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-The rich are different than you and me.

-Yes, they have more money.

Likely apocryphal conversation between F. Scott Fitzgerald and Earnest Heningway

I have long been on Hemngway's side on what the rich are actually like.  I went to school with future banksters, wall street hacks, and wannabe corporate titans.  When I read the Wall Street Journal and the New York times, I recognize former drinking buddies and lovers in the bylines.  I know these people, and for the most part they are unremarkably bright, but in no way brilliant, and in no way smarter than many of the other bright people I have met in my life.  What they shared, however, was the conviction of their own brilliance and the lack of humility to act on it.  These are the latter day "best and brightest" that led us into Vietnam...utterly unaware of the practicalities of guerilla war, colonialism and death.

But there is one way that the rich are different from you and me...they have access to the highest levels of government.  They can call representatives, senators, and cabinet members to find out what's coming down the road, adjusting their investing, business and lobbying plans accordingly.  They don't need to be brilliant to make money hand over fist when they have insider information and influence. And that is where I get confused.

If a credit default is likely to be coming, why haven't the Dow, NASDAQ and S&P 500 crashed yet?

I've long assumed that 'corporate titans' have better access to information than I do, and have been looking to the stock market to see what they think is gonna happen.  I may not want what they want, and I certainly don't think they are brilliant...but I have assumed that they simply know more than you, I or the media know.  

As of right now, there has been no selloff, no crash...which would normally lead me to believe that they know something I don't. They might know that the republicans or democrats will cave at the last minute. They might know that Obama is going to mint a trillion dollar coin.  Or they might know that the default actually doesn't really matter.  

But what scares me is this, maybe they have become as stupid and delusional as the tea baggers.

Let's take a look at the various possibilities.  

The default won't actually be that bad.  As a devoted follower of Krugman...he says it will be bad, and I believe him.  More-so, he ain't alone in that assessment.  So this seems unlikely.

The democrats are gonna cave.  Again, I just don't see this happening.  If they were gonna cave, they woulda done it sooner when they were less likely to take a major hit.  You don't minimize the effects of unpopular decisions by raising the stakes.  Caving early is generally less damaging than making a stand and then caving.

The republicans are gonna cave.  The senate republicans already have, more or less.  But it is looking less and less likely that the house republicans will.  And unlikely that Boehner is gonna break with the tea baggers and allow the democrats to pass the bill with some republican support.

Obama is going to mint the platinum coin. There are arguments for and against this, but whatever the case, this would lead to unpredictable court action that would make any debt issued under the platinum coin era more questionable than the debt is now.  While perhaps lessening the market crash, it wouldn't stop it.  There is no crash happening (as of right now), so again, this seems unlikely.

The 'corporate titans' don't actually have better access than I do, and have dramatically underestimated the potential for default.  Again, this seems unlikely to me...though it is beginning to feel like the most likely of the bad choices available.  Oddly, however, this one scares me about as much as any of them.  I can oppose and fight a rational opponent.  I know the teabaggers are not rational, but I have relied on the greed and venality of my former drinking buddies and lovers to at least make them rationally greedy and venal.  They ain't brilliant, but their insider access allows them to make a shit-ton of money without being brilliant.  But what if that access is gone, what if they are genuinely about to get blindsided.  Sure, it will be great to watch them fall, but their fall will mean horror to the rest of us.

So, what the fuck is going on?  I don't know.  But I am getting increasingly concerned that the masters of the universe are about to get sucker punched...and however much I like that in theory, in practice it could get really ugly, really fast.  

Poll

So why hasn't the market collapsed yet?

26%30 votes
8%10 votes
4%5 votes
1%2 votes
58%67 votes

| 114 votes | Vote | Results

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Comment Preferences

  •  Tip Jar (12+ / 0-)

    "Empty vessels make the loudest sound, they have the least wit and are the greatest blabbers" Plato

    by Empty Vessel on Tue Oct 15, 2013 at 11:53:43 AM PDT

  •  my hunch (8+ / 0-)

    is that bohner has put the word out to big money that he'll fold at the last minute, and allow a clean vote right before the default.

  •  ? whirling ? (2+ / 0-)
    Recommended by:
    Empty Vessel, Sylv

    Addington's perpwalk? TRAILHEAD of accountability for Bush-2 Crimes. @Hugh: There is no Article II power which says the Executive can violate the Constitution.

    by greenbird on Tue Oct 15, 2013 at 11:57:43 AM PDT

    •  only up 10 bucks over yesterday, metals freefell (1+ / 0-)
      Recommended by:
      Sylv

      over night, silver was down to 20.50 then this am rallied to only be down 3 cents from yesterday...I should have bought overnight, I would have made the vig this am and been into profit......

      Vaya con Dios Don Alejo
      I want to die a slave to principles. Not to men.
      Emiliano Zapata

      by buddabelly on Tue Oct 15, 2013 at 12:21:02 PM PDT

      [ Parent ]

      •  i'll show you your percentage if (1+ / 0-)
        Recommended by:
        buddabelly

        you'll show me mine.

        Addington's perpwalk? TRAILHEAD of accountability for Bush-2 Crimes. @Hugh: There is no Article II power which says the Executive can violate the Constitution.

        by greenbird on Tue Oct 15, 2013 at 01:39:48 PM PDT

        [ Parent ]

        •  I pulled a decent chunk of cash just in case and (1+ / 0-)
          Recommended by:
          greenbird

          have the order in and am refreshing about every ten minutes....once it hits my target this time I'm pulling the trigger on a bunch of physical silver.

          no damn interest rates in a savings and silver is doing ok...up a bit from the year low but down still from the year high with room to make the vig and a profit even if there's a hard ceiling....could always go south though which is why I like the actual product.  It might hold value though I'm more confident in canned goods and small caliber ammunition for squirrel hunting..../snark, I hope.......,

          Vaya con Dios Don Alejo
          I want to die a slave to principles. Not to men.
          Emiliano Zapata

          by buddabelly on Tue Oct 15, 2013 at 06:42:37 PM PDT

          [ Parent ]

          •  several just-posted delicious diaries (0+ / 0-)

            may suggest we have slipped on a banana-peel and landed on a pot of gold. whodathunk!! go read 'em, you can tell which they are: they're giggling and wiggly. also, for you -- new phrase: short the canned corn; buy pigeon !

            Addington's perpwalk? TRAILHEAD of accountability for Bush-2 Crimes. @Hugh: There is no Article II power which says the Executive can violate the Constitution.

            by greenbird on Tue Oct 15, 2013 at 08:30:34 PM PDT

            [ Parent ]

          •  weatherdude has kept his great sig: (0+ / 0-)

            "if you say green beans real slow, it sounds like 'gullible.'"

            did you "really" read my first comment ? ;)

            Addington's perpwalk? TRAILHEAD of accountability for Bush-2 Crimes. @Hugh: There is no Article II power which says the Executive can violate the Constitution.

            by greenbird on Tue Oct 15, 2013 at 08:32:44 PM PDT

            [ Parent ]

  •  The Democrats have already caved. (6+ / 0-)

    The affordable care act is based on republican proposals, the budget is based on republican cuts the problem is that republicans view every compromise as an incentive to move their demands even further to the right. What they've proposed to end this shutdown is the adoption of the Romney/Ryan campaign platform from the last election.

    "Remember, Republican economic policies quadrupled the debt before I took office and doubled it after I left. We simply can't afford to double-down on trickle-down." Bill Clinton

    by irate on Tue Oct 15, 2013 at 12:00:59 PM PDT

    •  What did the D's get from the Senate deal? (3+ / 0-)
      Recommended by:
      svboston, RainyDay, irate

      Nothing! The R's got the verification (very much like voter ID's only much harder) and a small cut in revenues for Obamacare without any new revenues.  What did the Dems get? Nothing!  The Dems were holding 4 aces and the Repugs had a pair of deuces, and this is what we end up with?  Why wouldn't you believe the Dems won't just keep giving until the Repugs say, great, see you in Feb for the next round!

  •  They have more to lose; I hope they get screwed. (3+ / 0-)
    Recommended by:
    Empty Vessel, poco, mrsadkins9399

    They bought & paid for these evil RW racist, stupid vile, venal monsters.

    I'm poor but I own my own home. They can eat shit, default on their mortgages, lose their jobs.

    nosotros no somos estúpidos

    by a2nite on Tue Oct 15, 2013 at 12:03:51 PM PDT

  •  You missed one. Obama will order the Treasury.... (5+ / 0-)

    to pay the debt Congress authorized.

    This isn't about increasing the debt.  It is about paying the bills.

    There is no way, Obama will allow a default.  That is what Wall Street knows.

    Tax and Spend I can understand. I can even understand Borrow and Spend. But Borrow and give Billionaires tax cuts? That I have a problem with.

    by LiberalCanuck on Tue Oct 15, 2013 at 12:04:17 PM PDT

    •  I kinda intended that to be subsumed (0+ / 0-)

      under the platinum coin option, though never really said it.  But it has problems for the same reasons that the platinum coin does.  There will be big lawsuits about it...and thus doubt...and thus at least some market crash.

      "Empty vessels make the loudest sound, they have the least wit and are the greatest blabbers" Plato

      by Empty Vessel on Tue Oct 15, 2013 at 12:06:21 PM PDT

      [ Parent ]

      •  Supreme court won't take the case... (0+ / 0-)

        ...cause no one will have standing....where's the injury if the US is just paying its bills...?

        If it comes down to the wire, this is the cleanest way through the morass, and Obama might be considered a hero for doing it.

    •  Congress holds the purse-strings (1+ / 0-)
      Recommended by:
      svboston

      He doesn't have the Constitutional powers to order Congress to pass a budget.
        Even I would vote to impeach Obama if he tried to do this, and I hate the current Congress.

      None are so hopelessly enslaved, as those who falsely believe they are free. The truth has been kept from the depth of their minds by masters who rule them with lies. -Johann von Goethe

      by gjohnsit on Tue Oct 15, 2013 at 12:10:49 PM PDT

      [ Parent ]

    •  LC - Congress does not authorize debt (3+ / 0-)
      Recommended by:
      Empty Vessel, poco, Sylv

      when it authorizes budgets. I think unilateral increase of the debt limit is the most Constitutionally troubling of the President's options. The new Treasury bonds would be so "tainted" that the market may not accept them.

      "let's talk about that"

      by VClib on Tue Oct 15, 2013 at 12:11:41 PM PDT

      [ Parent ]

    •  Do you mean he will invoke the 14th amendment? (0+ / 0-)

      I hope he does. Let the Repubs impeach him in the House.
      It will never get through the senate.
      Besides, as far as any court challenges, it will take months to resolve, just before election time

    •  Exactly. (0+ / 0-)

      Wall Street trusts the president.

    •  Income - interest payments = Income (0+ / 0-)

      Default takes place when a debtor does not pay interest on the debt owed.  The interest is on the order of $223B while revenue is on the order of $2449B.  Social Security is, technically, funded by the redemption of Treasury bonds;  this is another $768B to pay.  Mandatory spending is at $461B.  To this, add the fraction of the $802B of Medicare/Medicaid raised by the redemption of Treasury bonds, as opposed to new appropriation.  That's $1500B to $2300B that must be paid to avoid default or the violation of existing laws.  Make "mandatory" spending optional and you get $1050B to $1850B that must be paid.  

      The other option is for Obama to cite the 14th Amendment and his duty to execute the laws of the United States, thus ignoring the debt ceiling.  There is precedent:  the Lincoln Administration took out considerable debt to fight the Civil War without talk of a "debt ceiling".  It can even be argued that if he fails to direct the Treasury to honor US obligations despite Congress' tantrums, that it would be a violation of the Constitution.

      The way it will probably play out is that Obama will carry  out his 14th Amendment responsibilities.  Then the House, that has been searching for reasons to impeach, begins impeachment proceedings that the Senate will reject.  

