Tag: economics

Downgrade on the way

Or perhaps not, if the administration can convince S&P to accept its fictitious numbers:

Two government officials tell ABC News that the federal government is expecting and preparing for bond rating agency Standard & Poor’s to downgrade the rating of US debt from its current AAA value. Official reasons given, one official says, will be the political confusion surrounding the process of raising the debt ceiling, and lack of confidence that the political system will be able to agree to more deficit reduction. A source says Republicans saying that they refuse to accept any tax increases as part of a larger deal will be part of the reason cited. The official was unsure if the bond rating would be AA+ or AA.

A third official says that S&P made a “serious mistake” in its analysis, “based on flawed math and assumptions,” so the Obama administration is pushing back. But even though “S&P has acknowledged its numbers are wrong, it’s unclear what they’re going to do.,” the official said.

But… but… I thought being able to borrow more money made the existing U.S. debt safer! Anyhow, I don’t think any government whose agencies have made the historical 2001 recession disappear, and whose unscheduled ex post facto revisions are nearly five times larger than the revised growth are in any position to claim anyone else is using “flawed math and assumptions”.

The worrisome thing is these are the agencies that still had Enron at AAA when it was going bankrupt. It boggles the mind to think how bad U.S. finances must be for the ratings agencies to actually notice.

UPDATE – The administration’s whining didn’t work:

– We have lowered our long-term sovereign credit rating on the United States of America to ‘AA+’ from ‘AAA’ and affirmed the ‘A-1+’ short-term rating….

– The outlook on the long-term rating is negative. We could lower the long-term rating to ‘AA’ within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.

Notice that nothing is said about the need to raise taxes. S&P knows as well as the American public that more taxes will only lead to more spending. And there will almost surely be less reduction in spending than agreed to, given that this has been the case following practically every budget deal of the last 31 years.

As I wrote several times prior to the hike in the debt ceiling, increasing the amount of debt doesn’t make default less likely, it makes it MORE likely.

These charts are scarier

Derek Thompson of the Atlantic considered these four charts from Calculated Risk to the be scariest economic charts he’s seen all year. I can only conclude that he has not seen the following chart, which shows the “credit gap” between where the U.S. economy would be if credit growth had simply proceeded at its 50-year post-WWII average and where it actually stands after Q1-2011.  The chart shows, in no uncertain terms, how completely unprecedented the situation is, and also demonstrates that the scale of the problem is much, much larger than is presently indicated by the various employment, production and consumption statistics.

Nor, I presume, has he seen the chart that accompanied it in last week’s column, which shows how the composition of that stagnant debt has been shifting since 2008.

This chart explains the reason behind the determination of both political parties to raise the debt ceiling, as federal debt HAS to continue to increase, and increase significantly, in order to make up for the ongoing contractions in the private debt sectors, which so far has amounted to $600 billion in the Household sector and $3 trillion in the Financial sector.  The truly frightening thing is that it is perfectly possible for the Financial sector debt to contract much more severely; it grew from 0.85% of total debt in 1946 to 32.7% in 2008 and presently stands at 25.23%.  Considering what $3 trillion in debt-deleveraging has done to date, imagine how much more economic pain would be involved in an additional $13.8 trillion contraction.

As Steve Keen has chronicled since 2005, the mainstream economists are still paying absolutely no attention to these apocalyptic signs because they consider debt to be “exogenous” to their system models.  Paul Krugman’s words in his latest paper are straight out of Paul Samuelson’s 1948 textbook.

“Ignoring the foreign component, or looking at the world as a whole, the overall level of debt makes no difference to aggregate net worth — one person’s liability is another person’s asset.“
 – (Paul Krugman and Gauti B. Eggertsson, 2010, pp. 2-3)

Of course, this gives us a clear warning with regards to how The Masters of the Universe are going to try to fix the problem.  Big it up and centralize it.  Since the U.S. inability to pay back its foreign debt is becoming increasingly obvious, the answer will be to “look at the world as a whole”, or convert a national economy into a global one in which the national debt no longer counts because “one person’s liability is another person’s asset”.  As long as the macro accounting all balances, how could there possibly be any problem?  And since the European Union has shown that the stresses of monetary union cannot survive without political union to enforce austerity programs and forced transnational redistributions, this means global governance will be a necessary, indeed integral, part of the mainstream economic program.

