It looked for a nano-second as though we were ending the week with the US heading towards some sort of a workout on the debt ceiling and the European statement of intent enough to correct the market's near term peripheral vision.
What we hadn't counted on was just how completely and utterly stupid the Republicans could be and the market has swiftly moved from "they couldn't" status to "Jeez, they couldn't, could they????". TMM still cannot believe that they will let the US go over the edge, but they have stood at the rails at the top of some very high buildings in their time and the view down from this one is even more vertigo-inducing. Staring down this is what TMM see.
The year 2040 -
- Daddy, why do we hate the politicians so?
- Good question, son. You see, back in 2011 we had something called the debt ceiling that was not raised by a group of people. They did it for fun and also to engage in some futile meaningless political signalling exercise. This resulted in global confidence in the old USA collapsing and a sudden need for introversion, as we couldn't rely on the rest of the world funding our lifestyles any longer. Of course, this in turn led to massive internal stresses, which boiled over with the commodity rebellions tearing the old land in half. It was only when the Iraqi peacekeepers arrived that order was restored. Shortly thereafter, the head of the CIA took the country over in a coup which proved that those crazy hippie professors like Noam Chomsky were right after all about the black helicopters bringing the end of America. As it turned out, they were more the end of the end and the beginning of something new.
- Wow, Dad, I bet the politicians that caused all that were in big trouble?
- Well of course, son. When it all fell apart it didn't take long for them to realise the game was up and, rather than garnering more votes, their actions had alienated them from the rest of society. Most of them escaped and hid in the woods. A few, like Nancy Pelosi, found sanctuary in the basements and attics of collaborators, but were swiftly rounded up and sent to special labor camps, where they were encouraged to actually contribute to society. You've probably read the Barney Frank Diaries in school?
What followed was the Petraeus regime, which ruled for a decade and resulted in an economic program that would make Pinochet proud and a purge that would, errr, also make Pinochet proud. The US really needed its Pinochet moment, and as you all learn in school and commemorate on Pinochet Petraeus Day, it's not so much the purge, but the need for a government with a strong mandate and technocratic utilitarian leanings that is important. Weirdly, much like Germany in the run up to WW2, a common enemy made for strange bedfellows and "free-lunch" democrats and "tax cuts without spending cuts" republicans rallied around their belief in a free lunch.
However, the Petraeus economic program managed to turn the USA around. It did nothing to impinge on intellectual freedoms, but did mercilessly go after the main causes of the low level of US competitiveness and the budget condition. To deal with healthcare costs Petraeus surprised everyone, including the Brooklyn hipsters, by putting in place bike paths in many metro areas and raising revenues by enacting congestion charging. Aging Tea Party members were forced to get out of their SUVs and do some exercise, while the government nationalized healthcare and proceeded to brutally cram down Pfizer and others.
Petraeus, of course, also knew a thing or two about wars and realized that Defense and Energy policies were one and the same thing. The CAFE fuel economy standards went up as quickly as the US could get out of the Middle East (which, of course, led to the Great Middle Eastern War and the poisoning of the whole region; which is why it is now so lightly populated). It was around that time that Nevada got its name "The Black State" due to it being literally covered with solar panels.
Meanwhile agriculture was handled well by the man in charge, Jeremy Grantham, who restored the US to an incredible agricultural productivity and sustainability just as the rest of the world's agricultural Ponzi scheme unravelled. That is why the population of the US is the same as India today.
- So, Daddy, sounds like it wasn't a bad outcome after all? Shouldn't we thank the politicians of 2011 for behaving like that collection of puppets Grandpa gave you?
- Oh, them? Yes, I see what you mean.
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