Monday, April 11, 2011

The debt ceiling: Can Goldman Sachs win if the US defaults?

The GOP is expected to blackmail the Democratic party by holding the American economy hostage. This isn't news; Bruce Bartlett has been talking about the debt ceiling and debt default since last June, and has been expecting this crisis since January.

Even so, I haven't worried. It's not that I think the GOP is reasonable or even rational. The GOP is certainly crazy enough to blow up the village in order to save it. I haven't worried about this because I have assumed that the GOP will obey its masters on the big things  ...

Gordon's Notes: Is the GOP truly a pawn of corporations and the wealthy? We'll find out soon. (Jan 2011)

... Charlie Stross says emergent corporate entities control America. Krugman says wealth alone is sufficient explanation, emergent entities are an unnecessary complication.

John Gordon says control (the bouncing yellow ball) of America is a dynamic balance between the emergent corporate entity (ECE) powerful (wealthy) individuals, and the voting masses [1]:

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Of course I'm right, but it would be nice to have evidence.

Fortunately, there's a natural experiment coming up. The GOP is threatening to destroy the American, and world, economy. This is in the interests of neither powerful individuals nor ECEs. So if it happens, then Stross, Krugman and I are all wrong. The Voters have power after all, and it's just too bad so many Americans are detached from reality...

Recently, however, I realized there was a flaw in my logic.

I assumed destroying America was not in the interest of American "Corporate Entities". That's not necessarily so. I expect there's a way to make vast amounts of money off a US debt default, particularly for a company that has "insider" information. If Goldman Sachs were to bet on default, then they could combine with GOP whackiness to finish us all off.

Now I'm worried.

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