Because, after all, forcibly installing a one-world government makes so much more sense than simply replacing your inoperative and outdated economic model with one that actually works!

Bloomberg discovers debt/GDP

It’s the debt, not the debt ceiling. Moody’s announces a negative outlook for U.S. credit:

The U.S., rated Aaa since 1917, was placed on negative outlook, Moody’s said in a statement today as it confirmed the rating after President Barack Obama signed into law a plan to lift the nation’s borrowing limit and cut spending. A decision on the rating may be made within two years, or “considerably sooner,” according to Moody’s Steven Hess.

The debt-limit compromise “is a positive step toward reducing the future path of the deficit and the debt levels,” Hess, senior credit officer at Moody’s in New York, said in a telephone interview. “We do think more needs to be done to ensure a reduction in the debt to GDP ratio, for example, going forward.”

When I published RGD in 2009, I don’t remember anyone being concerned about debt levels except Credit Suisse and a few Austrian economists talking about Debt/GDP. It is a subject that few Neo-Keynesian or Monetarist economists are equipped to understand because it simply doesn’t factor into their models. Even those few prognosticators who are recognized for anticipating the 2008 crash, like Nouriel Roubini, didn’t start talking much about it, (except occasionally for the Japanese situation), until the middle of 2010. So, it’s interesting to see that it’s now being actively discussed in mainstream financial media outlets such as Bloomberg.

However, they’re still only looking at Federal debt to GDP rather than the more important figure of total debt to GDP. Keep in mind that it would be highly unusual for Moody’s to actually do any serious downgrading until it is already completely apparent in the credit markets. The ratings agencies are usually three days late and millions, if not billions, of dollars short.

Overprepared

If I sounded a little less than fluid in the interview with CTV yesterday, the reason is, ironically enough, that the two Canadian producers prepared me extraordinarily well for it. I was very impressed with their thoroughness and the quality of their questions; I’ve been on a number of national news shows before and I’ve never seen anything like it. After a 30-minute pre-interview going over the debt ceiling debate and how it related to some of the concepts in RGD with one of the producers the day before, I produced two charts that we both thought would be useful as well as nicely visual, after which I was sent me the six questions I was to anticipate.

However, there was just a bit of a curve ball in the interview itself. Not only did they use a different picture than the one I provided, (understandably, since they must have wanted color), and they didn’t make use of the charts I made, (which was fine, I used them in today’s column), but some of the questions asked by the anchor were somewhat different than the ones I’d been provided. Her questions weren’t bad ones, by any means, but they were just far enough afield so I didn’t have the statistics on things like “historical tax revenue as a percentage of GDP” immediately to hand.

Note that I’m not complaining here, merely observing how the process was very different than my experience with American TV and radio.

Anyhow, I found that I was thinking “wait, what?” the entire time I was trying to answer the anchor’s questions. “Did I mishear that? Am I even answering the right question?” Anyhow, since I thought the producer’s questions were pretty good ones and I prepared for them, I thought I might as well post my notes for the interview here.

You recently wrote in an article that the issue is not so much the debt ceiling, but the debt itself. Can you explain exactly why?

The U.S. federal government has spent three years keeping the economy artificially propped up by substituting $4.1 trillion in new government debt for $3.6 trillion in household and financial sector debt-deleveraging.  Washington cannot keep playing ostrich without raising the debt ceiling.  The reason you’ve seen the number $2.4 trillion bandied about is because that buys them another six quarters at the current rate of $365 billion in new debt per quarter, enough to get them past the 2012 elections. But all this accomplishes is to delay the day of reckoning and increase the eventual cost.  Since the housing market and employment numbers have actually gotten worse during this period of extend-and-pretend, it should be clear that raising the debt ceiling isn’t even a potential fix for the problem.
 
In your book you look at the patterns that led to the Great Depression, and the Heisei boom In Japan that led to it’s famous ‘lost decade”- and you believe it will happen again, only this time it will be worse. What leads you to believe this?

First, the debt-to-GDP ratio is worse than it was in the Great Depression or Japan in 1999.  It was 2.6 in 1933, it peaked at 3.7 in 2008 and it is 3.5 now.  Second, in the 1930s, it was only the USA that attempted to fight the post-1929 economic contraction with Keynesian stimulus policies and only the USA suffered a Great Depression.  In England, the contraction stopped in 1932, France never saw double-digit unemployment, and the Japanese economy was actually enjoying significant growth.(1)  This time, Europe, China, and Japan all followed the US lead and applied their own stimulus plans in 2009, which we are already seeing is now in the process of backfiring on everyone.
 
In a chapter of your book entitled “No one knows anything” you explain that many of the governments calculations for GDP are misleading that they contain wide margins for error and cannot be trusted- why is that?
 
Because they’re verifiably wrong.  Look at the recent first quarter.  All three reports, from Advance to Final, had U.S. GDP growth at 1.8 to 1.9%.  Then, in the second quarter report, there is an inexplicable revision from 1.9% to 0.4%.  That’s a $225 billion mistake, which is almost five times more than the $60 billion growth now being reported.  These revisions are so out of control that if you bother to look back at the 2001 numbers, you’ll see that the 2001 recession has been revised out of existence.  It’s complete fiction.  On the employment side, the game is to not count people who don’t have jobs as unemployed.  That’s why they claim the unemployment rate is only 9.2% when it’s really closer to 20%.

You say that a boom fuelled by easy credit must be followed by a bust of equal size and duration. Instead, it has been FED policy to re-inflate bubbles and they collapse, which only creates bigger bubbles- You say we are currently in the biggest bubble yet- what could pop it?
 
What will pop it is a reduction in the rate of growth of government spending, an increase in interest rates, or a major sovereign investor’s refusal to continue buying Treasury bonds.  Any of the three will suffice to put the USA into a debt-deleveraging spiral.  The problem with depending upon debt-based economic growth is that eventually, you run out of people who are willing and able to borrow money. And that’s when the contraction starts.

There is a large backlog of home foreclosures in the United States- what would happen if that backlog were to suddenly be cleared? Are there other potential triggers out there?
 
Clearing the backlog would put the economy into the equivalent of heart failure because it would instantly kill a lot of banks.  The $600 billion decline in household sector debt is deceptively small because over 7.5% of all mortgages have been delinquent for more than 90 days.  The banks aren’t writing those bad loans off yet because to do so would bankrupt them.  Based on the FDIC statistics, I estimate that about $3 trillion of the $7.5 trillion in assets presently claimed by the big four, Bank of America, Citi, Wells Fargo, and JP Morgan Chase, are worthless.
 
What are the options for the global economy- what are the best and worst case scenarios?
 
Pay a high price now, or pay a higher price later.  Deflation, default, and economic contraction aren’t fun, but they are perfectly survivable.  The best case scenario is we go through the global equivalent of the Great Depression, what I’ve called Great Depression 2.0.  It will be very difficult for a lot of people, but the basic governmental structures will survive and there won’t be cannibalism in the streets or anything like that.  The worst case is that the politicians keep kicking the can down the road until the entire global financial system finally collapses overnight.  In that case, we’re probably going to see wars, civil wars, and fundamental change of the sort most of us find impossible to imagine.

(1)thanks to the invasion of Manchuria, of course, but the GDP statistics are what they are.

WND column

Bailing Out Obama

“At the White House and in talks in congressional offices and corridors, most of the attention was focused on finding a way to define the precise conditions under which the president could get a second increase in the debt limit that would be needed early in 2012 under both Republican and Democratic proposals.”
– “Amid New Talks, Some Optimism on Debt Crisis,” The New York Times, July 30, 2011

It’s not hard to understand why the leaders of both political parties are vehemently opposed to the possibility of U.S. default. But as many commentators, including myself, have pointed out for weeks, a failure to raise the debt ceiling has absolutely nothing to do with the possibility of a sovereign U.S. default! In fact, raising the debt ceiling will make a default much more likely in the future. So why are the politicians, particularly Barack Obama, so desperate to see some sort of deal struck that will permit the raising of the $14.3 trillion federal debt ceiling?

NB – This column was written prior to the announcement of the “compromise” plan, which Karl Denninger summarized as below. Nothing in it changes anything substantive regarding the column.

1. Lie once again about “cutting spending.” It does no such thing. It increases spending – every year. Bogus and outright-fraudulent “baseline budgeting” means that if they intended to boost spending $300 billion but only increase it $200, that’s a $100 billion “cut.” If you ran your household like this you’d be broke in a week. For the US, it will take a bit longer.

