Thursday, December 06, 2012

Forget the 14th Amendment, It's a market issue, stupid!

Well, I was really liking my earlier post highlighting what I believed to be the President's power to sell bonds without Congress consent.

Josh Marshall has blown a hole in my theory the size of Texas. Of course he's right, and I feel a little silly.
The White House has made it equally clear that the President and his advisors do not believe there’s a constitutional rabbit he can pull out of his hat to sidestep the whole issue. In other words, no ‘14th Amendment’ solution in which the President just blows through the debt ceiling and continues to sell bonds. They don’t believe the President has the power. And they also believe it’s not viable in market terms since, remember, .... It’s a market auction. You need people to buy this paper that John Boehner and company will be saying is illegitimate. 
I should have thought of this. I'm feeling really foolish right now.

I still believe the President has the 14th Amendment power to sell bonds to service current debt, but that is moot if there is no market to buy them, and/or the sale does even more damage to the full faith and credit of the United States.

No comments: