---
Understanding the meaning of the F 16 transaction with Egypt. (See 2 below.)
---
Gaffney responds to my brother in law. (See 3 below.)
---
Coal's cold shoulder to Appalachian Democrats! (See 4 below.)
---
In Monday's press conference Major Garrett threw Obama's Senate debt limit vote back in his face and President Obama could not respond in a meaningful way but then what is new? President hypocrisy simply ignores what he wants to and moves right along.(See 5 below.)
Another kind of hypocrisy. (See 5a below.)
--
Has Roubini changed his tune? (See 6 below.)
---
Dick
--------------------------------------------------------------------------------------------------------------------------------
1)
Liberals: The Necessary Delusion
By Christopher ChantrillNormally, I can't get interested in the daily liberal partisan output, but when I saw RealClearPolitics' link to Andy Kroll of Mother Jones on "Revealed: The Massive New Liberal Plan to Remake American Politics" I decided to make an exception.
Nancy Pelosi has been promising to take back the House in 2014: maybe the lefties at Mother Jones knew something I didn't know.
The "massive new liberal plan" turned out to be a meeting of all the usual suspects to commit resources and staff to a three-point plan. The plan calls for:
- 1. getting big money out of politics,
- 2. expanding the voting rolls while fighting voter ID laws, and
- 3. rewriting Senate rules to curb the use of the filibuster to block legislation.
Nothing new, in other words, just the usual liberal push to marginalize and demonize anyone and anything that isn't liberal.
Kroll is full of the usual rubbish about "wringing our hands over the Koch brothers" and the "40-plus-year strategy by the Scaifes, Exxons, Coors, and Kochs of the world...to take over the country."
Now I like to say that there are only five things wrong with liberal thought and politics: its cruelty, its corruption, its injustice, its waste, and its delusion. The delusion bit begins with the need for lefty-liberals like Kroll to insist that those awful Kochs and Scaifes and Exxons are trying to take over the world, so they can demonize them.
Let's stipulate that Karl Marx had a point when he worried about capitalists replacing the landed warrior class as the overlords and oppressors of the modern era. Way back then, who could tell how the power contest of the industrial era would turn out?
But the answer eventually became clear, at the very latest when the US government broke up Standard Oil a century ago. If the capitalists were really running things, why would they let the politicians smash up their capitalist corporations?
In our own time we have the recent evidence of the Deepwater Horizon oil spill disaster. When President Obama told BP to fork out $20 billion -- before any regulatory finding or legislative action, just on his say-so -- BP merely asked whether to pay with their usual eftps.gov account. If you are not living a delusion that act has to tell you something.
This week we have the Boeing Dreamliner problem. Does Boeing tell the FAA and the flying public to go take a hike? They wouldn't dare.
The left needs the idea of vast corporate power to populate its tableau of oppression. It needs oppression to justify its lust for government power. And it needs to divide employers and employees to maintain its power.
However, advanced lefties realize that the old tableau of capitalists vs. proletarians needs freshening up. So Michael Hardt and Antonio Negri in their Empire-Multitude-Commonwealth trilogy declare that the capitalists are now merely surplus. In the new economy of "biopolitical production" the capitalists just get in the way of the spontaneous exchanges of the multitude, the "labor of the head and heart, including forms of service work, affective labor, and cognitive labor." Hardt and Negri call for an end of the power of both capitalists and the welfare state in favor of the spontaneity and self-governance of the multitude. But first we need a "global initiative to provide the basic means of life to all:" income, health care, and education.
Isn't it odd that a book advertising the wonders of spontaneous order among millions of "singularities" in the multitude wouldn't have one, not even one index entry for F.A. Hayek, who wrote the book on the subject.
Hardt and Negri call for revolution (of course!) to purge the "common" of its "corrupt form." They mean "the family, the corporation, and the nation."
One is reminded of Winston Churchill line that democracy was the worst form of government "except all the others that have been tried."
One day in the glorious future the history of the last century will be written as the repeated and delusional attempt by people like Andy Kroll and Hardt and Negri to force on us a society stripped of the most stunning and most beneficial forms of social cooperation ever established by settled science: the nuclear family to organize generation, the limited liability corporation to organize production and service, and the nation state to create a society based on the tie of common language rather than common blood.
It's this combination of the common in its corrupt form that got us from $1-3 to $120 per person per day in 200 years.
There will come a day when people will ask of us, as we wonder about the Romans, how could we end up so stupid, so deluded?
1a)Liberalism Versus Blacks
Severe restrictions on building housing in San Francisco have driven rents and home prices so high that blacks and other people with low or moderate incomes have been driven out of the city. The same thing has happened in a number of other California communities dominated by liberals.
1a)Liberalism Versus Blacks
There is no question that liberals do an impressive job of expressing concern for blacks. But do the intentions expressed in their words match the actual consequences of their deeds?
San Francisco is a classic example of a city unexcelled in its liberalism. But the black population of San Francisco today is less than half of what it was back in 1970, even though the city's total population has grown.
Severe restrictions on building housing in San Francisco have driven rents and home prices so high that blacks and other people with low or moderate incomes have been driven out of the city. The same thing has happened in a number of other California communities dominated by liberals.
Liberals try to show their concern for the poor by raising the level of minimum wage laws. Yet they show no interest in hard evidence that minimum wage laws create disastrous levels of unemployment among young blacks in this country, as such laws created high unemployment rates among young people in general in European countries.
The black family survived centuries of slavery and generations of Jim Crow, but it has disintegrated in the wake of the liberals' expansion of the welfare state. Most black children grew up in homes with two parents during all that time but most grow up with only one parent today.
Liberals have pushed affirmative action, supposedly for the benefit of blacks and other minorities. But two recent factual studies show that affirmative action in college admissions has led to black students with every qualification for success being artificially turned into failures by being mismatched with colleges for the sake of racial body count.
The two most recent books that show this with hard facts are "Mismatch" by Richard Sander and Stuart Taylor, Jr., and "Wounds That Will Not Heal" by Russell K. Nieli. My own book "Affirmative Action Around the World" shows the same thing with different evidence.
In all these cases, and many others, liberals take positions that make them look good and feel good -- and show very little interest in the actual consequences for others, even when liberal policies are leaving havoc in their wake.
The current liberal crusade for more so-called "gun control" laws is more of the same. Factual studies over the years, both in the United States and in other countries, repeatedly show that "gun control" laws do not in fact reduce crimes committed with guns.
Cities with some of the tightest gun control laws in the nation have murder rates far above the national average. In the middle of the 20th century, New York had far more restrictive gun control laws than London, but London had far less gun crime. Yet gun crimes in London skyrocketed after severe gun control laws were imposed over the next several decades.
Although gun control is not usually considered a racial issue, a wholly disproportionate number of Americans killed by guns are black. But here, as elsewhere, liberals' devotion to their ideology greatly exceeds their concern about what actually happens to flesh and blood human beings as a result of their ideology.
One of the most polarizing and counterproductive liberal crusades of the 20th century has been the decades-long busing crusade to send black children to predominantly white schools. The idea behind this goes back to the pronouncement by Chief Justice Earl Warren that "separate educational facilities are inherently unequal."
Yet within walking distance of the Supreme Court where this pronouncement was made was an all-black high school that had scored higher than two-thirds of the city's white high schools taking the same test -- way back in 1899! But who cares about facts, when you are on a liberal crusade that makes you feel morally superior?
To challenge government-imposed racial segregation and discrimination is one thing. But to claim that blacks get a better education if they sit next to whites in school is something very different. And it is something that goes counter to the facts.
Many liberal ideas about race sound plausible, and it is understandable that these ideas might have been attractive 50 years ago. What is not understandable is how so many liberals can blindly ignore 50 years of evidence to the contrary since then.
---------------------------------------------------------------------------------------------------------------------------
2)
| F-16 deal redefines US relationship with Egypts Morsi administration |
F-16 deal redefines US relationship with Egypt's Morsi administration Consignment of US F-16 jet fighters to Cairo signals level of support for Egypt's President Morsi and Muslim Brotherhood from which he hails, say military experts By Ahmed Eleiba A consignment of F-16 jet fighters to Cairo from Washington during the next few weeks has stirred up yet another hornet's nest in Egypt's fraught political atmosphere. In the opinion of many observers, the controversy over the deal is a thoroughly political one, as the additional fighter planes will do little to alter strategic balances of power in the region. It is unlikely that similar arms deals during the Mubarak era would have aroused such an altercation. The new factor, of course, is the Muslim Brotherhood's rise to power, which has worried political circles in both capitals. Various parties abroad and domestic adversaries of the Muslim Brotherhood and its Freedom and Justice Party (FJP) are keen to loosen the strategic embrace between the two countries. Nevertheless, in an interview with Al-Ahram Weekly, a US source stated that Washington would support the authority in Cairo as long as it remained committed to the democratic process. To officials in Washington, it is the defence question that counts more than the political, even if the arms deal has sparked some political controversy here or there, the source said. The same source stressed that the deal did not come attached with any security demands linked to the situation in Egypt or in Egypt's Sinai Peninsula. This is consistent with the outcome of the US-Egyptian joint defence committee meeting held in Cairo several weeks ago. The 28th of these regular sessions, the meeting affirmed the US's strategic vision that maintains the necessity of sustaining the partnership that has existed between the two countries over the past three decades. That Egypt represents a cornerstone of this strategic vision was probably the main factor in the success of the F-16 deal. Ambassador Hussein Haridi, former assistant foreign minister, prefers to use the term "the rules of the game" when referring to the arms agreement. "It appears that the Muslim Brotherhood understands these rules very well," he asserted. Some experts in military affairs are more inclined to see the issue purely in terms of the army, its morale and its armament needs, seeing little reason to colour the issue with domestic political considerations. It is in this context that a military spokesman has noted on numerous occasions the close military coordination between the US and Egypt. But this is not how another military expert sees it. In his opinion, it is impossible to separate politics from the question of arms for Egypt. For example, he said, in the current contest between President Barack Obama and US Congress, one cannot overlook the fact that there is a major agreement with regard to the management of Egyptian-US relations centring on military aid to Egypt, which takes priority over economic assistance. The F-16s slated to arrive are the block 50/52 versions. The F-16s that are currently in the Egyptian arsenal are the A, B and C models of blocks 30/32 and 40/42. These have been in operation in Egypt since the 1980s. Perhaps the importance of the new arrivals derives from the fact that they belong to a more advanced line, even if other Arab countries possess subsequent models with more enhancements. The UAE, for example, possesses F-16s from block 60/62. As for Saudi Arabia, it boasts the most expensive arms deals in the history of US weapons sales, estimated in the neighbourhood of $60 billion over ten years. Riyadh and Washington are currently contemplating yet more deals of similar scale. Cairo already has some 200 F-16s, but is looking forward to 20 new upgraded ones. Israel may have only 102 F-16s, but it will retain the qualitative edge when it obtains the F-35s. These fifth generation multi-role fighters – designed to perform ground attacks, reconnaissance and air defence missions with stealth capability – will not go into service for two years, but Israel will get first dibs when they are marketed internationally a couple years from now. It has been suggested that they are unlikely to be deployed in the US Air Force until they have first demonstrated their prowess in the skies of the Middle East. With such advanced and sophisticated weaponry, Israel will retain its qualitative military superiority not just over Egypt but over all Arab countries combined. This only confirms that the current US-Egyptian arms deal offers no breakthrough