2. No tax increases. That’s nice, but let’s not forget that while the Democrats scream about the “Bush Tax Cuts” the FICA tax cut was theirs. Obama signed it. You cannot keep reducing income and increasing spending forever.

3. The cuts, fraudulent though they are, aren’t even real anyway – and not binding either. There’s nothing before 2013, which means a downgrade is almost certain. Further, raising the debt ceiling now for the whole among but allegedly finding the “cuts” over 10 years is an outright fraud by a ratio of 10:1.

4. A 2013 timeline for actual changes means nothing, since the next Congress is not bound by what this one does. Period.

5. Sequesterization didn’t work in 1997. It won’t work in 2011 either.

6. We failed to get to $4 trillion. That’s what S&P said they needed, and they said they needed to see that within the next three years. Now we find out if S&P has any balls.

NRO reports: “According to sources, Boehner said the deal was “the best that we could get.”” And that is perhaps the most shameful thing about this whole bipartisan charade. The scriptwriters couldn’t even bother to write new dialogue for Republicans Cave on the Budget XXXI.

The debt ceiling dance

Unsurprisingly, it has all turned out to be fake. The choice being presented for public consumption is one between fake spending cuts (Republican) versus non-existent spending cuts (Democrat). Of course, the real issue is the need to keep spending in order to continue the appearance of economic stagnation. Ask yourself this question. What is the magic in the $2.4 trillion addition to the $14.3 trillion debt ceiling?

Answer: $365 billion. That is the average increase in federal debt per quarter since the middle of 2008. $2.4 trillion is six quarters worth of that… which is sufficient to see the current set of politicians safely past the 2012 elections. Assuming that the private sector continues its debt-deleveraging, this means that by the end of 2012, government will account for 27.8% of all debt, the federal government will account for 23.2% of it (up from 10.3% in Q2-2008), households will be at 22.4% (down from 28%) and the financial sector at 24.4% (down from 31.5%).

Speaking of the debt limit, if you happen to be Canadian, I’ve been asked to appear on their 24-hour news channel, CTV, to discuss it. If you are not Canadian, but happen to be so inclined, you can watch the clip here.

Missing the obvious

Megan McCardle adds 2+2, comes up with -4:

I’ve been having some disturbing conversations with both finance people and Washington people over the last few days, that have only confirmed the disconnect I wrote about a few weeks ago. Each side is sending signals that the other side is not reading correctly. And this is getting more dangerous by the hour.

The core fact is that markets haven’t sold off nearly as much as you’d expect if Wall Street were really freaking out. This is not because Washington pols have told their Wall Street paymasters about a secret deal that just hasn’t reached the ears of those of us reporting from down here. Nor are they calm because they think that a failure to raise the debt ceiling will be no big deal. They certainly don’t believe that a forced spending cut of 40% will somehow make us extra-super-more-likely to make us pay off our debt.

No, they’re relatively calm because they simply cannot bring themselves to believe that we’re not, in the end, going to raise the ceiling. It’s too outlandish that we would, through the collective action of our congressmen, suddenly and for no apparent reason shoot ourselves in the head.

This is sound reasoning, as far as it goes. But it doesn’t get you very far. They’re deriving a theory of the debt ceiling like Aristotle, from first principles rather than data. In general, my non-representative sample of people working on or near Wall Street is that they are now noticeably more sanguine about the prospects for a deal than people working in the city where the deal is going to get made….

Meanwhile, just as Wall Street doesn’t have much insight into what’s going to happen in Washington over the next week, I don’t think Washington really understands what will happen in the markets. I think Stan Collender is right: Washington, particularly the GOP bit of it, is interpreting Wall Street’s lack of a reaction as a sign that it’s maybe not such a big deal to breach the debt ceiling. But the real message Wall Street is sending is “You can’t be serious! Not raising the debt ceiling would be a disaster!”

This is an impressive failure to comprehend the obvious. First, what McCardle doesn’t understand is that it is raising the debt ceiling that would be a disaster. The ratings agencies are not warning everyone that a failure to make a deal to raise the debt ceiling will lead to a reduction in the quality rating of U.S. debt, but that a failure to provide the $4 trillion in spending cuts that were mentioned as part of a deal will lead to the aforementioned ratings downgrade.

