Debt ceiling vultures come home to roost

When you can see a crisis coming, you can find a way to profit: Buy low, sell high 

By Andrew Leonard

This is just embarrassing.
From The Washington Post:

Investors were paying more Wednesday to insure against a loss on U.S. debt than they were to hedge against a default by Turkey, Thailand, the Philippines or the Slovak Republic. The cost was about four times the price for British debt, almost twice the price for Russian debt, and more than double the price for IOUs issued by Panama.

Credit swap gamblers are speculating that the the greatest superpower and biggest economy is more likely to default on its debt than the Philippines. That's impressive.
The surreal nature of the debt ceiling crisis gets more stark by the day, if not the hour. As we hurtle closer and closer to the deadline, no one knows exactly what will happen, but everybody knows something really bad could happen. This is entirely unlike most previous economic crises -- either those that brewed slowly, like oil-shock induced recessions, or those that came fast -- like the post-Lehman Brothers collapse. It's hard to think of anything historically similar: a crisis that is entirely in our power to avoid, but might happen anyway, due to phenomenal political dysfunction. If there's any good news, it's that wiser heads have some time to prepare, but that's small solace.
On Wednesday, the U.S. stock market signaled more nervousness than usual, but on Thursday morning, complacency was back in style. Hard to know what to make of that, since it seems unlikely that investors think the probable passage of the Boehner bill in the House this evening would presage an end to the crisis. Yes, there's already plenty of crowing in right-wing circles, where there seems to be widespread belief that a successful vote on the Boehner bill means total victory for Republicans. But does it really?
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