We are told that failure to raise the debt ceiling will likely precipitate a financial collapse -- surely in the US, with global repercussions likely to follow. There is much uncertainty; even Paul Krugman says
There’s a significant chance that failing to raise the debt limit could provoke a renewed financial crisis
That is, he's worried, but unsure, which strikes me as reasonable. Please follow me below the fold, for an analysis linking default to the shock doctrine, and a take on why the Rethuglicans, and their plutocratic masters, are willing to risk default, even though it would be obviously bad for business
My reasoning is admittedly based on a worst case scenario, but I believe it is supported by the evidence. The key player is a chimerical beast called a bond vigilante -- that is, a mythical class of investor that is supposed to drive up the interest on US Treasury bonds, over concern about the size of our national debt and budget defict.
The so-called serious people have been screeching for months about the attack of the bond vigilantes, which (according to the serious) is only to be prevented by getting our fiscal house in order -- which means reducing the deficit on the backs of the poor and elderly, with no possibility of raising further revenue through taxes on the plutocratic class. But -- the bond vigilante has remained, until now, a myth, a chimera, a virtual unicorn.
Nonetheless -- what better strategy is there, for conjuring these unicorns into actual existence, than a default on the US deficit? Then there would be real evidence of insecurity in US bonds, which would conceivably send interest rates sky-rocketing.
This, in turn, would be used a club --well that's a poor choice of metaphor; let's say a Bowie knife -- with which to eviscerate Social Security and Medicare, not to mention the National Science Foundation and the Centers for Disease Control, and to furthermore privatize public facilities and resources, as is now being proposed in Greece.
In short -- failure to raise the debt limit leads to default, and likely to crisis, which thereby provokes a shock doctrine orgy. The cost to business of a financial collapse is conceivably outweighed by the benefit to plutocrat class, of being able to undo the social progress of the 20th Century in one fell swoop. That, in any case, is how I read the plutocrat calculus.
So where does multi-dimensional chess enter? I believe the President's tepid response to GOP posturing on the debt --his failure to publicly call them out for endangering the entire US economy-- represents less a failure of will than a conscious calculation.
When he convened the catfood commission, he effectively showed his hand on Social Security. Who ever imagined the need to defend that program under a Democratic president? Folding on the extension of the Bush tax cuts was another tell. The man is playing for the corporatist agenda, and has abandoned any thought of truly supporting the common people in this country. By staking out a weak bargaining position, calling for bi-partisanship which he knows will never be forthcoming, and allowing himself to be painted into a corner by Rethuglican intransigence, the president is giving the plutocrats what they want, while still attempting to maintain credibility as the leader of the Democratic Party in this country.
Sorry to have to be so blunt. If anyone sees a good way out of this mess, I'd be more than happy to hear to of it.