Tag Archives: economy

Seeing the Debt Ceiling Fight From the Other Side

by Olesiatd1 Posted on October 16, 2013

Mother Jones

As the debt ceiling fight drags on, we’re seeing more and more reporting about just what it is that motivates tea partiers to be so frenzied on the subjects of Obamacare, the national debt, and government spending in general. Roughly speaking, the conclusion of these pieces of ethnography is that tea partiers have an almost panicky belief in several things:

The growth of the welfare state is sapping the strength of the country as more and more people are allowed to live off the taxes of others.
Obamacare is the tipping point: if it’s allowed to stand, the fight against welfare entitlements is lost.
Likewise, the United States has reached the breaking point on its national debt. If it’s allowed to keep growing, the country is doomed.
Refusing to raise the debt ceiling may be tough medicine, but it needs to done in order to rein in spending right now.

If you believe these things, then you wouldn’t care about polls or charges of hostage taking or any of that. You’d feel like you were literally fighting a war for the future of your country, and anything is worth the cost. Shut down the government. Breach the debt ceiling. Do anything. Just make sure to stop the spending, rein in welfare programs, and stop Obamacare. The fate of the United States literally depends on it.

But there’s more to it. A lot of tea partiers just flatly don’t believe that breaching the debt ceiling is the big deal that liberals are making it out to be. Not only does spending need to be cut anyway, but it’s not even that hard. This is how you get interviews like this one, from Brett LoGiurato of Business Insider. He’s talking to David Biddle, a GOP state committeeman who lives in Rep. Ted Yoho’s Florida district:

“There’s a scare tactic out there that if we breach the debt ceiling and default, there’s just no more money coming in, and that’s just not the case,” Biddle said. “There’s money to be allocated different ways. And maybe you have to make some cuts somewhere that might not make everybody happy, but at some point, you have to say, enough is enough.”

So what can we cut? Social Security? Medicare? Those are the big, long-term problems on our docket.

“No one’s going to cut Social Security or Medicare. That’s another scare tactic,” Biddle said.

So what can we cut now?

“You can start with foreign aid. Cut that out. You can cut, you know, federal arts …” Biddle said.

“There are a lot of grants,” adds Bob Clemons, a director of finance for the local school board.

“Grants. There’s a lot of grants,” Biddle confirms.

There’s a pause for about 10 seconds.

“It’s a big problem,” Clemons said.

“It is. It is,” Biddle said.

Like a lot of people, Biddle simply doesn’t accept that refusing to raise the debt ceiling is a big deal. He thinks there’s plenty of spending that can be cut if we have to. He doesn’t know what, and apparently he doesn’t want to start talking about welfare in front of a reporter from New York, but he knows it’s there. Given all that, what’s wrong with using the debt ceiling as a hostage to force spending cuts or the end of Obamacare? It’s just ordinary leverage, not a threat of financial Armageddon.

For more, read the whole piece. It’s worth a few minutes of your time.

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Seeing the Debt Ceiling Fight From the Other Side

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Economist Mark Zandi on Default: “We Will Be Dooming Our Economy and the Entire Global Economy” for Years

by AMOGabriele Posted on October 15, 2013

Mother Jones

On Monday, I took a shot at Sarah Palin after she wrote, “To suggest that raising the debt limit doesn’t incur more debt is laughably absurd. The very reason why you raise the debt limit is so that you can incur more debt. Otherwise what’s the point?” In a tweet, I noted, “No, you do it so you can pay the debt you accrued.” That is, the government’s debt is not created by the extension of borrowing authority; it is created when Congress establishes entitlements or passes spending bills that require government borrowing. If you sign a tuition contract with a college for your kid and need to take out a loan to cover all or part of it, you assume a debt when you enter into that agreement, not when you go to the bank and ask for an extended line of credit. Put another way, raising the debt ceiling does not change the amount of money the US government owes.

