Personally, I'm thinking we will default because Washington is awash in irresponsible children. So I lead off the bidding with: Yes, we will default and no deal will be reached until we get a new Congress in 2014.
In a strangely related aside, did anyone see what happened in the two Walmarts in Louisiana? It turns out that the company who processes the electronic food stamp cards (Xerox) had a computer go down. The result was that the "Louisiana Purchase" cards (good grief) suddenly became without limits. The Walmart people knew something was wrong. They contacted their HQ for guidance, and were told to go ahead and let these people buy as much as they wanted. And so they did. They nearly emptied the food aisles at the two stores before the cards reactivated and the locusts abandoned cart-fulls of food.
Now the bills are coming due. Any thoughts on who should pay them? Personally, I suspect Xerox's contract makes them liable for errors. I also think WalMart will pony up because what they did was basically knowingly abet fraud. Probably a couple of the biggest abusers will be prosecuted as well.
In any event, these unseemly displays kind of show that Congress and welfare cheats think alike, doesn't it?
Andrew.....It's Bush's fault.
ReplyDeleteI have often wondered about speculation as to getting downgraded if we default on our debt. It seems to me we should be downgraded every time we raise the debt ceiling. For those who have considered day trading, here is an interesting take over at Zero Hedge: http://www.zerohedge.com/news/2013-10-15/what-expect-when-youre-expecting-default
ReplyDeleteThe nice thing about any of this is that, to most people, this stuff is yawningly boring. They don't care. The news as reported by one local DJ, and I quote: "The government is still shut down... So there's that. And Apple has announced it's new iPhones and iPad!" They never even returned to it after the new segment. I think there's literally nothing left to say on the subject.
ReplyDeleteIf we default (I'm not taking any bets) what the consequences, if any, are and who's to blame don't matter nearly as much as which party comes off as the responsible side. The President has been doing a great job of looking like he's throwing a tantrum and he's changing his message often enough that people are noticing. Plus, the media seems to be deciding that they'll have to burn this guy if the next Democrat is to have a chance at the White House.
It's the Republicans' fight to lose. If only they didn't seem so hell-bent on losing it.
T-Jed, would you mind expounding on that zerohedge piece a bit? I get that the markets only expect a deal to be reached and will thus freak out if it doesn't. I kinda coulda figured that before I read it. But if he's implying anything that might come after that, I'm too dull to see it.
ReplyDeleteAlso, one thing that has always bothered me about statistics, using Mr. Durden's coin-flip example, theoretically, the chance at $250 is better than the certainty of $100 except that losses "feel" worse than gains. But that's predicated on the assumption that, statistically, every outcome will eventually be felt. Yet the scenario is a single coin-flip. Doesn't that sort of undermine itself? No one in any single instance can ever realize the $125 "expected" value, so how is it rational to expect it?
Maybe I'm slipping into the philisophical, but it seems the whole fields of statistics is predicated on the notion that the human reaction to randomness is inherently irrational--another self-defeating proposition.
Patriot, LOL! I wonder if that still washes on the left?
ReplyDeleteJed, The reason we never (until recently) get downgraded is because our debt is miniscule compared to our ability to pay. Yes, it's high compared to income (about the same as a house mortgage), but it's not even 10% of our assets.
ReplyDeleteMoreover, out economy is super dynamic and in 10-20-30 years will be many times higher than it is now and that makes today's debt meaningless so long as we maintain our ability to make our current payments.
Since the grades are based on ability to pay, and no one doubts our ability to pay, there's never been a problem, There will be a problem, however, if people start getting the idea that we're going to start defaulting periodically to play political games.
As an aside, something interesting to watch if we do default will be money market and bond funds, who will need to write their short term debt off to $0 by regulation the moment of a default. That could cause those funds major problems.
tryanmax, There is an upside too. All of this had put a top on the market (which I think we hit about 20 minutes ago when the Senate announced a deal). So that should be a nice little guide for investors.
ReplyDeletePutting that aside, you are right. I don't think the public cares unless it hurts them. The bigger issue is lending costs. There have been some interesting theories lately on why the Fed is struggling so hard to keep interest rates down and as some people have pointed out, if our lending costs rise to 5%, the debt will eat the budget. A default would likely raise our lending costs by 1-2% and that will be very bad from a budget perspective.
tryanmax, The other problem with using statistics to predict human behavior is that human behavior is both variable between people and even within the same person at different times and on different issues. Thus, you won't always weigh the risks the same as other people and your tolerance for risk varies.