with respect to strategic equations. But, domestically, it means quite a bit. Retired Brigadier General Safwat Al-Zayat told the Weekly in a telephone interview from Doha that in the game between the White House and Congress, the Zionist lobby may still try to obstruct the deal. "Even though they know that the aircraft mean little in terms of military balances, they feel they have to say something with a political twist that includes Mohamed Morsi and the Muslim Brothers in a useful sentence. But then, the White House is playing the same game," he said. He continued: "Even if this bothers people in the military, it is obvious that the finalisation of the deal on 11 December, which happened to be at the height of the mass demonstrations in Tahrir Square against Morsi, conveyed a political message. Between the lines, Washington was sending a message to three parties. The first was to Morsi and it stated, 'We support you. Move ahead.' The second was to the army and it said, 'We are encouraging this man,' meaning Morsi. The third was to the opposition forces and it said the same thing. We need to bear in mind that Morsi had been put to the test during the last [Israeli] war against Gaza and passed with flying colours from the US perspective." If the above-mentioned US source had no reservations with regard to Washington's embrace of the Muslim Brotherhood, another source close to the same political circle complained that the Brotherhood were being two-faced in their dealings with Washington – which is to say that what is happening on the ground in Egypt is different from what they try to market to US public opinion. To this, a Brotherhood source responded: "How can we be sure that the US administration is dealing honestly with us?" The implication was that Washington is keeping its lines of communication open with the Egyptian opposition and army. Ambassador Haridi agrees that the F-16 deal signals an unprecedented level of support for Morsi and the Brotherhood. He finds this regrettable because "it leads me to understand that the Muslim Brotherhood reached power with US approval, and this means the provision of services." Therefore, he added, "Congress will not intervene, unless there is some dramatic excess or unless the Brotherhood deviates from the framework of its understanding with Washington. In any event, the Muslim Brotherhood in Cairo understands the rules perfectly and has no intention of breaking them." -------------------------------------------------------------------------------------------------------------------------- 3)A World Without America
By Frank J. Gaffney Jr.
Iranian president Mahmoud Ahmadinejad has repeatedly declared that "a world without America is not only desirable, it is achievable." While that sentiment won't be embraced in President Obama's inaugural address next week, all other things being equal, it seems likely to be the practical effect of his second term.
Of course, Iran's regime seeks a world literally without America. More to the point, Ahmadinejad and the mullahs in Tehran are working tirelessly to secure the means by which to accomplish that goal. Specifically, they have or are developing the ability to engage in devastating electromagnetic pulse (EMP) attacks, biological warfare and other asymmetric terrorist strikes.
For his part, Barack Obama seems to have in mind bringing about a world without America in a geo-strategic sense. As Mark Steyn notes in a characteristically brilliant essay in JWR,that would be "Obamacare's other shoe." It would amount to a "fundamental transformation" of America's place in the world, evidently intended to be the President's second-act counterpart to the socialist transformation of this country that dominated his first term.
That agenda is strongly evident in Mr. Obama's choices for key national security cabinet positions: John Kerry at the State Department, Chuck Hagel at Defense and John Brennan at the CIA. The three are, like the President, imbued with a post-American, post-sovereignty, post-constitutional, transnationalist outlook. In his administration, it would appear that their mission would be, as the American Enterprise Institute's Danielle Pletka puts it, to manage the United States' decline.
Having addressed previously in this space the serious problems with the judgment, records and policy proclivities of Messrs. Hagel and Kerry, let's consider those of John Brennan to further illustrate the syndrome.
Brennan is a textbook example of a U.S. official who has "gone native." He speaks Arabic and was formerly the top CIA officer in Saudi Arabia. He has shown himself to be deeply sympathetic to Islamists -- for example, excusing and dissembling about their commitment to jihad and the necessity of not offending them.
