The United States has already defaulted

There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved.
– Ludwig von Mises

The tea party movement is aptly named, and those elected in its name should remember the will and motivation of the extremists who stormed British ships in 1773.

The “debt-ceiling” debate is such a revolutionary moment, and compromise with fools, charlatans and self-absorbed milquetoasts is out of order. Raising the debt ceiling while pretending we will voluntarily cut spending at some future date is insane. It’s doing the same thing over and over and expecting different results. It guarantees catastrophe.

I, for one, would rather see the real deer-in-the-headlights expressions of John Boehner and Harry Reid than put up with one more shell game. Let August 2nd come and go with no more spending. On August 3rd we can all celebrate the president’s 50th birthday and offer prayers that wisdom will come with it. On August 4th, after counting the proceeds of his birthday fundraisers, the president can tell us what he thinks we should do.

If nothing is done before August 2nd, the US need not, and will not, officially default. The debt interest will be paid. Social Security and Medicare can be paid. Our troops can be paid. Comments to the contrary are fear mongering. The rest of our obligations matter less than the principle of correcting our fiscal course. Trouble now, or catastrophe later?

I agree with Michele Bachmann and those tea party stalwarts who insist on doing something real. Theirs’ is the compassionate position:

I refuse to be a party to deceiving the American people yet again.
– Michele Bachmann

A vote for “voluntary abandonment of further credit expansion” is a vote for the poor, the middle class and the rich. In that order.

Absent immediate cuts and a balanced budget Amendment, the one thing that should NOT be negotiable is the length of time any increase in the debt ceiling covers. We are told we can’t interrupt Christmas. We are told this debate is divisive and should not play a part in the 2012 presidential election. Really? What do the politicians think we pay them for except to practice politics? The most important political question the United States faces is the long term viability of our financial system. The president talks about it now using class warfare rhetoric. He otherwise refuses to reveal any specific aspect of his plans. And he doesn’t want to talk about it before he runs again for office? He is a charlatan who thinks you are a fool.

Update 6:23
Default Now, or Suffer a More Expensive Crisis Later: Ron Paul

Necessary, but hardly sufficient

Joe Nocera, writing in the New York Times yesterday, explains why Wall Street is to blame for the financial crisis: A Wall Street Invention Let the Crisis Mutate

Every time you pick up another rock along the winding path that led to the financial crisis, something else crawls out. Subprime mortgages were sold as a way to give low-income people a chance at homeownership and the American Dream. Instead, the mortgages turned out to be an excuse for predatory lending and fraud, enriching the lenders and Wall Street at the expense of subprime borrowers, many of whom ended up in foreclosure.

The ratings agencies, which rated the complex investments that were built with subprime mortgages, turned out to be only too happy to be gamed by firms that paid their fees — slapping AAA ratings on mortgage bonds doomed to fail. Lehman Brothers turned out to be disguising the full reality of its horrid balance sheet by playing accounting games. All over Wall Street, firms pushed mortgage originators to churn out more loans that were doomed the moment they were made.

In the immediate aftermath, the conventional wisdom was that Wall Street had simply lost its head. It was terrible, to be sure, but on some level understandable: Dutch tulips, the South Sea bubble, that sort of thing.

“…that sort of thing.” Mr. Nocera must think the Dutch government was subsidizing tulip buyers who couldn’t afford the flowers, because one sort of thing he fails to mention is government regulation. It’s the main “sort of thing,” and I do not mean there was too little. Without the government policies structured to punish banks if they did not lend to people who could not pay, synthetic C.D.O.’s would never have existed. Compounding that was the direct Federal intervention via Fannie and Freddie, as well as the lying about their stability:

“These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
-Rep. Barney Frank, D-MA

When Mr. Frank said this, George Bush was President. Frank was the ranking Democrat on the Financial Services Committee. He was not alone in defending the sub-prime debacle.

“I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing.”
-Rep. Melvin Watt, D-NC

Mr. Watt was reacting to a Bush Administration proposal to increase oversight on Fannie & Freddie. It might well have affected the “ability” of some to buy houses they couldn’t afford and which have been repossessed since.

It wasn’t just Wall Street urging the Fed to keep the housing bubble going, either:

Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.

The corporatist whores and the vote buyers all asked for Federal intervention on top of Federal intervention – and they got it. Mr. Nocera could have written a complete article if he had acknowledged this.

Saved At last!

Yesterday, President Obama assured us that the economic Catastrophe™! he thought we faced, just a month ago, is over: Obama: Economic crisis ‘not as bad as we think’

It’s not as bad as he thought, nor even as bad as he told us to think it was. This is good news from someone who’s been instrumental in the public perception of another Great Depression. It must be that the trillion dollar Porkulus bill, written by Nancy Pelosi, and passed immediately without anyone in Congress actually knowing what was in it, turned the trick in just a month. Now that the President has been able to assemble an extended spending strategy based on a $1.75 trillion deficit “budget” in the first year of his “administration,” we’re good.

The POTUS settles comfortably into socializing health care, raising taxes on small business, reducing charitable contributions and imposing an economy killing tax increase through a carbon cap-and-trade system the EU has proved doesn’t work. Everything is looking a lot rosier than when he was panicking a month ago – or at least feigning panic in order to secure that “budget” opportunity.

Obama is also solidly behind denying workers the right to a secret ballot because that will provide significant benefits to labor union leaders (there will actually be fewer workers). Union driven cost increases to business, small and large, is another Pretty Pony on Obama’s horizon.

So, here is at least one instance where The One is wrong. The things that would have worked themselves out are not going to be allowed to. The more of his agenda that succeeds, the more all of us will fail; especially including the temporary beneficiaries. The Veep gave an example of this to open the meeting:

Vice President Joe Biden opened the meeting by warning state officials that if they misuse [?] money from the stimulus package, they should not expect more help from the federal government for a long time.

“If we don’t get this right, folks, this is the end of the ability to convince Congress that anything should go to the states,” Biden said.

Joe Biden is the guy who predicted a 30% chance of failure no matter what they did. I guess that’s because, left to their own devices, the states might not invest enough in tattoo removal or the protection of small rodents.

Riskophiliacs Anonymous

They’re both out of touch, and they both think we’re ignorant. Unfortunately, they’re right about many of us.

While Barack Obama and John McCain try to out-populist each other by blaming the current financial crisis on the “greedy people” they practically forced to make bad loans by A) always bailing the assholes out, and B) supporting federal policies encouraging loans to people who could not pay them back; there is some unsettling anti-populist news for Obama from the Onion:
Portrayal Of Obama As Elitist Hailed As Step Forward For African Americans

I’m waiting for Charlie Gibson to ask either of these dolts what association tulips have with economics. It’s a hell of a lot clearer than the “Bush Doctrine.”

The Obama and McCain camps each get 4 bozos today.

Obama gets 1 extra for the MSM participation in his BS, and McCain gets 1 extra for the Keating 5 and another for pushing Sarbanes-Oxley.

Obama 10. McCain 6.

Broken imbed fixed. 24-Sep