Search
Here are all the things about the debt ceiling we do not know. Nearly everything. If ever there was an episode that confirms our inability to predict the future, or comprehend the present, this is it. We have little idea what will happen in the House, or in the Senate, or in the House and Senate when -- or if -- they come together to achieve that elusive miracle, reconciliation, or at the White House, or at the ratings agencies, or in the markets, or in the real economy, or in the world. The brave talk about how this won't matter (Felix Salmon and Tyler Cowen discuss this here and here) or the imminence of the apocalypse are guesses, inspired or not, self-interested or not, smart or not. We have been wrong all along, over and over and over. Our very "wrongness" has created a downward spiral: If nothing is "real," if experts are wrong, then we are compelled, by God or by voters of some remote district or from deep personal need, to fill in the gaps, to lean on the few solid things we do know, like household finances, Arthur Laffer or Ayn Rand; and reality slips its anchor and drifts away. We are heading into this dangerously unknown territory much as we blundered into Iraq: claiming deep knowledge yet knowing absolutely zilch. (Well, we had maps.) Heavily armored fools on a crusade.
The numbers cobbled together on savings are mere fictions, given the size of the economy and all the contingent factors that pile up into the future. Tax revenues are slightly more predictable, because they're short term; but as Chris Giles points out in the Financial Times today, the supply-side belief that tax cutting will generate compensatory economic growth, meaning jobs, remains voodoo economics, with no proof that it has ever really occurred. The belief, remarkably based on trying to read the opaque mind of the markets, that the economy sits perilously close to some fiscal cliff, that we are "broke," ignores what facts we do possess, as Simon Johnson points out in a post today: The real budget crunch is a decade or more ahead. The American economy, despite the jobless rate, is far better positioned than, say, Europe. Is there a growing fiscal problem? Certainly. But there is plenty of time, except for those who believe deep in their hearts that there is not. What we suffer from is an advanced case of cataclysmism (in which we both see visions of disaster and furtively wish it will occur) that in the end is both infantile and moronic. Students for generations have shaken their heads over the absurdity of the seemingly endless war over silver and gold in the late 19th century. Now that looks like some graduate seminar. 
blog comments powered by Disqus
Bob Teitelman, editor in chief and a member of the company’s executive committee, is responsible for editorial operations of print and electronic products. Contact
Goldman, Sachs & Co. veteran Tracy Caliendo will join Bank of America Merrill Lynch in September as a managing director and head of Americas equity hedge fund services. For other updates launch today's Movers & shakers slideshow.
When will companies stop refinancing and jump back into M&A? More video