After President Obama himself, John Brennan is, arguably, the single most important enabler of the Islamic supremacists' agenda in government today. In his role as Homeland Security Advisor to the President -- a position that does not require Senate confirmation and that he was given as a consolation prize when it became clear that he might not be confirmable as CIA director back in 2009 -- Brennan has helped legitimate, empower, fund, arm and embolden them abroad, and embraced and appeased them here at home.
Of particular concern is the fact that John Brennan has presided over: the policy of engaging the Muslim Brotherhood, which has consequently been portrayed by a politicized intelligence community as "largely secular" and "eschewing violence"; the shredding of training briefings and the proscribing of trainers that might upset Muslims by telling the truth about shariah and the jihad it commands; the penetration of U.S. agencies by Muslim Brotherhood-associated individuals as employees and/or senior advisors; and misrepresentations to Congress about the true, jihadist character of the attack that killed four Americans in Benghazi last September 11th.
Of particular concern is the prospect that Team Obama's second-term team will, if confirmed, be even more insistent than their predecessors on engaging Iran. Make no mistake about it: The practical effect will be to buy the regime in Tehran the last few months it evidently needs to achieve what it has sought for decades: the means to have the world not only bereft of America's leadership and stabilizing force, but to neutralize and perhaps eliminate the United States as a 21st Century society.
Ordinarily, a president should be given wide latitude by the Senate to appoint those he wants to staff his administration. This is no ordinary time, though, and this is no ordinary president or administration. The circumstances are such that a Team Obama that is pursuing so dangerous a policy course must be challenged and impeded, not encouraged and abetted.
The Senate's constitutional responsibility to confirm senior executive branch appointees is one of the few it hasn't compromised, or allowed the president to expropriate. It must exercise its authority to assure "quality control" with respect to his picks for top national security cabinet posts.
Indeed, the fact that President Obama seeks not one or two, but three individuals who share his determination to achieve the radical and dangerous national security transformation he seeks in his second term demands that Senators defy him. After all, should the Senate fail to object to this trajectory by rigorously debating and defeating any -- and preferably all -- of these problematic choices, its members risk not only allowing, but becoming party to, the realization of a world without America.
------------------------------------------------------------------------------------------------------------------------------------
4) The Shift Of King CoalThe coal industry still dominates in Appalachia, and that's bad news for the Democratic party.When West Virginia Sen. Jay Rockefeller formally announced his decision to quit the Senate on Friday, he opened the next chapter in one of the few true historic shifts taking place in American politics. Even before his announcement, Republicans were eyeing his seat as a prime pickup opportunity, a reflection of the ascendance of the Republican Party in Appalachia, a shift in which working-class white voters who have reliably cast ballots for Democratic politicians for the better part of a century are moving inexorably, and perhaps permanently, toward the Republican Party.
That's because in Appalachia, coal is still king.
Last June, Senate observers were surprised when Rockefeller, a long-time backer of his state's dominant industry, stood on the Senate floor lambasting energy companies for launching "carefully orchestrated messages that strike fear into the hearts of West Virginians." He attacked coal operators for denying the need to address climate change, and for resisting a lower-carbon environment.
Those familiar with Appalachian politics were surprised too -- that Rockefeller, by attacking King Coal, had effectively announced his retirement that day.
The shift away from the Democratic Party underway today isn't the first time Appalachia has changed its political identity. After the Civil War, coal country was reliably Republican. During the war, West Virginia itself seceded from the Commonwealth of Virginia to stay with the Republican Union. Between 1896 and 1928, West Virginia voted as Republican as Northeastern states; it voted Democratic only once, in 1912.
But the Coal Wars of the 1920s helped boost a mine workers' union that grew in size and political influence. And while the union dominated, it supplied a reliable stream of votes to the Democratic Party. Between 1932 and 1996, Republicans won West Virginia only in 1956, 1972 and 1984, all amid national waves. Kentucky, where the coal industry is equally powerful, was similarly a reliably Democratic state; it voted Republican only twice between 1900 and 1952, and it cast its electoral votes for Jimmy Carter in 1976 and Bill Clinton in both 1992 and 1996.