While a failure to raise the debt ceiling will certainly have negative consequences for stock prices and GDP statistics, this helps the long-term prospects for the ability of the U.S. to raise funds in the future. And second, the relative lack of panic over the rapidly approaching “deadline” is not due to any false signal readings, but rather the fact that the deadline is an artificial and meaningless one.

As for what Wall Street wants, the answer is obvious. More money, more debt, more inflation. That doesn’t mean that what Wall Street wants is relevant, good for the economy, or good for the American people. In fact, it’s usually a reliable indicator of what is bad for everyone but Wall Street. Concerning Washington, they know perfectly well the debt ceiling will be raised. After all, the only thing that really stands in the way is for Republicans to crumble, which they are doing as expected.

House Republicans are rallying behind House Speaker John Boehner’s (R., Ohio) deficit reduction plan, believing that is it their best available option to raise the debt ceiling and cut spending. During a Wednesday morning conference meeting, Boehner told members to “get your ass in line” and support his plan. “This is the bill,” he said. “I can’t do this job unless you’re behind me.” If the bill passes the House, the speaker predicted, Senate Democrats and President Obama would “fold like a cheap suit.”

Notably, Rep. Jim Jordan (R., Ohio), chairman of the Republican Study Committee, opened the meeting by apologizing for a series of e-mails sent by an RSC staffer urging outside groups like Club for Growth and Heritage Action to pressure undecided members to oppose the plan. Rank-and-file members, many of them members of the RSC, were none too pleased to find themselves on the list of targets. There were several calls for the offending staffer to be fired. Much of the meeting was devoted to the controversy, which merely underscores the intra-party tension that has been simmering over the past several weeks.

Meanwhile, however, the opposition bloc led by Jordan appears to be crumbling, as leadership’s message seems to be sinking in. Sources tells NRO that a number of members who were confirmed no votes against the Boehner plan announced during the meeting that they would be voting yes.

I know I’m surprised….

Not quite nobody

I believe I have pointed the connection between reduced government spending and reduced GDP on occasion as well:

The entire premise of the alleged “recovery”, in the words of Ben Bernanke, has been about pumping asset prices. But they won’t remain “pumped” when we take our medicine. They’ll go down.

A lot.

How much? Oh that’s easy – we know for a fact what the minimum contraction will be. It’s right here: That’s about 12% of GDP or about $1.8 trillion dollars. Why? Because GDP is simply defined as “C + I + G + (x – i)”, and “G” is government spending. Decrease it by that 12% of GDP and GDP falls by (at least) 12%. This is simple math – subtraction.

Yes, we need to do this. Yes, people will raise hell. But it will make, at least for a short time, unemployment worse and pain will increase among Americans. We will not buy those iPhones and cable TV and nights out at the bistro, and the follow-on effects cannot be avoided.

The problem with everyone pontificating on this is that nobody – other than I – is talking about what happens when, not if, we take our medicine. See, we must at some point. But as the chart makes clear up above we’ve been in an economic Depression we have refused to admit to for the last three years, just as someone on a monstrous multi-year bender will refuse to admit they’re addicted to some substance.

Of course, Karl is leaving out the so-called “multiplier effect”, for the very good reason that it does not exist despite the Keynesian myth-making. This is probably just as well because if it did, GDP would decrease even more than the 12% contraction in G(overnment spending).

In RGD, I anticipated that the decline in GDP would ultimately approach 35%: Utilizing total credit market debt as a proxy for the relative size of the contractions, I estimate that Great Depression 2.0 will be approximately one-third worse than the Great Depression. This indicates a 35 percent decline in real GDP over a five-year period, indicating a nadir of 9,455 sometime between the end of 2012 and the middle of 2013.

Now, obviously the time frames are off given the reckless decision by the Washington elite to stave off the inevitable declines in total debt outstanding and GDP by the gargantuan increase in Federal borrowing and spending over the last three years. But, once those efforts end, whenever that might be, there is no question that a statistically visible contraction will begin. It is mathematically assured. In light of Karl Denninger’s 12% figure, I think it may be worth noting that the contraction of private debt already amounts to 9.7% of its Q3-2008 peak.

