One thing that made the late seventies more bearable was Douglas Adams’ Hitchhikers Guide to the Galaxy – the new BBC absurdist radio serial, a bit of humorous existential science fiction. Think Jean-Paul Sartre with a wicked sense of humor, or Samuel Beckett without the despair. The whole tale hinged on a race of hyper-intelligent pan-dimensional beings who built a computer named Deep Thought to calculate the Answer to the Ultimate Question of Life, the Universe, and Everything. The answer turned out to be forty-two.
That’s it? No one knew what to make of that, but after ten million years of massive computer calculations that seemed to be the answer. What was the question again? That massive supercomputer, Deep Thought, had built another giant separate computer to do those ten million years of massive calculations – Earth, the planet and everything on it – that was the computer. The computer operators were a number of tiny white mice – actually hyper-intelligent pan-dimensional beings which only looked like mice, because that was convenient. We thought we were experimenting on them. They were experimenting on us. We had no clue.
Of course this was playful nonsense, and when the everyman-hero of the tale, Arthur Dent, comes to realize that everything he thought about life, and what we do with it, and what it all means, was completely wrong, he finally gets it:
“All through my life I’ve had this strange unaccountable feeling that something was going on in the world, something big, even sinister, and no one would tell me what it was.”
“No,” said the old man, “that’s just perfectly normal paranoia. Everyone in the Universe has that.”
That’s good to know. Everyone gets that strange unaccountable feeling that something is going on in the world, something big, even sinister, and no one will tell you what it is – and everyone is probably right, or maybe not. They’ll never know. You’ll never know. Does it matter?
And that leads to this exchange:
“The chances of finding out what’s really going on in the universe are so remote the only thing to do is hang the sense of it and keep yourself occupied. I’d far rather be happy than right any day.”
“And are you?”
“No, that’s where it all falls down, of course.”
There’s a reason that this obscure radio drama expanded into a television series, a series of novels, and then a 2005 feature film – Martin Freeman plays the bewildered Arthur Dent trying to make sense of it all, pretty much as he played Bilbo Baggins in the last three Peter Jackson Hobbit movies. He is us. The good-hearted and well-intentioned everyman is swept up in events that have nothing to do with him, and something sinister may be going on, and the task is to make sense of it all and rise to the occasion – or hang the sense of it and just keep yourself occupied – putter about in the garden or something. That could make you happy. But of course it won’t. We all want to make sense of it all. Douglas Adams showed that the joke was on us.
And now the joke is on America. How are we to make sense of him? Is the answer forty-two? That may be as good an answer as any, as we are facing the absurd:
After assuring Americans he is not running for president “to make things unstable for the country,” the presumptive Republican nominee, Donald J. Trump, suggested that he might reduce the national debt by persuading creditors to accept something less than full payment.
Asked on Thursday whether the United States needed to pay its debts in full, or whether he could negotiate a partial repayment, Mr. Trump told the cable network CNBC, “I would borrow, knowing that if the economy crashed, you could make a deal.”
He added, “And if the economy was good, it was good. So, therefore, you can’t lose.”
Such remarks by a major presidential candidate have no modern precedent. The United States government is able to borrow money at very low interest rates because Treasury securities are regarded as a safe investment, and any cracks in investor confidence have a long history of costing American taxpayers a lot of money.
Experts also described Mr. Trump’s proposal as fanciful, saying there was no reason to think America’s creditors would accept anything less than 100 cents on the dollar, regardless of Mr. Trump’s deal-making prowess.
“No one on the other side would pick up the phone if the secretary of the U.S. Treasury tried to make that call,” said Lou Crandall, chief economist at Wrightson ICAP. “Why should they? They have a contract” requiring payment in full.
There seems to be a misunderstanding here:
Repurchasing debt is a fairly common tactic in the corporate world, but it only works if the debt is trading at a discount. If creditors think they are going to get 80 cents for every dollar they are owed, they may be overjoyed to get 90 cents. Mr. Trump’s companies had sometimes been able to retire debt at a discount because creditors feared they might default.