Nevertheless, a mass of conservative trolls rushed to Palin’s defense and howled about my tweet. Looking for further edification on this matter that I could share with the Palinites, I sent her quote to Mark Zandi, the prominent economist who was one of the policy advisers to the McCain-Palin campaign in 2008, and asked him to evaluate it. Zandi, who is now chief economist of Moody’s Analytics, emailed back with a bigger message:

The point is that with each passing day the debt limit is not increased the more damage it will do to our economy. If lawmakers don’t raise the debt limit by November 1, the economy will fall back into recession. If they can’t raise it by the end of November, we will be dooming our economy and the entire global economy to a wrenching economic downturn with implications for years if not decades to come.

Whoa. This is a rather dire prediction, suggesting the very real possibility of global economic catastrophe. While the email doesn’t address Palin’s description of the debt limit, it does undercut her charge that President Barack Obama is shamefully “scaremongering the markets with his talk of default.” More important, Zandi’s note is a reminder that all those tea partiers who have pooh-poohed the consequences of not raising the debt ceiling—including Palin—are risking the country’s future by continuing their always-fervent crusade against Obama.

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Economist Mark Zandi on Default: “We Will Be Dooming Our Economy and the Entire Global Economy” for Years

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Why Harry Reid Fears a Long-Term Shutdown Deal

by pofg23dsacv Posted on October 15, 2013

Mother Jones

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As the week of a possible government default began, talks aimed at ending the shutdown and the debt ceiling crisis revolved around a new wrinkle: the resistance of Senate majority leader Harry Reid and his fellow Senate Democrats to an agreement funding the government for a longer, rather than shorter, period of time. Say what?

Why is kicking the can down the road a couple of months a better option than staving off another government-spending showdown for a half a year, as Republicans prefer? It’s because the Republican plan would lock in for even longer the $1.2 trillion in budget cuts known as sequestration, which went into effect in March and which Democrats really hate.

Democrats want to replace the economy-crimping sequester with a less austere plan that includes more targeted cuts and higher total spending levels. Reid is OK with extending current sequester-level spending—but only until mid-January, so a broader budget deal that includes Democratic priorities can be worked out before deeper spending cuts go into effect. If the House somehow forces a longer term deal, it would be much harder for Reid and Democrats to negotiate a substitute for the sequester, say, six months from now because the fiscal year (which began October 1) would be half over. That would mean that the current deep budget cuts, which have already resulted in the loss of hundreds of thousands of jobs, would likely drag on and on.

Reid does not want a deal that un-shuts the government to prevent him from waging a fight over sequestration. In September, he says, he agreed to a temporary continuing resolution that would keep the US government open for two months at the spending levels dictated by sequestration, and considered that a concession to House Speaker John Boehner and the Republicans. He did so with the expectation that he could still try to undo some of the consequences of sequestration in the 2014 budget. And with the House Republicans now on the ropes in the dual shutdown/debt ceiling crisis, he has seen his leverage increase and has pushed for the chance to wage another battle over sequestration.

As my colleague Tim Murphy and I reported earlier this year, below are some of the sequester’s initial impacts on programs that help struggling Americans. The harmful cutbacks explain why Reid and Democrats desperately want a way out of Sequester Land. (Exact numbers will be different for 2014, because sequestration was not in effect for the entirety of 2013, and Congress could restructure the cuts).

Public housing subsidies: $1.9 billion in cuts hit 125,000 low-income people who lost access to vouchers to help them with their rent. The housing authority in Rochester, New York cut 600 vouchers after losing $2.5 million in funding. In Dubuque, Iowa, new Section 8 housing vouchers were put on hold. And in New Orleans, the housing authority recalled 700 Section 8 vouchers for low-income families.

Foreclosure prevention: 75,000 fewer people received foreclosure prevention, rental, and homeless counseling services.

Educational programs: Learning programs for poor kids saw a total of $2.7 billion in cuts. The $400 million slashed from Head Start, the preschool program for low-income children, meant reduced services for some 70,000 kids. Here’s how that panned out at the local level. The Head Start program in Jefferson County, Alabama closed for 10 weeks, affecting 276 kids. Fifteen staffers were furloughed. In Fayetteville, Arkansas, the Head Start program ended 13 days early. In Eureka, Kansas, the program closed for good.