ReplyDeleteI am done with the whole "will we default/won't we default" mainly because I just don't care anymore. Though I am truly done with the Tea Party. They have proved to be idiots and have ruined any hope that we could have had a legitimate voice. They have turned off the moderates like me because they are mostly hardcore unreasonably irrational wackadoodles now. And they have ruined "the brand" so much that they are the paranhas of the political process.
ReplyDeleteBut other than that I really do like Ted Cruz...mainly because I see him as an opportunist (aka politician) who hasn't insulted me. Unlike our Republican Mayoral candidate Lhota who got a little over defensive when charged with being aligned with the Tea Party...(I know, I am playing both sides, but one is allowed to criticize one's own when others are not)
Oh, btw, the WalMart is being very generous about the EBT card snafu and, as a goodwill/publicity gesture have stated that they would allow it all over again. They need some positive publicity. REally, the Waltons are multibillionaires - they can afford to be generous and it's good for them to be magnanimous. Let's see if they sue Xerox though...
"Moreover, out economy is super dynamic..."
ReplyDeleteHistorically, yes. I´m not taking anything for granted. History is also full of great countries and economies that stopped being great. And being merely ok will not suffice to finance our follies.
Bev, On the one hand, I am concerned that a default could create truly massive problem if it raises lending costs and that could lead to serious problems. On the other hand, I am short the market, so I don't mind a little chaos at the moment. On the other hand, I would LOVE LOVE LOVE a return to common sense and a party that isn't intent on publicly committing suicide each week.
ReplyDeleteThe problem I'm having with Cruz, besides not having a clue what he actually stands for, is that he's become the leader of the "destroy the Republicans" faction. I'm not ruling him out, but I want to see him become a statesman rather than a political terrorist.
I don't honestly know what to make of WalMart's actions. It seemed like they were trying to pull one over on the system the way this originally came about and I'm not sure that sat so well with people. But eating the costs does seem to be a good move.
El Gordo, I don't take it for granted either, but the US is much more dynamic and much stronger than people want to believe.
ReplyDeleteThis is worth the read. A new study claims that Oreos are as addictive as cocaine (I would say more actually). LINK
ReplyDeleteInterestingly, the mice they tested this on would actually break open the oreos to eat the centers... just like humans. LOL!
Do scientist have to spoil EVERYTHING good and decent in this world?? Is there really an Oreo addiction crisis? I would think that finding a "cure" for heroine addiction would be a much better worthy scientific endeavor. I have yet to read/see/or hear about crazed Oreo addicts running amock in rampant crime/murder sprees. But then again, Big Nabisco is a pretty influential lobbying group so maybe the MSM is being paid off not to print stories...
ReplyDeleteBev, You haven't been caught in an Oreo riot? Lucky you. I've never been licked so hard my life.
ReplyDeleteI don't think it's a surprise that sugar is addictive, all pleasure is ultimately. I just like the fact that the mice broke the Oreos apart. It shows that there is a universal right way to eat an Oreo. There is cosmic balance in the Oreo world. :)
I know I never taught my children how to properly eat an Oreo, despite admonishments from Nabisco through their advertisements to do so. All the same, they both figured out rather quickly that the cream filling is the reason we are all here. And yes, I mean that as metaphysically as it sounds. All of human civilization was leading up to the cream filling. As soon as physicists stabilize the quadruple-stuff, we can all pack it in.
ReplyDeleteYeah, I don't really disagree with that. The end is nigh... our creamy, creamy end! :D
ReplyDeleteI hate it when the end is nigh because of a snack food. Speaking of nigh-ending, it looks like the has been an agreement and the government will not collapse after all. We can now view Mount Rushmore at will, repeat, we can now view Mount Rushmore at will...
ReplyDeleteBev, Snack food is the force that holds the universe together. It's like the force... only yummy.
ReplyDeleteDo we know if the House has agreed to the deal? This might be a good time to add demands to the list... maybe striking the letter Q from the alphabet?