But Mr. Trump’s statement might show the limits of translating his business acumen into the world of government finance. The United States simply cannot pursue a similar strategy. The government runs an annual deficit, so it must borrow to retire existing debt. Any measures that would reduce the value of the existing debt, making it cheaper to repurchase, would increase the cost of issuing new debt. Such a threat also could undermine the stability of global financial markets.
In 1979, for example, what the government described as “bookkeeping problems” temporarily delayed $120 million in interest payments. In the aftermath of the delay, investors pushed up interest rates on Treasuries by about 0.6 percentage points, according to a 1989 study by Terry L. Zivney of the University of Tennessee at Chattanooga, and Richard D. Marcus of the University of Wisconsin-Milwaukee. That cost taxpayers roughly $12 billion.
In 2011, federal borrowing costs climbed as congressional Republicans refused for a time to increase the federal government’s statutory borrowing limit, raising doubts about the government’s ability to repay its debts. The Bipartisan Policy Center calculated that the higher rates will cost taxpayers about $19 billion.
Is that too dry? Matthew Yglesias makes it simple:
With his statement, Trump not only revealed a dangerous ignorance about the operation of the national monetary system and the global economic order, but also offered a brilliant case study in the profound risks of attempting to apply the logic of a private business enterprise to the task of running the United States of America.
Okay, the business world:
Trump is a businessman, and in terms of thinking like a businessman his idea makes sense. The interest rate that investors currently charge the United States in order to borrow money is very low. A smart business strategy under those circumstances would be to borrow a bunch of money and undertake a bunch of big investment projects that are somewhat risky but judged to possibly have a huge payoff.
You now have two possible scenarios.
In one scenario, the investments work out and you make a ton of money. In that case, you can easily pay back the loan and everyone wins.
In another scenario, the investments don’t work out and you don’t make much money. In that case, you objectively can’t pay back the loan. You either work out a deal with the people you owe money to, in which they accept less than 100 percent of what you owe them (this is called a “haircut”) or else you go to bankruptcy court and a judge will force them to accept less than 100 percent.
This is how businesspeople think – especially those who work in capital-intensive industries like real estate. And for good reason. This is the right way to run a real estate company.
The other world:
The United States of America, however, is not a real estate development company. If a real estate company defaults on its debts and its creditors lose money, that’s their problem. If a bank fails as a result, then it’s the FDIC’s responsibility to clean it up.
The government doesn’t work like that. Right now, people and companies all around the world treat US government bonds as the least risky financial asset in the universe. If the government defaults and banks fail as a result, the government needs to clean up the mess. And if risk-free federal bonds turn out to be risky, then every other financial asset becomes riskier. The interest rate charged on state and local government debt, on corporate debt, and on home loans will spike. Savings will evaporate, and liquidity will vanish as everyone tries to hold on to their cash until they can figure out what’s going on.
Every assessment of risk in the financial system is based on the idea that the least risky thing is lending money to the federal government. If that turns out to be much riskier than previously thought, then everything else becomes much riskier too. Business investment will collapse, state and local finances will be crushed, and shockwaves will emanate to a whole range of foreign countries that borrow dollars.
In short, the world’s economy collapses, but Yglesias isn’t surprised:
This is the second time this week that Trump has revealed a profound ignorance of an issue related to government debts.
The early instance in which he kept proposing that Puerto Rico declare bankruptcy even though doing so is illegal was on a question that’s very important to Puerto Ricans but not so important to everyone else. It is, however, important to pay attention to how presidential candidates approach issues across the board – and what we saw with Puerto Rico is that Trump approached the issue by simplistically applying business logic without bothering to check whether it applies to the actual situation.
Now in the CNBC interview he’s done the exact same thing on a matter of more consequence – not the debts of Puerto Rico but the debts of the United States of America. It’s understandable that a real estate developer might assume that what works in real estate would work in economic policy, but it’s not true. And Trump hasn’t bothered to check or ask anyone about it.
