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The Bush Memorial Debt is largely irrelevant to the issue at hand. Bush's deficit affected in the main the federal debt, not the US national debt, which is run up due to your structural current accounts deficit. Which has been one of the most bipartisan efforts on record.

China could hurt the US, and a couple of oil states could hurt the US. But the oil states are American clients and with China the debt is the tail, not the dog. The dog is the Chinese ForEx policy, which wouldn't be materially altered by a debt writedown.

And anyway, if foreign creditors need to be bailed out in order to maintain sound foreign relations (a case can be made for that), then all he has to do is ask Congress for funds for that. It would have been cheaper than TARP and QE.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Dec 20th, 2009 at 02:45:57 PM EST
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