The Gun of August

In one of the most famous works of history in modern times, Barbara Tuchman described the contagious lunacy--the denial, the craven stupidity--that coalesced and gathered unstoppable momentum, to take the world into the abyss of World War I.  Her book was called The Guns of August.  President Kennedy knew it well, and he spoke of it often as he tried to prevent an even worse plunge into the thermonuclear abyss that awaited at the end of the Cuban Missile Crisis.

Now the Republican party is holding the gun of August 2011 to the heads of the United States and the economically interdependent world.  It is in President Obama's words the eleventh hour.  Even before the U.S. government has insufficient funds available to pay its bills on August 2, a couple of international credit agencies can set in motion an economic catastrophe.

Disbelief that officials elected to high office could be so irresponsible is turning to fear, as the clock ticks away.  The New York Times:

    Even though many on Wall Street believe that a default remains unlikely, the financial markets are starting to become agitated. Volatility in stocks has soared, and some investors say stock prices are falling because a United States default could severely raise companies’ costs of doing business.

In the Treasury market, investors are starting to sell, fearing that the government will not make good on some interest payments that will be due next month. And complex financial instruments that will pay out if the United States defaults have become twice as expensive to buy as they were at the start of the year.

Signs in Washington on Wednesday were not encouraging.  The Gang of 6 plan that raised hopes Tuesday was lambasted by House TPers, and even Democratic congressional leaders said that there wasn't enough time to pass it.  White House press spokesperson Jay Carney's suggestion early in the day that President Obama would accept a short-term debt ceiling bill was clarified later as meaning a bridge of a few days to a real agreement already in progress.  Meanwhile, 80 House TPers signed a letter urging the GOPer leadership to not even bring the McConnell plan (the so-called fail-safe) to the floor for a vote.  Carney suggested that President Obama would veto it in its present form.  The only new proposal from the House Rabid Right was for a 60 day extension, until Oct 1.

Polls show that Americans are starting to understand the magnitude of the abyss.  Apart from immediate interest rates rising, huge earthquake-like ripples through the world economy beginning, the federal government (and specifically the Treasury Department) will have to chose which 40% of its ongoing responsibilities to cancel.  If they choose to pay Social Security, Medicare and Medicaid, among the things they can't pay for are: air traffic controllers and airport screeners (so forget flying, period,) fuel and supply for the military, federal help for emergencies (like the heat wave, hurricanes, drought, tornadoes, floods, nuclear accidents) and a lot more.

But while more Americans seem to recognize raising the debt ceiling is important, they may not have yet caught up to the fact that a fanatical TPer minority in the House seems immune to any argument, leading observers to suspect that they want the economy to collapse for ideological reasons, or (and this is not mutually exclusive) because they are insane.

So the most cogent news report today comes from The Onion.  Here it is:

Congress Continues Debate Over Whether Or Not Nation Should Be Economically Ruined

WASHINGTON—Members of the U.S. Congress reported Wednesday they were continuing to carefully debate the issue of whether or not they should allow the country to descend into a roiling economic meltdown of historically dire proportions. "It is a question that, I think, is worthy of serious consideration: Should we take steps to avoid a crippling, decades-long depression that would lead to disastrous consequences on a worldwide scale? Or should we not do that?" asked House Majority Leader Eric Cantor (R-VA), adding that arguments could be made for both sides, and that the debate over ensuring America’s financial solvency versus allowing the nation to default on its debt—which would torpedo stock markets, cause mortgage and interests rates to skyrocket, and decimate the value of the U.S. dollar—is “certainly a conversation worth having.” "Obviously, we don't want to rush to consensus on whether it is or isn't a good idea to save the American economy and all our respective livelihoods from certain peril until we've examined this thorny dilemma from every angle. And if we’re still discussing this matter on Aug. 2, well, then, so be it.” At press time, President Obama said he personally believed the country should not be economically ruined.