Skip to main content

Senator Rand Paul (R-KY) speaks during a  news conference to announce legal action against government surveillance and the National Security Agency's overreach of power on Capitol Hill in Washington June 13, 2013. REUTERS/Yuri Gripas (UNITED STATES - Tags
Duhhhhh....I'm an idiot!
The latest message we've been getting from the nutcase fringe that runs the GOP is this: that a failure to pay some of the government bills need not mean default. It indicates an almost asinine understanding of how sovereign bond markets work.

Just listen:

"I will hear language like, 'Well, we are heading toward the debt ceiling and you are going to default.' Anyone that says that is looking you in the eyes and lying to you, either that or they don't own a calculator," Rep. David Schweikert, R-Ariz., said in a House debate Friday.

And Rep. Ted Yoho, R-Fla., even argues that reaching the debt limit could help the economy, by showing the world the U.S. is serious about its debt problem. "I think, personally, it would bring stability to the world markets," he told The Washington Post Monday.

Try Rand Paul on for size:
"I think it's irresponsible of the president and his men to even talk about default. There's no reason for us to default. We bring in $250 billion in taxes every month. Our interest payment is $20 billion. Tell me why we would ever default," Paul said on NBC's "Meet The Press."
Stunning.

So here's how this works guys: You have to pay everybody, on time. Because the way bond owners and traders view things, if you aren't paying somebody, I could be next.

How long does the GOP think the U.S. Government could skimp on domestic priorities because they're short of cash while continuing to pay foreign bondholders? Is that politically sustainable? How long before the government starts looking down the list of who is actually getting interest payments before they start picking and choosing who to pay? Will employee pension funds get priority over hedge fund speculators? Will Social Security, a big player in Treasury Bonds get shorted in favor of insurance companies?

You know what any investment advisor is going to tell their clients? Don't risk it. Go to safer harbors. And that my friends, is what begins a panic, which will inevitably lead to a global calamity. You can't choose not to pay people when you're the United States government. Especially when you're the world's reserve currency (mostly held in US treasures which are as good as cash...or at least is for now). You have to pay everyone, or face the consequences.

That's why insurance on U.S. Treasuries, which pay in case of default, looks like this today:

Another barometer of stress is the price of insurance contracts on Treasury bonds, known as credit default swaps. The cost of buying protection against losses on bonds has more than doubled in the last two weeks.
If we get closer to default, those swaps are going to go through the roof. Interest rates are going to send shockwaves through markets. Scared money is going to start moving rapidly. Disaster would ensue.

So to Rand Paul and all the other GOP crazies who seem to think its okay to pay your credit cards but screw the mortgage company without consequences, go ahead and default and see what happens. Quite frankly, that would be the watershed moment we almost need in order to break and destroy the Republican Party for good.

Originally posted to Triple-B in the Building on Tue Oct 08, 2013 at 07:41 AM PDT.

Also republished by Daily Kos.

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

Meteor Blades, Pat K California, RichM, Doug in SF, Sylv, Chris Andersen, northsylvania, dalemac, Gooserock, NYmom, Emerson, mrhelper, Sherri in TX, billlaurelMD, Bryce in Seattle, gjohnsit, cinnamon68, 88kathy, TracieLynn, whenwego, ask, Pithy Cherub, Aquarius40, roses, RLF, psnyder, Joe Bacon, annan, elmo, Lawrence, Catte Nappe, Timbuk3, mungley, jcrit, Josiah Bartlett, Gowrie Gal, radarlady, 3goldens, basquebob, dewtx, Kevskos, reflectionsv37, Sun Tzu, Inland, most peculiar mama, Tunk, SocioSam, mightymouse, Alan Arizona, BachFan, Themistoclea, bastrop, cookseytalbott, philipmerrill, 4Freedom, el cid, ER Doc, livjack, CA Nana, kurt, Compostings, Statusquomustgo, Brunette, bstotts, bartcopfan, SC damn yankee, cpresley, DBunn, Thinking Fella, camlbacker, Deadicated Marxist, ColoTim, HCKAD, jayden, jhop7, rovertheoctopus, Librarianmom, leonard145b, madgranny, JML9999, billso, Korkenzieher, on the cusp, TomP, cville townie, gizmo59, rmonroe, thankgodforairamerica, Clubbedinthehead, Youffraita, Involuntary Exile, bythesea, elwior, KJG52, Gemina13, petulans, billybam, forgore, JBL55, Marnie1, maggiejean, MufsMom, CanyonWren, JesseCW, LibrErica, geebeebee, kevinpdx, IreGyre, jfromga, p gorden lippy, Observerinvancouver, Eddie L, ericlewis0, USHomeopath, wrpereir, slice, dot farmer, Joe Hills Ghost, the autonomist, kerflooey, Bluefin, Liberal Capitalist, Bob Duck, slowbutsure, vahana, Cintimcmomma, FarWestGirl, lexalou, CoExistNow, marleycat, PorridgeGun, BarackStarObama, JWK, disconnect the dots, JenS, jham710, quill, anodnhajo, Siri, IndieGuy, Eric Nelson, a2nite, BRog, wasatch, Bisbonian, Windowpane, Heavy Mettle, Dallas L, ericf, Eric Twocents, Smoh, ModerateJosh, IndyinDelaware, amparo fan, skepticalcitizen, Mark Mywurtz, H E Pennypacker, maryannm, Capt Crunch, patsijean, VPofKarma, Richard Villiers, stitchingasfastasIcan

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site