(no subject)

[randomness]

"[E]very person in this country of super-asinine propensities, everyone who hates social progress and loves deflation, feels that his hour has come and triumphantly announces how, by refraining from every form of economic activity, we can all become prosperous again.” --John Maynard Keynes, reacting to the British emergency budget of September 1931, quoted by his biographer Lord Skidelsky in the Financial Times.

via a post in Prof. Brad DeLong's blog

Comments

[r-ness.livejournal.com]

It's even worse than that for the Europeans. Right now, flight to quality helps the Americans, because the dollar is still the world's reserve currency, and one of the two favorite safe haven currencies in the world. So whenever there's uncertainty, people buy Treasuries.

Likely, this means that the US can borrow for even longer than it would if the credit markets were simply trading on belief that America will pay its debts; they're also trading on fear that no one else will.

This sort of thing goes on for a while until there's an abrupt break. You don't want to be holding anyone's IOUs then.

(There are a couple of other, probably equally unfair reasons for America being able to get away with this for longer than anyone else, but this comment is getting long.)

[achinhibitor.livejournal.com]

they're also trading on fear that no one else will.

Bwahahahaha!

This sort of thing goes on for a while until there's an abrupt break.

One feature of modern finance is that it gives one an incredible amount of rope with which to hang one's self, on very easy terms, before the rope jerks taut with remarkable speed.