"Appalachia, particularly Kentucky, East Tennessee and Pennsylvania, were very Republican after the Civil War and remained that way for a very long time," said Mike Duncan, the former chairman of the Republican National Committee and a native of Kentucky coal country. "The mining wars and unionization flipped them hard Democrat in the 1930s."
Clinton was the last Democrat to win either state. During his administration, the environmental movement began to gain traction and importance within the Democratic Party, and the party itself gravitated more toward the liberal coasts than it had previously. And the Environmental Protection Agency, a bureau created by a Republican president, began asserting its will more broadly, issuing regulations that the coal industry opposed. That combination of factors, Republicans and Democrats alike agree, conspired to give the impression of a Democratic Party that no longer had Appalachia's interests at heart.
"When you attack guns and coal, you're attacking what they in the mountains consider their birthright," said Jim Cauley, a Democratic strategist and Kentucky native who managed President Obama's campaign for U.S. Senate in 2004. "They'll feel like you're attacking their culture."
The evidence of old Appalachia is still present: 56 percent of Kentucky voters are registered Democrats; 54 percent of West Virginia voters are Democrats. But the evidence of new Appalachia is presenting itself in every subsequent election: In 2010, Republicans won two of the state's three Congressional seats, the first time they claimed a majority since the Reagan wave of 1980. In 2012, an otherwise good year for Democrats, Republican Andy Barr defeated Democratic Rep. Ben Chandler in a Lexington-based district in Kentucky, and West Virginia's Democratic attorney general lost his re-election bid.
That same year, President Obama won just 30 of the 421 counties that belong to the Appalachian Regional Commission, according to a National Journal analysis of election results. Just one of those 30 counties, Elliott, was in Kentucky; Obama lost every county in West Virginia. He only came within ten points of Republican nominee Mitt Romney in three of the state's 55 counties.
"The Democratic Party has lost touch with the working class Appalachian person," Duncan said. Those voters, he added, were the foundation of what Richard Nixon called the Silent Majority.
Democrats still have a presence in Appalachia. The governors of Kentucky and West Virginia are both Democrats, and Democrats control three of the two states' four legislative chambers (Republicans won control of the Kentucky state Senate in 2000). But the region's conservatism means an Appalachian Democrat is much different from a Democrat from another part of the country; as he sought re-election in 2012, Sen. Joe Manchin ran an advertisement in which he literally shot Democratic-backed cap and trade legislation with a rifle.
Rockefeller's retirement opens another opportunity for Republicans to grow their burgeoning Appalachian stronghold. Rep. Shelley Moore Capito, the daughter of the governor whose three terms bookended Rockefeller's in the 1970s and 1980s, announced she would run for the seat even before Rockefeller dropped out.
The arc of history changes some things and leaves others strangely intact. Appalachia has moved from Republican to Democratic to Republican again over the course of post-Civil War America, because even in the era of trans-Canadian pipelines, oil fracking and renewable energies, King Coal still reigns supreme.
------------------------------------------------------------------------------------------------------------------------------------------------------
5)
Major Garrett To Obama: "You Yourself" Voted Against The Debt Ceiling
MAJOR GARRETT, CBS NEWS: As you well know, sir, finding votes for the debt ceiling can sometimes be complicated. You yourself as a member of the Senate voted against a debt ceiling increase. And in previous aspects of American history: President Reagan in 1985, President George Herbert Walker Bush in 1990, President Clinton in 1997, all signed deficit reduction deals that were contingent upon or in the context of in raising the debt ceiling. You yourself four times have done that; three times those were related to deficit reduction or budget maneuvers.
5a) France is now going to war in Mali because it says “we cannot have a terrorist state at the door of Europe,” but when Israel launches a defensive operation to protect its citizens from missile attacks from terrorists in Gaza, all the French newspapers and television commentators scream about Israeli aggression.