Maybe this is a minor matter, but Kevin Drum adds this:
There you have it. If Trump crashes the economy, he’ll just default on our sovereign debt. Easy peasy. Why is everyone so worried?
This is a pretty good example of the Trump Dilemma™. Do you ignore this kind of desperate plea for attention? Or do you write a long, earnest piece about just why it’s a very bad idea indeed? You can hardly ignore it since it’s now coming from the Republican Party’s presidential nominee. But giving it oxygen just gives Trump the free media he was angling for in the first place. In this case, I’m semi-ignoring it.
Yep, hang the sense of it and go putter in the garden or something. It’s better to be happy than right any day:
“And are you?”
“No, that’s where it all falls down, of course.”
And of course there are those who can’t hang the sense of it:
New rifts emerged Friday in the already shaky relationship between Republican leaders and presumptive presidential nominee Donald Trump, heightening concerns that the party is headed into a long period of civil war that imperils its chances in the November elections.
A day after House Speaker Paul D. Ryan of Wisconsin took the unusual step of refusing to support Trump, a steady list of other GOP notables joined in the opposition, including former Florida governor Jeb Bush, Sen. Lindsey O. Graham of South Carolina and 2012 presidential nominee Mitt Romney.
Trump, in turn, attacked Ryan and others for refusing to back him, even as he agreed to meet with Ryan next week to air out their differences.
And at the White House, President Obama waded into the opposition’s turmoil for the first time since Trump effectively clinched the nomination, listing concerns about the mogul that he said Republican voters must seriously consider.
They cannot hang the sense of it – Trump is their guy – and this won’t get better:
Amid the upheaval, there was at least one encouraging sign for Republicans hoping that the party comes together: Trump and Ryan agreed to sit down face-to-face.
“Having both said we need to unify the party, Speaker Ryan has invited Donald Trump to meet with members of the House Republican leadership in Washington on Thursday morning to begin a discussion about the kind of Republican principles and ideas that can win the support of the American people this November,” Ryan’s political office said in a statement. Ryan, Trump and RNC Chairman Reince Priebus will also meet separately, the statement said. Ryan’s office said that meeting will also be Thursday.
But Trump was tepid in his own statement on the planned gathering, saying he had agreed to talk to Ryan “before we go our separate ways.”
“So I guess the meeting will take place and who knows what will happen,” he said.
Trump doesn’t need Ryan or anyone else – everyone loves him (as he says) – so this may not matter to him:
Bush, whom Trump disparagingly labeled “low energy” when they faced each other as presidential candidates, posted a message on Facebook on Friday afternoon saying that he would not support Trump or Democratic front-runner Hillary Clinton.
“He has not displayed a respect for the Constitution,” Bush said of Trump. “And, he is not a consistent conservative.”
Graham, another former presidential candidate, had backed Bush and later Sen. Ted Cruz of Texas in hopes of stopping Trump. He released a statement Friday saying that he “absolutely will not support Hillary Clinton” but “cannot in good conscience support Donald Trump.”
“I do not believe he is a reliable Republican conservative nor has he displayed the judgment and temperament to serve as Commander in Chief,” the statement said.
And then there’s the party’s last candidate, Mitt Romney:
According to the Washington Examiner, Romney, who plans to skip the convention, said at an awards gala Thursday evening, “I don’t intend on supporting either of the major-party candidates.” William Kristol, a leading conservative commentator and editor of the Weekly Standard, said he met with Romney on Thursday to urge him to consider an independent bid for president.
Some Republicans have gone further, saying they plan to back Clinton over Trump or are at least considering it.
This is getting absurd, so President Obama gave it a little nudge further along:
Fielding questions from reporters Friday, Obama said Republicans will have to do soul-searching when it comes to the presumptive GOP nominee.
“Not just Republican officials but, more importantly, Republican voters are going to have to make a decision as to whether this is the guy who speaks for them and represents their values,” Obama said. “Republican women voters are going to have to decide, ‘Is that the guy I feel comfortable with in representing me and what I care about?'”