Title I Funding: The Department of Education’s Title I program, the biggest federal education program in the country, subsidizes schools that serve more than a million disadvantaged students. It was cut by $725 million.

Rural rental assistance: Cuts to the Department of Agriculture resulted in the elimination of rental assistance for 10,000 very low-income rural people, most of whom are single women, elderly, or disabled.

Social Security: Although Social Security payments themselves were not scaled back, cuts to the program resulted in a backlogging of disability claims.

Unemployment benefits: More than 3.8 million people receiving long-term unemployment benefits saw their monthly payments reduced by as much as 9.4 percent, and lost an average of $400 in benefits over their period of joblessness.

Veterans services: The Transition Assistance Program was forced to cut back some of the job search and career services it provides to 150,000 vets a year.

Nutritional Assistance for Women & Children: The government’s main food stamp program is exempt from cuts, but other food programs took a whack. Some 600,000 women and children were cut from the Special Supplemental Nutrition Program for Women, Infants, and Children, which provides nutrition assistance and education.

Special education: $978 million in cuts affected 30.7 million children. For example, because of the scaling back of federal grants to states for students with disabilities, cash-strapped states and districts had to come up with the salaries for thousands of teachers, aides, and staff that serve special-needs kids. In Fort Myers, Florida, the Lee County school district had to lay off 100 employees, including 15 teachers, due to the lack of special education funding.

Job training programs: $37 million was slashed from a job retraining and placement program called Employment Services Operations, and $83 million was cut from Job Corps, which provides low-income kids with jobs and education.

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Why Harry Reid Fears a Long-Term Shutdown Deal

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A Budget Deal Finally Starts to Take Shape

by Susie Quan Posted on October 15, 2013

Mother Jones

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I’ve deliberately avoided posting about all the dueling proposals and counterproposals in the Great Budget Showdown of 2013 because (a) it’s too damn depressing, and (b) you all know where to find Politico if you want to. However, it now appears that we’re getting close to a deal that might actually make it through the Senate:

The latest proposal would reopen the government at current spending levels until Jan. 15 and extend the federal borrowing limit until early February, according to aides familiar with the talks. Lawmakers also would begin longer-term negotiations on the budget, with the task of reaching an agreement by Dec. 13.

….The proposed agreement’s framework included no major alterations to the 2010 health-care law that Mr. Obama championed and congressional Republicans have tried to curtail.

However, lawmakers appeared to be weighing some minor changes, including new procedures to verify the incomes of some people receiving government subsidies for health-insurance costs. Lawmakers also appeared to be considering delaying for a year a fee of $63 per insured person levied on those who offer policies, including employers, unions and insurance carriers.

The way this fig leaf seems to work is that Republicans get the income verification provision and Democrats get a delay of the “belly button tax.” Since this is a genuine deal, not a demand for Democratic concessions in return for nothing, we can all pretend that it’s a completely independent barnacle that just happens to be attached to the rest of the deal. This means that President Obama can sign it while sticking to his promise not to negotiate anything in return for a debt ceiling increase. Everyone wins!

There are, of course, several reasons to remain cautious:

Ted Cruz might decide to filibuster the deal. The odds are probably against it, but you never know.
The House might refuse to vote on it.
Even if it passes, all it does it set everyone up for (appropriately) a Groundhog Day rerun of the whole mess next year. But then again, maybe not. The evidence this time around has been pretty resounding that the public isn’t on the GOP’s side in this fight, and that might convince lot of Republican fence-sitters to nip things in the bud if the tea partiers try to start another hopeless war in February. Right now, public irritation with the budget fight probably hasn’t had any real effect on next year’s midterm elections, but if Republicans do it again and again, it might.

So….that’s where we are. Stay tuned.