The distance between Bamako and Paris: 6266 km.
The distance between Gaza and Israel: 1 km.
---------------------------------------------------------------------------------------------------------------------------------------------
|
Roubini: US Still Safe Despite Debt Ceiling Fight
By Michael Kling
The United States is not at risk of skyrocketing borrowing costs if Congress fails to raise the debt ceiling, said economist Nouriel Roubini.
Ironically, the opposite would happen — Treasury yields would go down, Roubini said at a Reuters conference.
"Paradoxically, if we don't reach an agreement in March on the fiscal debt ceiling and we get another downgrade, yields are going to fall, they're not going to go up," said Roubini, a New York University economist known as "Dr. Doom" because of his pessimistic forecasts.
"Everywhere else, if a country gets a downgrade, the yields go up. I in the U.S. it is the opposite."
Investors turn to U.S. debt whenever global economic risk increases, he said. That includes the risk coming from U.S. domestic political squabbles and the risk of a U.S. ratings downgrade.
Whenever there's a bout of global economic fear, people dump the yen and euro and turn to the dollar.
Plus, China keeps financing the United States to maintain its export-led growth. If China were to drop the dollar, other emerging markets would scoop up Treasurys, he said.
"If China shuns the U.S. dollar then every other emerging market says 'Hey, I don't want to let my currency appreciate and lose market share to China' and so they intervene and buy dollar and Treasurys."
For those reasons in spite of our large and unsustainable debt, bond vigilantes are not a factor, Roubini said.
"Eventually if we don't solve our problem, at some point, the bond vigilantes are going to wake up. But not yet."
Congressional Republicans want to reduce government spending in return for raising the debt limit, which the government is expected to exceed by mid-February or early March. President Barack Obama has said he will not negotiate over the debt limit.
"To even entertain the idea of this happening, of the United States of America not paying its bills, is irresponsible," he said at a news conference. "It's absurd."
"They will not collect a ransom in exchange for not crashing the American economy," he said of Republicans. "The full faith and credit of the United States of America is not a bargaining chip."
-----------------------------------------------------------------------------------------------------------------------------
Ironically, the opposite would happen — Treasury yields would go down, Roubini said at a Reuters conference.
"Paradoxically, if we don't reach an agreement in March on the fiscal debt ceiling and we get another downgrade, yields are going to fall, they're not going to go up," said Roubini, a New York University economist known as "Dr. Doom" because of his pessimistic forecasts.
"Everywhere else, if a country gets a downgrade, the yields go up. I in the U.S. it is the opposite."
Investors turn to U.S. debt whenever global economic risk increases, he said. That includes the risk coming from U.S. domestic political squabbles and the risk of a U.S. ratings downgrade.
Whenever there's a bout of global economic fear, people dump the yen and euro and turn to the dollar.
Plus, China keeps financing the United States to maintain its export-led growth. If China were to drop the dollar, other emerging markets would scoop up Treasurys, he said.
"If China shuns the U.S. dollar then every other emerging market says 'Hey, I don't want to let my currency appreciate and lose market share to China' and so they intervene and buy dollar and Treasurys."
For those reasons in spite of our large and unsustainable debt, bond vigilantes are not a factor, Roubini said.
"Eventually if we don't solve our problem, at some point, the bond vigilantes are going to wake up. But not yet."
Congressional Republicans want to reduce government spending in return for raising the debt limit, which the government is expected to exceed by mid-February or early March. President Barack Obama has said he will not negotiate over the debt limit.
"To even entertain the idea of this happening, of the United States of America not paying its bills, is irresponsible," he said at a news conference. "It's absurd."
"They will not collect a ransom in exchange for not crashing the American economy," he said of Republicans. "The full faith and credit of the United States of America is not a bargaining chip."
-----------------------------------------------------------------------------------------------------------------------------
No comments:
Post a Comment