FRIDAY, MAY 19, 2023
What, us citizens worry?: An interesting headline appeared in this morning's New York Times.
In print editions, that headline went like this:
If the U.S. Defaults, Then What?
You can read the attendant report online. Online, the headline says this:
What Would Happen if the U.S. Defaulted on Its Debt?
What will happen if the U.S. defaults? "Better late than never," one of the analysts said.
Having said all that, we'll bite! What will happen if the U.S. defaults?
Given the new realities alive in the House; given the fact that the GOP won control of the House in the election our tribe says they lost:
Given those two realities, we'll admit that we've wondered if we actually will avoid default this time. Maybe the current fight will turn out, once again, to have been a showboat charade—but then again, maybe it won't!
With that in mind, we'd have to say that major news entities are taking a slightly "What, us worry?" approach to this latest fandango.
The Times deserves credit for running today's essay—but it appears all the way back on page B1, in spite of this assessment by Times reporter Joe Rennison:
RENNISON (5/19/23): Some corners of the financial markets have already begun to shudder, but those ripples pale in comparison to the tidal wave that builds as a default approaches. The $24 trillion U.S. Treasury market is the primary source of financing for the government as well as the largest debt market in the world.
The Treasury market is the backbone of the financial system, integral to everything from mortgage rates to the dollar, the most widely used currency in the world. At times, Treasury debt is even treated as the equivalent of cash because of the surety of the government’s creditworthiness.
Shattering confidence in such a deeply embedded market would have effects that are hard to quantify. Most agree, however, that a default would be “catastrophic,” said Calvin Norris, a portfolio manager and interest rate strategist at Aegon Asset Management. “That would be a horror scenario.”
That sounds like a fairly gloomy assessment. Then again, what us worry?
Rennison's lengthy essays jumps inside to page B4. On that same page, the Times offers a companion report. It appears beneath this headline:
When Will the U.S. Run Out of Cash? The Answer Is Complicated.
The so-called "X-date" is "hard to predict," Alan Rappeport therein says.
A few days ago, we saw Anderson Cooper interview Lawrence Summers about the likely poisoned fruits of default. Summers made it sound a bit like a day in the park, though the day in the park might be cloudy.
All along, we've wondered if we can really avoid catastrophe this time around. As of today, you have to go to the Washington Post for a headline which captures our state of potential concern:
World watches in disbelief and horror as U.S. nears possible default
The whole world is watching, in disbelief / horror! All in all, we can't say that we know that the whole world is wrong.
On the brighter side, in one part of that world, nothing much has changed. On MSNBC, our own blue tribe just keeps discussing Trump Trump Trump Rudy Trump Jail!