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A Budget Deal Finally Starts to Take Shape

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VIDEO: David Corn on Whether or Not Obama Would "Kick the Can"

by Cletus Posted on October 15, 2013

Mother Jones

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Mother Jones DC bureau chief David Corn spoke with MSNBC’s Chris Matthews and the Washington Post‘s Jonathan Capehart this week about the whether or not President Obama would be wise to accept a six-week debt limit extension. Watch here:

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VIDEO: David Corn on Whether or Not Obama Would "Kick the Can"

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In Shutdown and Debt Ceiling Showdown, GOPers Ignore Their Party’s Own Advice

by AnnaBest Posted on October 14, 2013

Mother Jones

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In March, the Republican Party released a 97-page report on its future prospects that chairman Reince Priebus had commissioned following the 2012 election. The party called the study its Growth and Opportunity Project report, but most members of the politerati referred to it as an autopsy. The hard-hitting study—authored by Henry Barbour, the nephew of former Mississippi Governor Haley Barbour, former Bush II press secretary Ari Fleischer, and a few other prominent GOPers—fingered what had gone wrong for the Rs and provided a roadmap for the coming years. But the party’s recent excursion into the government shutdown/debt ceiling quagmire shows that few members of its national wing absorbed the lessons the party’s coroners had assembled.

After convening in-depth focus groups of voters in Iowa and Ohio who used to call themselves Republicans, polling Republican Hispanic voters, consulting assorted pollsters, and surveying political practitioners at the local and national level, the group made some obvious conclusions. Noting the nation’s changing demographics, it maintained that the GOP had to reassess its relationship with Latinos: “If Hispanic Americans perceive that a GOP nominee or candidate does not want them in the United States (i.e. self-deportation), they will not pay attention to our next sentence.” Ditto concerning young voters: “A post-election survey of voters ages 18-29 in the battleground states of Virginia, Ohio, Florida, and Colorado found that Republicans have an almost 1:2 favorable/unfavorable rating. Democrats have an almost 2:1 favorable rating.” And the members of the GOP’s morgue brigade asserted that GOP governors had been doing a better job in promoting a positive image of the party than congressional Republicans. The party’s “messaging,” they observed, was hurting it.

Clearly, this point has been ignored by the Republicans who have pushed the party toward a government shutdown and a possible default. (Ted Cruz, this means you.) As Republican leaders on Capitol Hill—read: Senate minority leader Mitch McConnell—scurry to prevent a tea party-caused default if the debt ceiling is not lifted later this week, here’s a look at five key passages of the report that have gone unheeded by the Republican radicals in the House and Senate who have positioned the GOP as the party of hostage-taking.

THEN: “The GOP today is a tale of two parties. One of them, the gubernatorial wing, is growing and successful. The other, the federal wing, is increasingly marginalizing itself, and unless changes are made, it will be increasingly difficult for Republicans to win another presidential election in the near future….Public perception of the Party is at record lows.”

NOW: Since the report came out, these record lows have become lower. Last week, Gallup reported that the Republican Party was viewed favorably by only 28 percent of Americans, down 10 points from the previous month. The polling company noted, “This is the lowest favorable rating measured for either party since Gallup began asking the question in 1992.”

THEN: “At the federal level, much of what Republicans are doing is not working beyond the core constituencies that make up the Party.”

NOW: While tea partiers have cheered on Cruz and House Republicans who have demanded ransom for funding the government or preventing default—be it thwarting Obamacare or insisting on more spending cuts—this strategy has not played well with the general public. A recent NBC News/Wall Street Journal poll found that only 24 percent approve of the performance of Republicans in Congress and 70 percent disapprove. (Democrats had a 36/59-percent split.)

THEN: “The Republican Party needs to stop talking to itself. We have become expert in how to provide ideological reinforcement to like-minded people, but devastatingly we have lost the ability to be persuasive with, or welcoming to, those who do not agree with us on every issue.

Instead of driving around in circles on an ideological cul-de-sac, we need a Party whose brand of conservatism invites and inspires new people to visit us. We need to remain America’s conservative alternative to big-government, redistribution-to-extremes liberalism, while building a route into our Party that a non-traditional Republican will want to travel. Our standard should not be universal purity; it should be a more welcoming conservatism.”

NOW: The shutdown was pursued by the Republicans who consider themselves conservative purists—and who have been supported and encouraged by outside groups seeking more conservative purity within the GOP. This political crisis occurred because a faction of the GOP in Congress was reinforced by far-right activists and advocates.

