Facts matter: Sign up for the free Mother Jones Daily newsletter. Support our nonprofit reporting. Subscribe to our print magazine.


THE TIPPING POINT….Should the stimulus bill have been even bigger?  Tyler Cowen lists several reasons to be cautious on this score, including this:

5. Many on the left are boasting that the U.S. government could borrow lots more (look at the current T-Bill rate), forgetting they used to warn us that international capital flows, as amplified through noise traders and speculators, mean that crises can arrive in a single, whiplash moment, bringing countries from riches to rags virtually overnight.  Somehow those old narratives are being forgotten, I wonder why.

We have essentially replaced a risk bubble with a safety bubble.  And there are lots of good reasons to think that this bubble, which manifests itself as an almost bottomless demand for U.S. treasuries, will continue for a long time.  But a long time isn’t forever, and we’re planning to sell upwards of $3 trillion in treasuries over the next 30 months.  So when will the tipping point come?  After $1 trillion?  $2 trillion?  Never?  I hope the answer is never, but if the past couple of years has taught us anything, it’s that we don’t know — and that never is probably the least likely answer.  And when the market does turn on us, it’s going to turn ferociously and without notice.  I sure hope Geithner and Summers and the rest of the crew are prepared for this, because the odds are that we’re going to be paying for the profligacy of the Bush administration for a long time to come.

THE END...

of our fiscal year is Thursday, June 30, and we have a much larger fundraising gap than we can easily manage with only days left to go.

Right now is no time to come up short: If you value the hard-hitting, democracy-protecting, justice-advancing journalism you get from Mother Jones, please help us keep charging as hard as we possibly can with a much-needed and much-appreciated donation today.

payment methods

THE END...

of our fiscal year is Thursday, June 30, and we have a much larger fundraising gap than we can easily manage with only days left to go.

Right now is no time to come up short: If you value the hard-hitting, democracy-protecting, justice-advancing journalism you get from Mother Jones, please help us keep charging as hard as we possibly can with a much-needed and much-appreciated donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate