Disaster Capitalism Kabuki

July 30, 2011

Investors also piled into Treasurys, driving down the yield on the benchmark 10-year note sharply to 2.804%, its lowest close since last November. Yields, which fall as prices rise, cratered as investors searched for a safe haven ahead of the Aug. 2 debt-ceiling deadline.

All three major credit-rating firms have warned they could lower the top-notch rating of U.S. debt if the borrowing limit isn’t raised.

From the Rich White Motherfucker Journal.

So let me see if I’ve got this straight. We’ve got to slash spending immediately because (1) if we don’t, the debt ceiling can’t be raised, and if the debt ceiling isn’t raised, then the US will default on its Treasury bonds, and (2) if we don’t cut spending then the rating agencies will downgrade Treasury bonds, thus instantly making them worth less. And because of all this, investors “piling into Treasurys”, because they perceive them as a “safe haven”.

7 Responses to “Disaster Capitalism Kabuki”

  1. BikeMonkey Says:

    Clearly you do not understand the sophisticated subtlety of the science of economics.

  2. JackDanielsBlack Says:

    And they figured this out using a formula that a physicist sold to the investment banks — oh wait, that was for risk-management using CDOs tied to subprime mortgages!

  3. Pascale Says:

    You think this shitte should make sense? You get visits from the tooth fairy, don’t you?

  4. Anonymous Says:

    From what I’ve read, the tendency of investors to pile in to treasuries in the face of uncertainty is now basically Pavlovian. Hilariously ironic behavior in the current situation, indeed.

    Ratings agencies aint gonna provide an objective assessment of jack shit, they’re just a political tool (were they objective, impartial measurements, US treasuries would already be junk). The market doesn’t consider failure to raise the debt ceiling as a credible threat. It agrees with you (as I do) that this week’s melodramatics is just Kabuki theatre. There’s no fucken way that it won’t be raised. The financial “community” all know that the US is fucked now, but as long as DC and the Fed keep pumping, the music keeps playing, and they can stake out all the good seats for when it inevitably stops. That’s the game now.

    No, this is not about S&P or Moody’s downgrading anything. The issue is that the American economy is in a continuous state of contraction, despite the massive amounts of spending and printing (sorry, “Quantitative Easing”) being thrown at the problem. It’s beyond saving now. More spending is just going to increase the debt more rapidly. Less spending and the economy will drop dead and the interest on the existing debt will explode.

    A standard of living more akin to that of people in China is coming to an “exceptional” nation near you, sooner or later, one way or the other. The longer the US avoids confronting this reality, the worse it’s gonna hurt. In that respect, the teabaggers, whatever their dubious motivations, are probably right to insist on no more debt. But there’s no way in hell that’s actually going to happen. Spending will continue, printing will continue, and the big boys will continue looting the ship for all it’s worth for as long as they can keep it afloat.

  5. Nate Says:

    Do you delete every comment you disagree with, Comrade?

  6. What the fucke are you gibbering about, smeggebagge? I haven’t deleted a single comment from this blogge.

  7. Nate Says:

    My fault, I have a couple of links going on here at once, one goes to the freethoughtblog, one comes here. Disregard.

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