THEN: “Our job as Republicans is to champion private growth so people will not turn to the government in the first place. But we must make sure that the government works for those truly in need, helping them so they can quickly get back on their feet. We should be driven by reform, eliminating, and fixing what is broken, while making sure the government’s safety net is a trampoline, not a trap.

As Ada Fisher, the Republican National Committeewoman from North Carolina, told us, ‘There are some people who need the government.'”

NOW: In recent weeks, several congressional Republicans pressing for a shutdown and for leveraging the debt ceiling have celebrated the shutdown and given the impression they see government as the enemy. That NBC News/Wall Street Journal poll reported that 52 percent of Americans believe government “should do more to solve problems and help meet the needs of people.” Forty-four percent said government “is doing too many things better left to businesses and individuals.”

THEN: “As part of the Growth and Opportunity Project’s effort, focus groups were conducted in Columbus, Ohio, and Des Moines, Iowa, to listen to voters who used to consider themselves Republicans. These are voters who recently left the Party.

Asked to describe Republicans, they said that the Party is ‘scary,’ ‘narrow minded,’ and ‘out of touch’ and that we were a Party of ‘stuffy old men.’ This is consistent with the findings of other post-election surveys.”

NOW: In the NBC/Wall Street Journal poll, 53 percent blamed the GOPers for the shutdown. (Only 31 percent pointed the finger at Obama.) Seventy percent said they believed the Republicans were “putting their own political agenda ahead of what is good for the country.” Given that most respondents believed the shutdown was causing harm to the nation, it’s a fair bet that the actions of the GOP are seen by many as “narrow minded” or “out of touch.”

When the GOP autopsy was released seven months ago, conservatives—especially those who oppose immigration reform—howled that Priebus and establishment Republicans (including Karl Rove) were trying to neuter right-wingers and dilute the core ideology of the Grand Old Party. But it turns out they had little reason to worry. The report that Priebus hailed at the time—and its primary message about messaging: Don’t let extremists drive our bus—has had no discernible impact on House Speaker John Boehner, the tea partiers in his House Republican caucus, Sens. Cruz (R-Tex.), Mike Lee (R-Utah), and Rand Paul (R-Ken.), and other GOPers who have pressed for ideologically-fueled conflict. Yet given that the current polls show Republicans have fallen deeper into the Mariana Trench of public opinion, it seems that the morticians were right. It’s too bad for them that their autopsy turned out to be DOA.

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In Shutdown and Debt Ceiling Showdown, GOPers Ignore Their Party’s Own Advice

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Why Residents of Disaster-Prone Areas Don’t Move

by Olesiacei Posted on October 14, 2013

Mother Jones

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This story first appeared on the Atlantic Cities website and is reproduced here as part of the Climate Desk collaboration.

When disaster strikes the same place twice, distant observers can be left scratching their heads, wondering why residents of high-risk areas return, again and again, to rebuild. Whether it’s the Lower Ninth Ward in New Orleans, the communities along Tornado Alley, or low-lying coastal areas in the Sandy-affected region, it might seem like an easy solution to pick up and move away—to people who don’t actually live in those places.

But the reality is that no word inflames more than “retreat”—as in moving people, even whole towns, away from danger. And altering landscapes to ward off danger from climate change can run afoul of heartfelt and robust interests. Besides their economic investments, people and organizations have all sorts of sunk costs in local communities. “Retreat”—and even more modest alternatives—arouses significant resistance.

Ensuring more resilient communities in the future will require us to find ways to make adaptations more palatable to more people, in part by considering local concerns in the design of resilient infrastructure.

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Why Residents of Disaster-Prone Areas Don’t Move

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Could This 2013 Nobel Laureate Afford College Today?

by dla@kk2.pl Posted on October 11, 2013

Mother Jones

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Climate Desk has launched a new science podcast, Inquiring Minds, cohosted by contributing writer Chris Mooney and neuroscientist and musician Indre Viskontas. To subscribe via iTunes, click here. You can also follow the show on Twitter at @inquiringshow, and like us on Facebook.

