You want fries with that $700 billion, Mr Paulson?

Posted on by

A few days ago I mentioned that the markets were thinking about the possibility of the US government defaulting on its debts. Professor Charles Goodhart, a noted UK economist, then came on BBC Radio explaining that it was impossible for a government to default in this way, and I assumed I had simply misunderstood the signals. But in today’s Financial Times, Gillian Tett reports as follows:

This week, the cost of insuring against a US default via credit derivatives hit record levels. Yesterday, London dealers were quoting between 23 and 28 basis points, meaning it costs €23,000 ($33,600) to €28,000 a year to insure €10m in bonds. But the quotes for McDonald’s were about 25bp-26bp.

Yes, you read that right: the entity that brought us big fries and the floppy clown commands as much gravitas in the credit world as the mighty US of A.

These CDS prices might seem weird: it is extremely unlikely the US will default. But there are at least two factors making investors jittery. One is the rising cost of US bail-out plans. If you spend $50bn here (to support money market funds), $85bn there (to rescue AIG), another $30bn (to complete the Bear Stearns deal) and then $700bn (for a bail-out), soon you are talking serious numbers.

More specifically, the rescue proposals from Hank Paulson, US Treasury secretary, are threatening to push gross US debt well above 70 per cent of GDP for the first time since 1954…

Interesting, eh?

Evening in America

Posted on by

[McCain] tried to remind viewers of his greater experience and heroic combat career, while also casting himself as a maverick outsider ready to storm the barricades. Mr. McCain wanted to be the true revolutionary in the room, but his is the Reagan revolution, and for a lot of people right now, it doesn’t look like morning in America.

The New York Times, summing up last night’s Presidential campaign debate.

Miss Alaska

Posted on by

Meet the next Vice-President of the United States.

Later: there have been stories circulating on the Net saying that YouTube is removing copies of this footage. So far (Saturday 27 October, 10am GMT) this copy seems to be still going. But in case it disappears, there’s another copy here.

McCain looking for his 9-11 moment? Some cheap, armchair psychologizing…

Posted on by

Watching McCain posturing as the saviour of the US economy this evening I was reminded of this post by David Weinberger.

McCain’s suspending of his campaign is so very odd that I find myself looking for psychological, and not just political, explanations. So, try on this armchair psychoanalysis, keeping in mind that I’m just making this stuff up:

First, assume that McCain is desperate. When Fox puts you at 39%, desperation becomes reality-based thinking. Second — and this is the unpleasant part — imagine that McCain has had the thought that many of us had had: A terrorist attack in October would shake up the entire electoral chessboard, and might well favor the Republicans. (Yeah, yeah, I don’t think it should it, either.)

Now, no one wants a terrorist attack (except, um, the terrorists), including John McCain, of course. But we’re talking psychology here. So, could it be that McCain is reacting to the financial meltdown as if it were a large-scale terrorist attack because deep within him, he’s waiting for the crisis that saves him, the crisis that lets the aging warrior put on his flight suit one more time?

After all, the subtext of his “putting country first” trope isn’t patriotism but heroism. Heroes need crises. McCain’s brand of heroism consists of sacrifice: He gave up 5 years of his life in North Vietnam, and now he’s willing to give up campaigning.

McCain’s political problem is that in this case, his self-sacrifice seems unnecessary and can be taken as panic or cowardice. It seems like sacrifice for sacrifice’s sake. He thus runs the risk of voters turning away from the hero-without-a-cause to the leader who has one.

That Bush speech in full

Posted on by

Good evening, my fellow Armenians. This is an extraordinary period for America’s economics.

Over the past few weeks, many Americans have felt anxiety about their finances and their SUVs. I understand their worry and their frustration.

We’ve seen triple-digit swings in the stuck market. Major financial institutions have teetered on the ledge of collapse, and some have failed. As discertainty has grown, many banks have restructed lending, debit markets have frozen solid, and families and businesses have found it harder to get money from the ATM.

We’re in the midst of a serious financial crisis, folks, and the federal government is responding with decisive reactionariness.

We boosted confidence in money marketing mutualities and acted to prevent major investors from intentionally driving down sticks for their own personal gain.

Most importantly, my administration is working with those assholes in Congress to address the root and branch behind much of the destability in our marketplaces.

Financial assets related to home mortgagees have lost value during the house declination, and the banks holding these assets have destricted credit. As a result, our entire ecology is in danger.

So I proposition that the federal government deduce the risk posed by these troubled assholes and supply urgently needed moolah so banks and other financial institutions can avoid collapse and resume screwing the public in the time-honoured way.

This rescue effort is not aimed at perverting any individual company or industry. It is aimed at preservating America’s overall economics.

It will help American consumers and businesses get debit to meet their daily needs and create jobs for the good ol’ boys. And it will help send a semaphore to markets around the world that America’s financial system is back on truck.

Gawd help America. Thank you and good night.

And you thought Cheney was scary?

Posted on by

Well, just watch this.

I’m tired of hearing people pay obesience to John McCain because of his, er, heroism. Whatever principles he once may have had have already been jettisoned in the interests of getting elected. Besides, a guy who could offer this religious crackpot to his country as a potential president needs to be certified, not elected.