The danger of Wikipedia

The nice thing about Wikipedia is that you can always find a quote for every subject. The dangerous thing about it is that you can easily find yourself applying such quotes incorrectly when you clearly don’t know a damn thing about the subject:

The easy thing now might be to proclaim that debt is evil and ask everyone — consumers, the federal government, state governments — to get thrifty. The pithiest version of that strategy comes from Andrew W. Mellon, the Treasury secretary when the Depression began: “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate,” Mellon said, according to his boss, President Herbert Hoover. “It will purge the rottenness out of the system.”

History, however, has a different verdict. If governments stop spending at the same time that consumers do, the economy can enter a vicious cycle, as it did in Hoover’s day.

The minor point that David Leonhardt omitted from his article is the small fact that Hoover didn’t listen to Mellon. Mellon’s strategy was never enacted. Hoover overrode the objections of his “liquidationist” Secretary of the Treasury and embarked upon a spending program that was increased faster, in percent of GDP, than anything that FDR subsequently did. The failure of Herbert Hoover was not a failure of austerity, it was the same failure of Keynesian interventionism that FDR repeated.

There are 112 comments from the educated readers of the New York Times following the article. Not a single one points out this fundamental error. So, it appears that the old adage about those who refuse to learn from history are doomed to repeat it is more than a little applicable to the present situation.

Cackling while Rome drowns

Miss Coulter appears to be under the extraordinary impression that preemptive surrender is a brilliant political tactic:

Sen. Mitch McConnell, R-Ky., has checkmated the Democrats. He has proposed a bill that will allow Obama to raise the debt ceiling three times, up to $2.4 trillion, over the next 18 months, but only provided Obama proposes equivalent cuts in spending each time. Finally, the Democrats will be forced to pony up spending cuts – or default on the debt and crash the economy.

Contrary to some hysterical Republicans, McConnell’s bill does not forfeit any of Congress’ authority: The House and Senate will still have to decide whether to accept Obama’s proposed cuts when they write their appropriations bills.

But we will finally get some proposed cuts to federal programs from Obama, and not more nonsense about theoretical savings from “investing” in our children’s future with additional spending on Pell grants and prenatal counseling.

McConnell’s deal cleanly takes the debt-ceiling issue off the Republicans’ back and puts it on the president’s back. Either the Democrats tell us what they’ll cut or they’ll have to admit: “We will never cut anything. Everything Ann Coulter says about us is true!”

McConnell’s “schooling” of Obama on the debt ceiling is an epic one and ranks with Chamberlain’s schooling of Hitler at Munich and King Guy’s schooling of Saladin at the Horns of Hattin. Ann has clearly been spending far too much time orbiting around the New York-Washington axis as she has clearly failed to recognize how Americans who are paying attention to the issue, particularly Tea Party Republicans, are going to view the raising of the debt ceiling, not once, not twice, but three times in advance, with about the same degree of favor as neocons would view the US Air Force giving three SLBM-equipped nuclear submarines to Iran.

The idea that anything negative is going to be blamed on the president by his de facto press agency is completely absurd. If recent articles are any indication, they’ll probably just keep blaming Bush and the people who get their news from the news will believe it. It is astonishing that a media star such as Coulter still doesn’t understand that it doesn’t matter what actually happens, because the narrative remains.

Coulter also demonstrates that she knows literally nothing about economics. A failure to raise the debt ceiling will not cause default but it will crash the economy. Spending cuts will also crash the economy. This is because the private economy has already crashed and all that is preventing this from being completely apparent to everyone is all the government spending, 43% of which is presently borrowed.

As I pointed out two years ago in RGD, this crash isn’t something that can be avoided. It was inevitable. It was eminently predictable and it was, in fact, predicted by numerous economic observers. Raising the debt ceiling will only make things worse by digging the hole yet deeper and allowing the extension of the extend-and-pretend strategy. But the strategy is not only logically absurd, we have 21 years of empirical evidence demonstrating that it hasn’t worked in Japan and are now approaching three years of showing that it hasn’t worked in Europe or the USA.

This is why the political considerations to which Coulter is appealing are not only incorrect – and they are incorrect as the public rejects a debt-ceiling increase by 58 to 36 percent, including 38 percent of Democrats – more importantly, they are irrelevant. The only responsible thing, the only relevant thing, that the House Republicans can do is to refuse to accept any deal that raises the debt ceiling for any reason. The economy will crash, this is certain, but the vital point is that until it does, absolutely none of the necessary restructuring can begin to take place.