      "Politics should be the part-time profession of every citizen who would protect the rights and privileges of free people and who would preserve what is good and fruitful in our national heritage." -- Lucille Ball

      by Yamaneko2 on Tue Oct 15, 2013 at 04:33:12 PM PDT

      [ Parent ]

  •  Poll option missing (7+ / 0-)

    Wall Street has already figured out a way to profit off this (and screw the rest of us)

    The thing about quotes on the internet is you cannot confirm their validity. ~Abraham Lincoln

    by raboof on Tue Oct 15, 2013 at 12:06:17 PM PDT

    •  what would that way to profit be? (0+ / 0-)

      Seriously, Krugman says they won't.  What do they see that Krugman doesn't?

      "Empty vessels make the loudest sound, they have the least wit and are the greatest blabbers" Plato

      by Empty Vessel on Tue Oct 15, 2013 at 12:09:25 PM PDT

      [ Parent ]

      •  Squeezing everyone who shorts the market. (1+ / 0-)
        Recommended by:
        gustynpip

        Basically the strategy that has been in effect for the past year, during which time there has not been one correction that meets the definition of such, a loss of 10 percent or more.  Every time the market dropped 4-5 percent, the short squeeze brought the market to new heights.  It's not your normal market anymore.

        •  I suspect this is too smart by half. (2+ / 0-)
          Recommended by:
          Yoshimi, Sylv

          for every investor who sells futures, there is another who buys them.  Whatever else, there are truly very few non-institutional investors in the futures market.  The futures market is titan vs titan.  Sure, if the default happens, there will be a few winners, but by definition, there will be many losers.

          "Empty vessels make the loudest sound, they have the least wit and are the greatest blabbers" Plato

          by Empty Vessel on Tue Oct 15, 2013 at 12:19:45 PM PDT

          [ Parent ]

    •  Yep (2+ / 0-)
      Recommended by:
      gustynpip, Sylv

      Even if big money moves who is moving all the small money like individual 40ks and small investment accounts for the Average Joe?

      Those will move once the crap hits the fan and will be the ones that experience the biggest losses because they moved late.

  •  EV - two reasons (7+ / 0-)

    Most experts feel the actual "day" is Oct 31st and for sure Nov 1st based on what payments the federal government has to make. So the day we hit the wall is still two weeks away.

    They are confident that the President won't allow a default on maturing Treasury securities, or interest payments on Treasury notes and bonds, to happen on his watch.  

    "let's talk about that"

    by VClib on Tue Oct 15, 2013 at 12:08:41 PM PDT

  •  Wall Street hit all-time new highs (3+ / 0-)

    In January 2000, when Dot-Coms were getting ridiculous, and October 2007, more than a year after the subprimes started crashing and months after the credit markets seized up.

    They are all about momentum chasing, not predictions.

    I post this just yesterday.
      These guys are set themselves up to be wrong. The only question is timing it.

    None are so hopelessly enslaved, as those who falsely believe they are free. The truth has been kept from the depth of their minds by masters who rule them with lies. -Johann von Goethe

    by gjohnsit on Tue Oct 15, 2013 at 12:08:46 PM PDT

  •  One more possibility:.. (3+ / 0-)
    Recommended by:
    Empty Vessel, gustynpip, Sylv

    ...is that the market is no longer closely connected to fundamentals, that it's a contest of market makers who are trying to squeeze each other for profits, since individual small investors -- the dupes they'd normally victimize, who now participate only through IRAs managed by market makers -- have been otherwise out of the market since 2009.  Aside from some unanticipated black-swan event, most likely from overseas, there is no reason to think that the stock market cannot operate as its own closed-system cage match wholly divorced from the real world.  That'll break down someday, but maybe not this particular someday.

  •   I doubt we make the Oct 17th deadline, (1+ / 0-)
    Recommended by:
    Sylv

    but we won't default.  Keep your eye on the markets in the last hour today, the Asian markets tonight and U.S. markets again early tomorrow. At some point the markets will react, which will be the thing that forces the GOP's hand.

    "The prospect of being hanged focuses the mind wonderfully."

