Was it so important for Wall St to back the Republicans no matter what, that they couldn’t acknowledge the ramifications of failing to increase the debt ceiling?
“One of the worst possibilities that people in the financial industry, like Mr. Lengsfield, have been discussing is that scores of insurance companies, pension funds and mutual funds might be forced to dump their Treasury holdings. Some investors have rules that they cannot hold assets that are rated below AAA. It was this sort of rule that drove the forced selling of mortgage bonds during the financial crisis.”
Perhaps Wall St could have countered Presidential candidate Michele Bachmann’s irresponsible claim that it wasn’t necessary to raise the debt ceiling?
“It isn’t true that the government would default on its debt because, very simply, the treasury secretary can pay the interest on the debt first and then, from there, we have to just prioritize our spending…. It is scare tactics because, Bob, the interest on the debt isn’t any more than 10 percent of what we’re taking in. In fact, it’s less than that. And so the treasury secretary can very simply pay the interest on the debt first, then we’re not in default.”
but Ted Rall gets it: http://www.gocomics.com/tedrall/2011/07/22
