, the conversation seems to assume that if we fail make a payment in August everyone concludes that we will refuse to pay all of our obligations. I had a hard time understanding the logic that supports this inference.Thomas Oatleyhttps://www.blogger.com/profile/14092437150746625670noreply@blogger.comtag:blogger.com,1999:blog-1331441403058020963.post-28051729338255431362011-07-19T04:01:58.481-04:002011-07-19T04:01:58.481-04:00Good post and welcome back. Few things:
1. If our...Good post and welcome back. Few things:<br /><br />1. If our options are between "doomsday" and "pay more for borrowing while we have a $1tn/year primary surplus" I'll still take "raise the damn debt ceiling please". Hence, I don't think any discussion of the doomsday scenarios is hyperbole.<br /><br />2. "One would think we would see some sign of impending doom". Like what? Spikes in prices of gold and other commodities? Check. Ratings agencies flipping out? Check. Wall Street going nuts on the GOP? Yep. Obviously right now bond markets haven't freaked out on Treasuries, but I think that's because they think a deal will get done in which everyone is made whole (as do I) and because if a deal doesn't get done and an actual default occurs, everything goes to hell so nothing's safe anyway. <br /><br />3. Comparing a technical difficulty in 1979 (in which the full faith and credit of the United States is still promised) to a measured political decision to intentionally default for no good reason in 2011 (in which the full faith and credit of the United States is deliberately eschewed) is apples to oranges, to put it mildly.<br /><br />4. On your math (0.06 x 0) you should be adding rather than multiplying, in which case it isn't nothing. A 60 basis point increase is a 60 basis point increase, no matter the starting point. I would guess that the 1979 penalty is a best-case scenario, given #3, but even still this would cost billions of dollars. For no reason at all.<br /><br />5. "In other words, markets might distinguish between a sovereign default caused by massive over-borrowing and collapsing export revenues (where the likelihood of being made whole is zero) and a technical default by the United States (where the likelihood of not being made whole is zero)." This is a key point, and in every prior event where there's been a gov't shutdown everyone (including workers) have been made whole. OTOH, to my knowledge we've never had an event where the legislature simply refuses to pay. And we've never had an event (again, to my knowledge) where the ratings agencies downgraded our debt, thus really straining the banks. We've earned our reputation as payers of our doubts, which is why it could hurt so much if we tarnished it.<br /><br />6. I also agree on the bargaining stuff. I actually had a post planned along the same lines. It makes sense for the GOP to toe the line. It makes sense for Obama to call the bluff and push for a bigger bargain than the GOP really wants, and it makes sense for a McConnell-type plan to be the equilibrium outcome. But I worry about trembling hands.Kindred Winecoffhttps://www.blogger.com/profile/14330671232391851377noreply@blogger.com