4654

I find no fault with this analysis of what the Turtle is doing.

4655

The problem is I also can’t find fault with McConnell’s reasoning. He’s right. He will destroy the U.S. economy, he will immiserate countless people, and he will get re-elected, and probably get to be majority leader again, which is all he cares about.

4656

Yes, that’s why we despair. Because McConnell is right (from his point of view), and his actions are predictable. He, and the Republican party, will be rewarded for destroying the economy on purpose.

4657

I think this is wrong in at least one respect: if Biden gives up on the BBB agenda, McConnell is perfectly happy to let / help the Dems lift the debt ceiling cap. This is probably his preferred outcome: no economic catastrophe but also no expanded welfare state, no tax increases for his donors, no accomplishments for Biden and the Dems to run on.

4658

It the debt ceiling did implode, I don’t think it would move the needle much in either direction. Everyone will blame who they think is to blame, facts be damned.

The only thing that matters now is getting out your base and suppressing their base.

4659

I think the idea that McConnell’s constituents and donors would be happy about a stock market crash and all the attendant knock-on effect damage on their personal wealth and economic situation is, well, crazy. They don’t want that.

4660

I think the constituents he cares about want him and his allies to be in power, as soon as possible, so if they have to go through short-term pain to get there, they’re OK with it. They can afford it.

4661

I don’t know any rich person who thinks this way.

4662

Ya, I don’t think rich people are willing to lose massive amounts of money for the benefit of keeping McConnel in power.

4663

Agreed. McConnell has somehow managed to convince people, including on this board, that he’s crazy and he’s not bluffing. But just like the progressive House democrats, I think he’s totally bluffing.

4664

I don’t think he’s bluffing, really. I think he just knows that the Dems will find a way to raise the debt ceiling in reconciliation.

I think McConnell’s plan is to get back in power without crashing the stock market. And that is what his constituents and donors want.

4665

But, and here is the key thing, they won’t. I mean short term on paper? Yes. But look at the net effects from things like the dot com bubble, or the 2007 housing crash. On paper the wealthy looked like they took a bath, but in practice they were able to leverage that crisis to increase their holdings. They were able to purchase distressed assets at a discount. They came out ahead in the end, once the markets rebounded. It was the middle class and small business owners, those who had enough to have some measurable assets but not enough liquidity or access to cash to weather the crunch, that took it worst. They were the ones forced to sell at cut rates to the predators at the top of the food chain.

So, yeah, a financial crisis is an opportunity for them. They can increase their asset holdings, use paper losses to reduce tax burdens, leverage the crisis to institute friendly governments, and then push them to give tax cuts to themselves on the basis of how hard up they are due to the market drop.

Maybe, but I think it is also possible that many of his donors are able to position themselves to be able to take financial advantage of the situation, and so view a crash as an opportunity.

4666

Do we need to do the thing again where we explain how paper assets being devalued doesn’t actually matter until you sell them?

Because here’s the thing: Paper assets being devalued doesn’t actually matter until you sell them.

4667

Do we need to do that thing again where we realize that the effects of a sovereign debt default by the United States will probably produce a bit more than a drop in the value of paper assets?

4668

Oh, no argument here. I wasn’t trying to speak to anything outside the narrow scope of “what a devalued paper asset means to its holder,” which is mostly “nothing unless they’re using it as collateral or selling it.”

I’ve been on Team Fuck The Debt Ceiling As A Concept Entirely for, well, since I learned that it was a thing back in I guess the Obama administration?

4669

I read this and I think that the shitlords at Lehman Brothers probably thought they were well positioned to ride out, even take advantage of, any downturn in the collateral mortgage securities market.

4670

Oh, for sure. That they were wrong does not discount the fact that others were able to improve their situation. Or that Lehman acted in a manner they did because, often, they would be right.

The financial industries in the US are so designed to favor the wealthy and powerful that most don’t truly grasp how well off the top came from the 2007 crash. Sure there were losers in the top, but on aggregate they won, big.

4671

I mean, I’m skeptical. I imagine if you asked those at the top if they would have preferred not to have had the crash, most would say so. It’s all history now, all water under the bridge, but it sure wasn’t then.

What McConnell wants is for Biden to be seen as a failed President and for that perception to hamstring the Democrats in the midterm and the next presidential year election; and to achieve that with the least collateral harm to Wall Street that is consistent with that goal.

4672

It’s definitely true that if you’ve got money, you can exploit economic downturns to make money. However, at the same time, severe downturns essentially slow down the economic growth of the system, and essentially set back your gains. You don’t technically lose money until you sell the paper assets, so you can get that stuff back, but it causes you to “waste time”, because now you gotta wait for those assets to recover their value.

While you can offset this to some degree by buying stuff up at the bottom, it does still create some additional risk and delay, which old rich people may not like.

4673

Back to the Reconciliation Bill…