Q, huh? Well, I never liked that letter anyway. K is just as good and we won't confuse it with an O ever again. Good plan! I will let them know before it's too late to back out.
ReplyDeleteMay as well get rid of "C" while we're at it. It does nothing that kan't be handled by a "K" or an "S."
ReplyDeleteI konkur. We should drop Z as well.
ReplyDeleteNo, the "Z" helps us to "recognise" Brits from Americans.
ReplyDeleteWe could still rely on the "u" as in "labour."
ReplyDeleteNormally I'd say we should exersise kaushun (we should eliminate "tion" and "sion" while we're at it) but this is a time for outrageous demands let's go for it!
ReplyDeleteBut we have to keep the "x". You kan't spell Xtreme without the "x".
Good point. And X-mas.
ReplyDeleteAnd while we are at it, kan we demote "y" from vowel to a consonant? At least make it one or t'other. Skool children akros the kountry will thank us and vote for us.
ReplyDeleteNO! Not "X-mas." That's taking the "Christ" out of "Christmas." It's almost as bad as "Happy Holidays" or, even worse, "Season's Greetings." *shudder*
ReplyDeleteAnd don't try to give me any history lesson about "X" being the first letter in the Greek word for "Xristos." In MY kountry, we speak Amerikan!
Bev, y-not?
ReplyDeletetryanmax, Sorry, that's the way it must be... federal regulations and all.
ReplyDeleteAndrew, what are we fighting these kommies for if we kan't get everything we want? May as well let them keep the whole alphabet at this rate! Why not take our guns and enslave us while you're at it?
ReplyDeleteTryanmax - I have a compromise - how about Kristmas?
ReplyDeleteBev, LOL!
ReplyDeleteSo would it be Xripsy Xream or Xispy Xeam?
ReplyDeleteBev, normally I would konsider kompromise the ekwivalent of giving up, but as long as we kan keep the larjer (soft "g" needs to go, too) issues from being resolved, I kan live with it.
ReplyDeleteHAHAHAHAHAHAHAHAHAHA! I'm a cop in Cincinnati and one of my sidejobs is working security for Krogers,which is the major grocery chain here in town. Last monday I was working in an inner city Krogers and we had the opposite "problem." The food stamp card readers went down. In order to prevent fistfights(not an embellishment) the manager made the announcement every half hour. I'm not kidding,the store looked like one of those movies about the Rapture that they used to terrify us with in church back in the seventies. The store was full of carts in various stages of fullness,just abandoned. After years watching obese ghettoins(like bedouins,TeeHee) load up more than my two week take home on their cards(actually our cards because we pay for them) I don't have the vocabulary to tell you all how satisfying it was.Every great once in a while there's a little justice. :)
ReplyDeleteGypsyTyger
You're a cop?! Uh... we were kidding about all that illegal stuff we talked about, officer. Yeah... kidding. ;-P
ReplyDeleteGhettoins. LOL! You paint a very vivid picture.
Tryanmax, - sorry for not responding to your question earlier. I was not feeling very good yesterday. Basically, as you know, Tyler Durden is Brad Pitt's character from "Fight Club" and is used collectively by the group that runs that site, so I don't know who the author is. There is a theory about markets discounting possible events based on probabilities. It doesn't always work (see derivitives trading.) I didn't go back and re-read the article, but as I recall, the author was merely saying the market had put no discount on stocks for the possibility of a default, meaning they considered no chance it would be allowed to happen. For short term traders, people thinking there would be huge jump following a deal would be wrong.
ReplyDeleteT-Jed, thanks. In other words, I didn't miss anything. There's no prognostication beyond the possibility of default. I guess I was looking for broader implications, but that's not really zerohedge's realm.
ReplyDeleteBTW, you don't need to tell me who Tyler Durden is. Fight Club remains my all-time favorite movie. But I didn't know that multiple authors at zerohedge used the moniker. I assumed it was just one. TY
Andrew, thanks for the compliment! And relax brother, I'm a local cop. I hate the feds as bad as you guys do;0. Hell, I'm registered to vote as a libertarian. :)
ReplyDeleteGypsyTyger
[Andrew - Umm, now that we know the fuzz are watchin' maybe we should ixnay on OingGay to EnverDay from now on. Really, I would NEVER OingGay to EnverDay...ever...;-) ]
ReplyDeleteHmm, the pig-Latin suffixes to "Going to Denver" spell "Gay Day." Coincidence?