When Randy Schekman attended the University of California-Los Angeles in the late 1960s, getting a good college education was unimaginably cheap. Student fees were just a few hundred dollars; room and board was a few hundred more. “I could work a summer job and pay myself for the whole school year,” says Schekman, now a cell biologist at the University of California-Berkeley.

On Monday, Schekman was awarded the Nobel Prize in medicine for his pioneering research on how cells transport proteins to other cells—a process fundamental to cellular communication.

Schekman’s college experience at UCLA, from which he graduated with a degree in molecular sciences in 1971, shifted him from wanting to pursue a career as a medical doctor to a fascination with scientific research. It was pivotal to his success—in science, the ultimate success. That’s why it’s so striking to hear Schekman say that as a Nobelist, he now wants to use his newfound influence to stand up for publicly funded higher education, which he considers to be “really in peril all over the country.”

In this episode of Inquiring Minds (click above to stream audio), Schekman explains that his dad, a middle-class father of five, “never had to pay virtually anything to educate his kids. That simply isn’t possible now, and it’s just tragic that this happened.” The numbers are staggering, particularly within Schekman’s own state of California. For example:

Tuition increased by 72 percent from 2008 to 2013, according to the Center on Budget and Policy Priorities.
According to a report last year by the San Jose Mercury News, a student from a middle-income California family would pay thousands of dollars more more to attend Cal State East Bay than to attend Harvard (after financial aid).
On an inflation-adjusted, per student basis, state funding of the University of California system declined by 40 percent from 1990-1991 to 2007-2008, according to the Stanford Public Policy Institute. And then another 28 percent decline ensued over the next several years. A new California budget agreement devotes more money to higher education, but does not bring it back to 2007-08 levels, according to the California Budget Project.

Maggie Severns

Those kinds of numbers trouble Schekman deeply. “If I have a little more influence this week than I had last week, I intend to use that,” Schekman says.

Schekman was recognized last week by the Nobel Committee, along with two other researchers, James E. Rothman and Thomas C. Sudhof, for research decoding how cells manage what you might call “traffic”: the complex flow of proteins, both inside and outside of their cell membranes. This is very basic research: Schekman did his most influential work on a unicellular organism, Baker’s yeast, uncovering genetic mutations that can affect the organism’s ability to secrete or release some of the proteins it has manufactured.

Retro Science: A figure from Schekman’s breakthrough 1979 paper, showing how vessicles—the sacs used to transport proteins in and out of cells—accumulate in mutant yeast cells. A and B show normal cells, while C, D, and E show mutations that markedly increase the number of vessicles (Ve) in the cell. Novik, P, Schekman, R: “Secretion and cell-surface growth are blocked in a temperature-sensitive mutant of Saccharomyces cerevisiae.” Proc Natl Acad Sci USA 1979, 76: 1858-1862.

This turned out to be the first step in defining a “secretory pathway,” regulating how the proteins created in cells are moved out of them, thereby allowing cells to communicate with one another. The science has large medical implications: The Nobel committee cited examples including diabetes and immune disorders and neurological diseases, all of which can result from faulty cellular transport processes.

The Nobel Committee’s recognition of this type of research takes on a much larger symbolic meaning today than it might have had in prior years: The government shutdown and the sequester have hit science labs hard across the country, halting research and stagnating progress. More generally, without obvious applications like developing vaccines or curing diseases, basic biological research has often taken a back seat in funding and attention. Yet clearly, the Nobel Prize committee begs to differ. All three science prizes announced this week have gone to researchers whose contributions are on quite fundamental science topics: cell signaling and transport, the elusive Higgs boson, and computer models of chemical reactions.

“The virtue of the Nobel is that more often than not, it celebrates basic science,” says Schekman.

On Inquiring Minds, then, Schekman in effect is making two closely related arguments: We need to restore public support for our universities, to help keep college affordable—and we need public support of very basic research, because it generates the baseline knowledge that, in turn, engenders new innovations and cures in private industry. Yet instead, we’re watching college students grow indebted, and scientists scramble as their funding becomes tightly constricted.

