Thursday, June 30, 2011

Wrecking the Economy For Fun and Profit

Are politicians really gambling on national and global economic collapse?

Sure seems that way, given the Republican House Majority Leader Eric Cantor stormed out of negotiations with Democrats over debt reduction and tax discussions, which stalled the whole compromise plan. But he's also investing $15,000 against U.S. government bonds. If there is another economic crash because of failed budget talks, he'll make large profits.

"Unless an agreement can be reached, the U.S. could begin defaulting on its debt payments on Aug. 2. If that happens and Cantor is still invested in the fund, the value of his holdings would skyrocket.

“If the debt ceiling isn’t raised, investors would start fleeing U.S. Treasuries,” said Matt Koppenheffer, who writes for the investment website the Motley Fool. “Yields would rise, prices would fall, and the Proshares ETF should do very well. It would spike.”

Cantor’s office claims the investment is simply part of a balanced portfolio. I have no evidence to the contrary. It’s hardly a stretch, though, to suggest prominent officials should avoid these kinds of conflicts of interest."

Who will not profit from these games? Just the American public. Oh, and Republicans have been constantly campaigning for re-election by claiming the Democrats and President Obama haven't helped the economy rebound after it was driven into the ditch by greedy, gambling speculators and lousy economic policies.

I have no problem if a politician wants to make a gamble on the issues of policy - except when the goal is wrecking our economy. As Steve Benen writes in an earlier post, rating agencies like Moody's and the S&P, have clearly stated the trouble is just weeks away:

here’s a certain beauty to the GOP’s clinical insanity: they’re eager to impress rating agencies, so they’re pursuing a strategy that would aggravate rating agencies.

Also keep in mind, Moody’s Investors Service — another one of the agencies (GOP Senator) McConnell wants to impress — has said the nation’s AAA U.S. credit rating is at risk of being downgraded by mid-July, long before the deadline, if it looks like failure is even a possibility. In other words, the United States would suffer if it looks like the country might miss a payment on its debt obligations, and since Republicans refuse to even consider reducing the debt with a penny of additional revenue, it’s getting increasingly difficult to see how this game of chicken ends anytime soon."

No comments:

Post a Comment