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« Weighing the Week Ahead: The Political Sideshow Continues | Main | Profit Margins: The right answer to the wrong question »

April 18, 2011



art -- I am not making a "political" decision about deficits, especially in the short term. I am mostly trying to interpret the market.

I think I am on record that rushing to fix deficits is not healthy. I have a link at the top for background -- maybe in need of updating.

A good comment, and thanks for clarifying.



It is nice to know that some are reading carefully:)



The people at S&P should be rotting in prison not making neo-liberal guided judgements on the US prospects about anything.

I think art gets it.

Further, Japan did not weather the downgrades early too badly either in my estimation.


"But US debt is NOT more questionable. The ratings agencies have no credibility."

Not only that--the US is the monopoly supplier of the currency that all of its debt is denominated in. That means that the only way the USG can default is if Congress decides to. If they do, it would have absolutely nothing to do with ability to pay.

Why do so many people, Jeff included it seems, accept the idea that USG deficits and debt are bad and should be lower at face value? Shouldn't we be assessing them on real economic outcomes, rather than listening to the fanciful imagineerings of Bob Rubin and the like? There's as much empirical credibility behind his 'crowding out' nonsense as there is behind the rating agencies' competence after all.


"bond guru Rick Santelli"

Oh Jeff, the subtle humor. Well done!


"1. The market reaction today made little sense. If US debt is more questionable, bonds should trade lower."

But US debt is NOT more questionable. The ratings agencies have no credibility. Given their performance (or absence) during the the past 3-4 years, I actually ascribe them 'negative' credibility. That is, whatever recommendation or warning they issue, I will position for the opposite.

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