Saturday, July 30, 2011

Debt-Ceiling Death Spiral. . . While Tea Party Cheers

For days I've been trying to avoid looking too closely into the particulars of the ever weirder crisis of the impending deadline (2 August) for raising the US government's debt ceiling.  Just an especially overblown attack of Congressional diva-ism and histrionics, thought I.  They'll get it done, somehow.  Besides, there are much more important issues to keep on top of (or at least try to) - the continuing Arab "spring" (or is "uprisings" a better term for what's happening; less hopeful, less certain of a happy outcome), Europe's examination of conscience in the aftermath of the Oslo massacres, the US's ramping up of rhetoric against the nefarious Iranians who are hell-bent on ruining our glorious exit from Iraq . . . .

But enough is enough.  Paul Krugman's essay in today's NYT lays it squarely on the line: the nation's economic well-being and reputation are being held hostage by Republican extremists (those pesky Tea Partiers) who, quite frankly, would love nothing better than to see the edifice of "big government" come crashing down over the heads of Harry Reid, Nancy Pelosi, and the man who happened to become the first African-American - and with an Arab middle name, no less! Talk about a two-fer.  How the pieces are to be put together again, they truly could care less.   For they will have restored government to "We the People" - that is, real Americans just like themselves - non-elite, salt of the earth, xenophobic, intellectually myopic, (almost entirely) white and Bible-lovin' Christians.  But the damage they would incur - have indeed already incurred - seems beyond their feeble imaginings.

But the world is watching, and worried - and speaking out.  As the NYT also reports, China has laid into the US with some harsh admonitions,

“The ugliest part of the saga is that the well-being of many other countries is also in the impact zone when the donkey and the elephant fight,” the state-run news agency, Xinhua — considered the propaganda arm of the Communist Party — said in an opinion piece Friday, referring to the standoff between Democrats and Republicans.

Xinhua said the “irresponsible” brinksmanship in Washington risked “strangling the still fragile economic recovery of not only the United States but also the world as a whole.”

Japan has expressed concern as well, albeit a bit more tactfully.  Wall Street watches anxiously, though with the (comforting?) assumption that if the Dow falls 500+ points a la the 2008-2009 financial markets meltdown, Congress will (as it did then) step up and do the right thing - or at least do something, which is more than it's done in the current crisis.

For a perspective from Europe, note the blunt take from The Independent in London:

The Treasury and the state governments will, of course, put together contingency plans this weekend for short-term financing, albeit in secrecy. But in the absence of a congressional
agreement, even if the Fed staggers on, the price will still be heavy. The possible consequences of no deal include loss of America's triple-A credit rating, a run on money markets, a rise in interest rates and nervousness among holders of dollars throughout the world, China especially. Beijing has been the world's largest purchaser of US Treasury bonds in recent years. In that case, we can also forget President Obama taking a lead on questions beyond America's borders, such as Israel-Palestine, the Arab Spring or climate change. This will necessarily be a much more inward-looking America.

Do Tea Party Republicans care? Not necessarily. Sarah Palin's famed ignorance of foreign parts is a plus to her supporters, a sign of her American First values. Beyond loving Israel and hating Iran, the Tea Party doesn't have time for "abroad", or what it insists is alarmist talk about a default. Ms Palin has dismissed it as an "Obama drama". The omens do not look good.

Truly.  But if I could choose one good thing that might come from all of this, once it's all played out . . .   I return to Paul Krugman, who reminds us that much of the responsibility for this nonsense can be laid at the feet of those mainstream journalists who have taken the mantra of "fair and balanced" (and please, never mind Fox News) to mean that there are always at least two sides in any such conflict, and both sides have some claim to merit.  (He notes the joke, now current, that says that if one side came out with a statement that the earth was flat, then the paper would report that "two sides differ on shape of the Earth.)  This drive to achieve centrism, as he calls it, only hastens us down the road to ruin - and in the current circumstances, shields us from the truth.  As he puts it.

making nebulous calls for centrism, like writing news reports that always place equal blame on both parties, is a big cop-out — a cop-out that only encourages more bad behavior. The problem with American politics right now is Republican extremism, and if you’re not willing to say that, you’re helping make that problem worse.

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