    Samuel Johnson

    "Because I am a river to my people."

    by lordcopper on Tue Oct 15, 2013 at 12:14:03 PM PDT

    •  I don't think we have to... (1+ / 0-)
      Recommended by:
      lordcopper

      Lew has said he can keep things above the water at least till the 17th. I think he is running a few billion short each day. In actuality, he can probably go more toward the end of the month, but I don't think there is any way he can make the big end-of-the-month payments ( social security, etc.) I think in actuality, he will always pay off the debt interest obligations and bond retirements and short everything else. Unless this goes on for months, I doubt we will ever default and I think Wall Street has anticipated this. We will just once again screw everyone but the bankers.

  •  the market behaves like an emotion driven crowd (3+ / 0-)
    Recommended by:
    svboston, gustynpip, Sylv

    whatever the issue of the moment is, it doesn't matter till it matters, then the crowd rushes for the exit, or entrance, or whatever

  •  Up to this point we have come to a resolution (2+ / 0-)
    Recommended by:
    poco, Sylv

    on every shutdown and default threat but it has always come in the eleventh hour. Always. One thing the President has done is that he has calmed the stock market during his whole presidency and it appears that Wall Street trusts him.

    If you are thinking about selling your stock, you want to sell when it is high and buy when it is low. I think we'll see movement when Wall Street realizes there is no way out of a default.

    •  Yeah (1+ / 0-)
      Recommended by:
      Yoshimi

      But the trick is to be the first to sell in a sell-off.  If you and I can see the risk, with our crappy info, what are they seeing that we aren't?

      I'm not saying I have any answers...hell, even my headline asks WTF.

      "Empty vessels make the loudest sound, they have the least wit and are the greatest blabbers" Plato

      by Empty Vessel on Tue Oct 15, 2013 at 12:27:14 PM PDT

      [ Parent ]

  •  You forgot one. (0+ / 0-)

    They're either betting on the Bernanke put, or they've been assured they will get prioritized.

  •  The Senate basically has a deal... (2+ / 0-)
    Recommended by:
    Ashaman, poco

    that is just being delayed one day by this last-minute crap in the House.  Once the House plan fails to pass, which will probably happen before I eat dinner today, the Senate will approve the deal Reid and McConnell concluded with 75+ votes and send it to the House where Boehner will "reluctantly" allow a vote, and it will pass with majority support from Democrats.

    That's why the market hasn't tanked.  The only thing that happened today is the Republican House delegation decided to waste one last day of everyone's time.

  •  because nothing major happened yet (0+ / 0-)

    and there is going to be some deal at the end.

  •  Wall Street Has a Plan (4+ / 0-)
    Recommended by:
    Yoshimi, gustynpip, Sylv, a2nite

    There is an old investor's maxim, "buy the rumor, sell the news."

    Right now hedge funds are gobbling up stocks being sold by panicked investors expecting to sell them back at a profit to those same mom-and-pop investors after an agreement is reached. And they are hedging their bets with "put options" in the event stocks fall. Either way, stocks up or stocks down, they plan to make fortunes.

    In fact, the only way the hedge funds can lose in this situation is if the are no big swings, either up or down, in the next few weeks.

    Power is not sufficient evidence of truth. - Samuel Johnson

    by Knighterrant on Tue Oct 15, 2013 at 12:38:59 PM PDT

  •  I suspect (0+ / 0-)

    Wall Street is looking to capitalize on the misery, snatching up undervalued stocks and reaping big bucks when democrats fix the mess.  

    Political compass: -8.75 / -4.72

    by Mark Mywurtz on Tue Oct 15, 2013 at 04:39:37 PM PDT

  •  Here is a clue (0+ / 0-)

    Treasury Bond yields for today.

      Term       Yield        Day to day change
    3 Month    0.06%    +0.04 (200.00%)
    6 Month    0.10%    +0.05 (100.00%)
    2 Year    0.35%    +0.01 (2.94%)
    5 Year    1.43%    0.00 (0.00%)
    10 Year    2.73%    +0.02 (0.74%)
    30 Year    3.79%    +0.03 (0.80%)

    The short term bonds yields doubled a tripled today because investors aren't buying and don't trust the Tea Party machine they created.

    Long term yields are stable because they still trust the country to figure it out.

    I, for one, have no problem being led by a 3500 year old Pharaoh who was trained by space aliens on a distant star.

    by Tomtech on Tue Oct 15, 2013 at 08:34:13 PM PDT

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