”Reader, suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself."— Mark Twain
We lost interest in “government” about 15 minutes after we began learning about it in junior high school.
The theory is interesting: checks and balances, democracy v. republic (v. tyranny). The commerce clause as it pertains to alcohol consumption.
The history of how messed up our own government has been – from day one – is also fun to read.
But that’s where it ends for me.
The problem with all governments is they are run by people. In junior high, the kids who wanted to be in government were teachers’ pets jonesing for attention from teachers and seeking extra badges on their scout uniforms.
Those people, should they fail to heed the hot stove of politics, grow up to be an especially acute species of greedy, conniving and narcissistic sycophants who get easily swayed by power to do really stupid things.
You can ignore junior high politicians for most of the year. They only bother you when their self-serving rallies in the gym are made mandatory by the adminstration. I don’t remember much, but I do recall spitballs.
The adult version of your junior high do-gooder is much more pernicious. They’ve grown up enough to realize if the public wants to “vote itself into the public largesse,” that largesse has to go through their offices.
And now, with social media, you cannot escape politics at all.
My biggest beef when the reality show host, Donald Trump, decided to throw his hat in the ring for the 2016 election, is simple: he made people care about politics again.
Why, oh, why?!
Except for one stained blue dress some time in the 1990s everyday Americans largely went about their business without really caring what goes on in Washington or state capitals around the country. It was better that way.
“A government’s basic functions,” reads a lesson in civics online, “are providing leadership, maintaining order, providing public services, providing national security, providing economic security, and providing economic assistance.”
It’s kind of a broad description, but let’s tick them off using this the debt default debate
- Provide leadership… ha.
- Maintain order… ha, ha.
- Provide public services… meh, if you like standing in line and kissing some bureaucrats ring
- Providing National Secruity… works great if you’re a government contractor or a member of Congress’ whose campaign is bought and paid for
- Providing economic security… I’m sure that’s in the motto of the IRS somewhere
- Providing economic assistance… to your buddies who put you in your seat
Now that we know what government’s theoretical responsibilities are, we arrive at “X-Date” – 3.
Or are we?
First, the term “X-Date” comes from Wall Street. It is the last day you can buy a dividend stock and still collect the dividend. It’s a deadline you want to pay attention to because collecting the dividend is the whole reason for buying.
In Washington, the term has been tortured into meaning it’s the day your finances go kablooey through no fault of your own.
Janet Yellen says June 1 is “x-date”.
Goldman forecasts say June 8 or 9.
The next day the government takes in Tax Receipts is June 15. If the government can stretch its checkbook out to June 15 they get a rush of tax revenue… which would kick the can down the road even further.
Regardless of whether she’s right or Yellen is certain the government cannot hold out until June 15. “The sooner a deal is reached the better,” is the mantra from both sides of the aisle and from bankers on Wall Street.
For the most part, markets have been ignoring the political rhetoric, but on May 18 they started to take notice. With the exception of a way-better-than-expected earnings announcement from the AI chip maker NVidia, the Dow, S&P 500 and Nasdaq all started sliding on May 18.
In hindsight, that will probably be seen as the real “X-Date” – the day 401(k)s, IRAs, pension funds starting sinking under the weight of your representatives failure to provide the first order of business from our civics lesson above.
So it goes,
The Wiggin Sessions
P.S. Why bother having a debt ceiling anyway? Congress has had to raise it 78 times since 1960. Each time, they’d already spent more money than the ceiling allowed, so they have to raise it and hustle for new funds in the bond market.
An actual default – which, still, with three trading days left to Yellen’s “X-date”, no one actually believes they’ll do – could wreak havoc in the bond market.
Treasuries are meant to be the safest investment; the flight to safety trade. If a debt default happens, bonds will become the object of speculation like every other asset class. All it took was the Fed to get serious about inflation and banks like Silicon Valley Bank, who had over 50% of their assets in treasuries, became insolvent. What havoc would a speculative mood in Treasuries wreak across other banks who’ve been heretofore unscathed by this year’s panic?
Addison Wiggin is an American writer, publisher, and filmmaker. He was the founder of Agora Financial and publisher for 18 years. An acclaimed New York Times best-selling author, his books include: Financial Reckoning Day, Empire of Debt, The Demise of the Dollar, and The Little Book of the Shrinking Dollar. Addison is also the writer and executive producer of the documentary I.O.U.S.A., an exposé on the national debt, shortlisted for an Academy Award in 2008. He lives in Baltimore, Maryland with his family. Addison started his latest project, The Wiggin Sessions, powered by Consilience Financial, in March 2020. He films from a homegrown studio in his basement.