@ctrl @SteveRoth i’m a long time finance guy…
@ctrl @SteveRoth no, it doesn’t, because because face value can be arbitrary small. zero-face consols are simplest to talk about, but if we’re going to argue that the market will view constraint on the maturity mix as somehow equivalent to default (a bit absurd in my view, but ok), then we can consider low face value bonds of any maturity.
@ctrl @SteveRoth the market looks through differences in legal formalities to economic substance. and low-face-value bonds are substantively stronger than the existing mix, precisely because debt ceiling risks are obviated.
@ctrl @SteveRoth no, because you can simulate in substance a treasury issue of any maturity as a premium bond, with no or if there is some constraint arbitrarily low face value. we’d have to get over some novelty, but a world of low-face value bonds needn’t constrain the economic substance of Treasury issues at all.
@tri_becca90 it makes no sense but please do ❤️
@SteveRoth @mafeesh @pluralistic yeah. i think this is the right frame.
@ctrl @SteveRoth it ends any uncertainty. consols are legal, we’ve issued them before. the debt ceiling computation is specific, it only applies to face value. 1/
@ctrl @SteveRoth over a short term, there’s risk that the Supreme Court disregards all that and adopts a kind of nonconstitutional debt-ceiling primacy doctrine to invalidate them. someone will undoubtedly try to claim standing to sue. but then the Court will face the prospect of using tortured logic to force a US default on already marketed instruments or not. 2/
@ctrl @SteveRoth Once it does not, whether by punting on standing or acknowledging the plain language of statute, these just become another US Treasury product, but one that means the debt ceiling can’t be used extortionately anymore, the worst it can do is constrain the product mix Treasury issues a bit. /fin
@ctrl @SteveRoth why? you think the market cares about face value? you think it values the debt ceiling, and would insist a ceiling that binds be restored? it’s trivial to price premium bonds, no sweat for traders to deal with.
@ctrl @SteveRoth they can be sold any time, and if without face value (as is typical for consols) in any amount without adding to the ceiling-limited debt. so the debt ceiling basically ceases to bind, it can always be circumvented.
“The greatest monsters of history —men like Andrew Carnegie, JP Rockefeller, Henry Ford and Andrew Mellon — lived lives of cruel mass-exploitation, only to rehabilitate their reputations at the ends of their lives, or posthumously, by endowing charitable foundations that do genuinely good works, while plastering those monsters’ names on every tangible expression of those works. Our modern crop of monsters are pursuing the same path” @pluralistic https://doctorow.medium.com/rich-peoples-gain-is-worth-less-than-poor-people-s-pain-6c3631292841 ht @SteveRoth
@ctrl @SteveRoth but this would resolve the debt ceiling permanently, potentially removing something from the general term premium, not just from the short-term spread that appears during crises. i don’t know how much of the term premium is explained by debt ceiling risk, maybe not much, but directionally you’d expect some compression.
@MadMadMadMadRN @lori @Alon @ddayen an interesting conjecture!
@allafarce @w7voa welcome to the club i’ve spent my life fleeing. you can check out any time you like…
no one reads press releases, but i suspect fascist provocateurs will use this as proof of the alliance they proclaim is eternal between corrupt elites and jews, and peddle it to the large audience already convinced Biden is the archetype of corrupt elite.
netanyahu made israel a right-partisan issue in the US. i fear this helps make jews’ civil rights a left-partisan issue.
@lori @Alon @MadMadMadMadRN @ddayen we could have unions that embraced a soludarity ethos across age cohorts! sometimes tradeoffs are avoidable.
@allafarce @w7voa maybe? but as a member of the singled out class, i viscerally dislike this and think it renders more rather than less likely my future persecution.
@allafarce @w7voa (to much of the public, whatever “the Biden regime” protects or embraces must surely be a corrupt and corrupting enemy of real americans. and they’re primed for this one.)
@ctrl @SteveRoth i’d expect a premium to compensate for the risk the Supreme Court invalidates the bonds and the timeframe of any retroactive authorization proves prolonged. i’m not sure why there would be any premium at all once that’s taken off the table. as @SteveRoth suggests the whole curve might tighten as the risk of debt-ceiling provoked defaults is eliminated.
when the problem is a group is being singled out for persecution, singling them out for protection may be counterproductive. it reinforces the singling out. https://www.whitehouse.gov/briefing-room/statements-releases/2023/05/25/fact-sheet-biden-harris-administration-releases-first-ever-u-s-national-strategy-to-counter-antisemitism/ ht @w7voa
@SteveRoth @djc ha! i had no idea!
@MadMadMadMadRN @Alon @ddayen it’s US rentism in miniature, success deriving from zero-sum transfer from a less powerful to a more powerful group.
@MadMadMadMadRN @Alon @ddayen (then once union contracts started accepting shitty terms for new hires while grandfathering existing workers into better terms — that was a real betrayal of the ethos of solidarity that undergirds strong unions.)