July 31, 2011

The Terrible, Awful Truth About The Debt Ceiling

in football, when the game is already won, this is called "running out the clock"

The current debt crisis, the one that goes apocalyptic on August 2, the one that is front page news, all the time, is a non-issue.

You don't need to know any economics or public choice theory to know this, all you need to do is look at this pic:

debt ceiling matters.jpg
Somehow this poor woman has been convinced that the essence of the problem is this deal.  I can't tell if this photo is staged for a photographer standing behind her or she thinks she's testing Congressmen with giant Zener cards, but she clearly wants this to be about relationships and non-partisan debate and unity and pride.  Somehow she has been convinced that what makes the U.S. different from Greece is this vote; that what confounded the Greeks was really whether or not to raise their debt ceiling.  "Come on guys, just work it out!"

She doesn't appear to know how to read, or see, so whatever she thinks she knows came inevitably from the news media, the one that is now using her as a symbol of something.  So with no other information you can assume the opposite and trade accordingly. (Get out by Sept 20.)

In this case, it's easy to deduce the real issue, which has no deadline. The popular phrasing of the real issue is "America's in debt, we spend more than we take in," but a more meaningful understanding of that sentence is this: we're all on the federal dole, one way or another.

Debt ceilings are accounting tricks.  Whether you make the minimum monthly payment by August 2 only affects the books; as long as you make that payment you look ok on paper and so does Visa.

So it is inevitable that a deal will be struck by August 2, because that deal doesn't actually mean anything.  This a is husband and wife arguing about rebalancing the household budget, each pretending they aren't going to pay the electric until he's agreed to cut back on beer and she's agreed not to be such a bitch.  Whether they do it or not is irrelevant, the electric's still getting paid.  The electric always gets paid, it has to, we need it for the chairs.

Not to mention that no politician wants to be remembered as the guy who made his constituency go unpaid.  Public choice theory will save you by August 2, even as it wrecks you all the other times.

So when you get the temporary reprieve tomorrow-- and it is temporary-- you should do whatever you have to to get off the dole; you are getting off of it anyway.

Because one of these days we won't be able to even make the minimum monthly payment, and, keeping to the household budget analogy, in those circumstances what happens isn't that the family goes bankrupt, what happens is that the couple gets divorced.  Pray on this.


There's a game you should play, and it is analogous to Bloody Mary, where you and your Tiger Beat reading friends are at a slumber party, and they tell you to go into the bathroom and hold a candle and look into the mirror, and exactly at midnight if you say "Bloody Mary" three times a bloody face will appear.  And you do it and it works, and you're like, "what the... did that really just happen?"  Then you climb back in bed only to discover your friends put a tarantula in it.

The game is you take a major population-grabbing news story and ask, "what's going while I'm focused on this moronity?"

You can try it with Casey Anthony and get Greek austerity and Britain union protests and the commonplace use of the phrase, "the end of the euro"; but the lead story doesn't have to be frivolous for the game to be instructive.  9/11 was pretty real but if it weren't for that we might have learned how entangled the California and Federal governments were with Enron and energy suppliers in general, and the complicity of Arthur Anderson in asset price inflation and bubbles all over the world.  Instead, we didn't.

Neither is it necessarily a conspiracy or a cover-up, it is simply related to the fact of finite human waking hours.  Unless you're chronically running 20 hours a day, to the likely detriment of your body and silent deterioration of your sanity, just so you can do things other people don't have time for like look up the references in the introductions of research papers or watch Susan Sarandon's naked granddaughter act annoying(ly) in Joe, you're simply not going to get to everything.  There's just no time, your mind can only handle one lead story a week.  "But I do like to get in depth and hear both sides of the issue."  That's why you subscribe to  The Atlantic.

It's also fun to play "what's the lead in other countries, where this story isn't?" or "what's the lead for men/women if this story is the lead for women/men?" because it tells you what the rest of the world cares about while you're hearing both sides of the J-Lo divorce.

So let's play that out now, what's the lead story if the Debt Ceiling isn't?  That one's easy:

islamists flood square.JPG
Throw in the pic of the protestors:

islamist protest egypt.jpgand observe that in contrast to Revolution Facebook, none of those signs are in English-- and sprinkle in a little "Gunmen attack Sinai Gas Pipeline" and "Dozens Killed As Syrian Forces Storm Cities" and you have everything that would have previously driven Bush to "illegally" send the troops and Cheney to "accidentally" shoot his lawyer.  The US may have the luxury of employing  "watchful waiting" while Sideways Glasses Guy retweets his Time Magazine cover and plans on voting in the upcoming elections, but the guy above doesn't look like he's going to wait for anything.  Especially elections.

Right or wrong I have no idea, I only know that when the Debt Ceiling Crisis is averted the Egypt problem will still be exactly the same and, unsurprisingly, so will the debt.  I'm not suggesting the radicalization of the Egyptian protests are more important than our debt, I am simply reminding you that both the cause of the debt and the cause of the radicalization of the protests are more important than the "debt ceiling crisis." If anyone knows Obama's or Boehner's twitter addresses, send them a tweet.


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The Terrible, Awful Truth About The Tax Cuts