The president also suggested Trump is not up to the momentous challenges the country faces.
“I just want to emphasize the degree to which we are in serious times and this is a really serious job,” Obama said. “This is not entertainment. This is not a reality show.”
And then Politico reported this:
Hillary Clinton’s supporters in recent days have been making a furious round of calls to top Bush family donors to try to convince them that she represents their values better than Donald Trump, multiple sources in both parties told POLITICO.
The moves come as Clinton and the Democratic Party try to take advantage of deep unease among establishment Republicans on Wall Street and elsewhere with Trump’s emergence as the presumptive Republican nominee.
Top targets for the Clinton team include people like Woody Johnson, Jeb Bush’s former finance chair and the owner of the New York Jets. In recent days, Bush’s brother and father, former presidents George H. W. Bush and George W. Bush, have said they plan to skip Trump’s nominating convention.
One person close to Clinton said supporters of the former secretary of state drew up a list of Wall Street donors who supported Jeb Bush and other unsuccessful Republican candidates months ago but wanted to wait until Trump locked down the nomination before beginning to make the calls.
“When you think about it there is no downside to making these calls, including for Hillary herself to make then,” this person said. “They may say no but they will talk to her for half an hour about their view of the world and probably say nice things when asked about her publicly. And they might stay away from Trump.”
The item goes on to note that they’re all saying no, but that may not matter:
A new Electoral College projection map shows the immediate impact of Donald Trump’s nomination as 11 states have moved towards the Democratic column.
The Cook Political Report’s updated Electoral College map contains all bad news for Republicans. Colorado and Florida were moved from toss-up to lean Democratic. Pennsylvania and Wisconsin moved from toss up to solidly Democratic. North Carolina went from leaning Republican to toss-up. Georgia and Arizona went from likely Republican to lean Republican, and Indiana went from solid Republican to likely Republican.
According to The Cook Political Report more states could be projected to go blue in November, “With these changes, 190 Electoral Votes are in the Solid Democratic column, 27 are in Likely Democratic, and another 87 are in Lean Democratic – enough for a majority. Yet another 44 Electoral Votes are in Toss Up. Although Iowa, New Hampshire and Ohio could shift to Lean Democratic and Nevada could shift to Likely Democratic, we are holding off on changes in these states until we see more evidence.”
The Cook projection sees Democrats keeping the White House by an Electoral College margin of 304-190.
Then add this:
The Donald Trump nomination is already having a disastrous impact on the presidential map for Republicans. Trump claims that he is bringing millions of people into the Republican Party, but polling numbers and voter registration data suggest that he is driving people to register for Hillary Clinton in the fall.
Then add this:
After Donald Trump’s ascent to presumptive presidential nominee, conservative pundit Erick Erickson demanded Republicans apologize to Bill Clinton for vilifying and impeaching the former President for the same behavior they’ve glorified in Trump.
In a Friday blog post on The Resurgent, headlined, “Republicans, Apologize to Bill Clinton,” Erickson recapped Clinton’s extramarital affair while in office and his eventual impeachment by House Republicans before comparing him to the presumptive GOP nominee.
“On the campaign trail, Trump was more a pathological liar than Bill Clinton ever was,” he wrote, noting the billionaire “smeared” his opponents’ wives and families, pushed 9/11 conspiracy theories, and “peddled malignant, false stories” about rival Sen. Ted Cruz’s (R-TX) father.
“Republicans owe Bill Clinton an apology for impeaching him over lies and affairs while now embracing a pathological liar and womanizer,” Erickson wrote. “That apology will not be forthcoming. In fact, for years Republicans have accused the Democrats of gutter politics and shamelessness. Now the Republicans themselves have lost their sense of shame.”
No, they haven’t lost their sense of shame. They’re just confused. Good-hearted and well-intentioned folks are sometimes swept up in events that have nothing to do with them, and something sinister may be going on, or not, and their task is to make sense of it all and rise to the occasion, even if that’s impossible, and sometimes comic. Douglas Adams thought that was comic. This isn’t.