Maggie Severns

No wonder Schekman’s “passion about public higher education,” as he puts it, is so strong: He sees that it got him to where he is, and he wonders whether middle-class kids today will get the same chance. “I’ve come to realize how crucial to my life having that access to public higher education has been, for what I’ve done,” he says.

And the problem today, he says, is “not just in California, it’s in every state that has offered public higher education. We’ve gone away from that principle, and to the extent that I have any influence, I want to claw our way back.”

You can listen to the full interview with Randy Schekman here:

This episode of Inquiring Minds also features a discussion of the scientific accuracy of the new hit sci-fi film Gravity, and a controversy over the Nobel Prize in physics.

To catch future shows right when they release, subscribe to Inquiring Minds via iTunes. You can also follow the show on Twitter at @inquiringshow and like us on Facebook.

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Could This 2013 Nobel Laureate Afford College Today?

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Here’s Who Profits If the Government Defaults

by Alexander Wood Posted on October 11, 2013

Mother Jones

If House Republicans don’t agree to raise the nation’s debt ceiling and a default ensues, the economic effects would be “catastrophic,” in the words of Treasury Secretary Jack Lew. The nation’s borrowing costs would spike, as would interest rates for average Americans, and the stock market would plummet. But not everyone will lose if a default causes an economic catastrophe. Here’s who could profit from a financial calamity:

1. Short sellers: Most folks invest in stocks and bonds hoping the value of their investments will increase. But there’s also money to be made by short selling—betting that the value of a stock or bond will drop. Short selling is an investment strategy that’s typically employed by sophisticated investors and financial firms, but technically anyone can do it. Investors who bet that the value of US Treasury securities will dip would likely profit. Because a default could cause the US stock market to crash, shorting almost any US stock could make you money. In fact, you can even invest in specific mutual funds that specialize in short selling. “It’s a very powerful and disillusioning feeling to know that smart rich people can make money even when America goes over Niagara Falls in a barrel,” says Jeff Connaughton, a former investment banker and White House lawyer during the Clinton administration.

2. Investors in gold and silver: Gold and silver typically rise in value when when the stock market is volatile, because they hold their value better than paper money or other assets. The price of both metals rose this week as default fears heightened.

3. Bitcoin investors (maybe): The value of this untraceable virtual currency has tracked closely with gold over the past year, suggesting that it could serve as a more stable investment during a financial crisis.

4. Currency traders: Traders who bet that the US dollar will decrease in value relative to foreign currencies stand to profit off of a US government default.

5. Pawn shops: If the effects of a default are catastrophic, stocks will plummet, pension funds could dry up, credit card interest rates will rise, and jobs will be lost. Though credit markets may freeze up, as they did in the wake of the 2008 meltdown, pawn shops ought to do well, as they did following the last crisis.

6. Bankruptcy lawyers: See above.

7. Mortgage servicers: Mortgage rates typically rise and fall along with Treasury rates. If a default causes a spike in interest rates, home owners could see their monthly mortgage bills soar, causing some homeowners to default on their loans and wind up in foreclosure. You’d think this would be bad news for all parties involved—families, lenders, investors, mortgage servicers. But the latter actually turn a good profit by foreclosing on people; investors take the losses, while servicers make back all the money they’re owed in a foreclosure sale, plus all sorts of fees borrowers have to pay on their delinquent loans.

8. The canned and freeze-dried food industries: Doomsday preppers are already getting ready for the collapse of civilization that could result from a financial meltdown by stocking up on pork and beans and freeze-dried meals.

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Here’s Who Profits If the Government Defaults

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How Many Republicans Will Vote to Confirm Janet Yellen?

by y0afvun Posted on October 10, 2013

Mother Jones

It’s time for a pool. There are currently 46 Republicans in the Senate. How many of them do you think will vote to confirm Janet Yellen as chairman of the Fed? Keep in mind that there isn’t even a ghost of a reason to vote against her.

I’ll go with 13. Not for any particular reason. Just because. Leave your guess in comments.

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How Many Republicans Will Vote to Confirm Janet Yellen?

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