De, re "And maybe there will be a pseudo-default, in which case Obama will cite the 14th Amendment as justification to print money and pay bills, and thereby create a Constitutional crisis.
As with everything these days, it will be interesting."
I am wondering what you and others think the dollar and market outcomes will be?
I should think that a failure to extend and pretend will hit the markets, and metals, hard but the dollar itself -- which has been FALLING during this period of uncertainty -- would actually strengthen considerably..at least for a while?
I would expect the same result for a credit downgrade.
We have to be really close now to an end to the dollar's reign as a reserve currency. I have noticed the Canadians are looking at our incompetence with amusement and growing disgust. The may have a bit of their own comeuppance to deal with when their housing markets finally pop but their government and banking system do seem much better managed. I keep thinking of how during the Great Depression America had thousands of banks go bankrupt but Canada had not one. Indeed, I have heard (but not verified, so it could be nonsense) that Canada has never had a bank failure. That's a little hard for me to believe ... so I guess I need to
Oh, here we go: http://en.wikipedia.org/wiki/Banking_in_Canada
According to the Department of Finance, two small regional banks failed in the mid-1980s, the only such failures since 1923, which is the year Home Bank failed. There were no bank failures during the Great Depression compared to 9000+ in the US.
I don't know how Canada is going to deal with its real estate bubble but I seriously doubt it is going to be major problem for its banking integrity... that would be too good a record, too obvious, to mess up.
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