Josh Eidelson interviews me about the shutdown, default, the Tea Party, and the rot of the American ruling class: “Tea Party’s shutdown lunacy: Avenging the surrender of the South” Josh and I had nothing to do with the headline.
Forgot to include that quote from J.P. Morgan, explaining why he didn’t short stock (who knows if he really did?): “Don’t sell short the United States of America.” Eric Cantor evidently disagrees.
The Wall Street Journal reported the other day (here it is, but it’s behind a paywall) that as of his last disclosure form, House Republican leader Eric Cantor owned shares in a mutual fund that is short long-dated U.S. Treasury bonds. He is, in other words, betting that interest rates will rise, and hoping to make money off the fall in prices that would cause. (For my ancient primer on why bond prices fall when interest rates rise, see here.) Cantor is in a position to help the U.S. default on its… Read More
In the course of a pretty wonky piece on CDOs, Felix Salmon points out that the modern financial environment weakens the political position of creditors. Back in 1975, when New York City was on the verge of default, its bonds were uninsured, and held mostly by the city’s rich and its biggest banks. Both sets of bondholders were relatively few in number and invested in the city’s long-term survival. The creditors were able to come together and speak with one voice to force wage cuts and layoffs on the unions and service cuts… Read More