ReplyDeleteAs long as we're correcting the alphabet, why the hell does Q have to have a u after it? I've been able to read for 43 years now and I never have figured that one out. We all know what Q sounds like. Why does it need a u? The u is silent when it's coupled with q. It's never pronounced as u when it's with q.WTF?
ReplyDeleteGypsyTyger
GypsyTyger, I have no idea why we need the U with the Q?
ReplyDeleteBev, I have no idea what you're talking about... yep, never been to Denver. :P
ReplyDeletetryanmax, LOL! Yikes.
Was talking with my Dad today. Last year he retired from President of the community college and he told me that someone called to complain that the changes in teacher pay was terrible and how they had heard people saying if he was there he figure out a way to make things work. Evidently the new execs are not teachers.
ReplyDeleteMy Dad at the college fought to change teacher incentive. He realized that if a teacher cast a dollar per kid to teach 10 students then that cost would be reduced to 50 cents if there were 20. He got with the department heads and figured out what the optimum class size was and then gave the teachers a bonus based on how many kids stay in and pass the teachers class. He paid this at the end of each semester so that the bonus would be noticeable. He found that teachers requested larger class sizes and were more worried about student's performance.
He also changed the terms to seven weeks from 15 weeks and found kids would do better taking two classes each seven week term instead of 4 for 15 and kids were less likely to skip a class over 7 weeks,
The new provost is a more traditional liberal college president and he does not think large classes are better. He also has a problem paying the teachers all these bonuses. He does not understand what my Dad found out that you should not worry about the cost of paying the bonus because the teachers are making you more money by attracting more kids.
In talking with him I realized something. When you run things in a bureaucratic manner you are less efficient because you measure things on a subjective nature. When you run things from an efficiency standpoint you use more objective measures.
My Dad used measures based on how many kids were being processed by thee school. The new provost is using subjective measures such as smaller class sized because she subjectively thinks this provides a better learning environment.
To my mind it is why I have noticed that when my profession switched from operational audits measured on savings identified to government compliance the measures to judge the work is now subjective. In an operational audit I was judged on savings and improvements that were implemented. Sox work is judged on the subjective assumption that an internal control will "work" to correctly record the records.
Prior to 2002 managers did not argue with the results of an audit because they were being measured on an objective basis. They did not care what the results were so long as they were validated. Under Sox management and IA execs routinely argue what is and isn't "Sox Relevant" because it affects the financial statements. The results are subjective and the answers are more political and less direct and straight forward.
Just trying to develop mu thought process in this. I find it interesting. I think one of the main problems with most government agencies is the political class relies to much on subjective measurements.
Indi, Subjective standards = power. When you impose subjective standards, it becomes impossible for anyone to tell you that you have done poorly and it becomes very easy to eliminate those employees you don't like because they haven't lived up to imaginary expectations.
ReplyDeleteWhat's interesting is that bureaucrats pride themselves in dealing only with the objective, which is true, BUT the objective they choose to use for measuring purposes is objective. In other words, it's not an object measure of success, it's just an objective measure of the subjective goal that has been set -- like class size.
Andrew
ReplyDeleteOdd thing is many teachers hated what my Dad was doing the first year. They told him that larger class sizes would hurt students especially minorities (although why this should hurt minorities was vaguely explained). After the first year the teachers changed their tune because minorities were doing much better under the larger seven week classes than the old structure along with everyone else but minorities had the most "improvement" at the college. Plus on top of that teachers got paid big bonuses at the end of each semester.
Problem with subjective measures is the world itself is not "subjective". You can create as many subjective "Keynesian" theories on how to spend money all you like but in the end the economy will be driven by what is objectively produced whether you choose to measure it or not.
Indie, "it will especially hurt minorities" is just one of those phrases we are supposed to accept and cower away from. The mere assertion is enough to brand anyone dubious of the claim as desirous to inflict harm on the "underprivileged." I use quotes because, in the context of a college education anyone who has gained admittance is already privileged above the large majority who don't even go to college.
ReplyDelete