Hot topic of the day seemed to be the U.S. debt ceiling and would it be raised in time or would the politicos engage in a highly visible contest of wills and risk government default? Terms like catastrophe and Armageddon are being thrown about and the “irresponsibility” of those who would take these risks is being shouted to the roof tops. Well, I say bullshit, bullshit! Wiki has listed the previous times when the debt limit was approached and then raised and guess what, it is a long list. I have been in the markets since 1975 and the debt limit has been increased more often than my belt size. It will be again after the buffoons have had their chances to pontificate on TV. This is as the Bard might say “ a tale told by an idiot, Full of sound and fury, signifying nothing."
For this issue to become the disaster being described would require a significant number of current elected officials to stand upon some principled objection to the point of being ridiculed as dangerous by the financial press and little Timmy Geithner. I am more likely to break the world record in the 100 meters than I am to see so many elected officials take a courageous ( though foolish) stance about anything. These guys check the polls to find out if they believe in gravity.
I do have some hopeful news though for some compelling TV. Emails have surfaced that reveal Goldman’s head of derivatives (or some such position) instructing the sales and trading staff of credit default securities to mark the prices very low to “squeeze the shorts” and force them out of positions and allow Goldman itself to get short at favorable levels. This is evidence of blatant manipulation of an opaque market. The news has re-energized the previously befuddled Senator Levin who almost certainly will be having hearings again on the issue. So we can all look forward to the almost dream match up of Senator Levin questioning Goldman executives on TV. What could be more entertaining than the demonstrated incompetent versus the criminally unethical. I drool in anticipation.
( I do not know why all the different font sizes and I am not taking the time to look)