The Big Bet revisited - Part I: Turkeys grounded

[jakeXT]

A Show About Nothing
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CI: So you did not think a US government debt default was ever imminent. The Wall Street Journal and every major US media outlet is blaring the message “Default looms as Congress haggles over debt limit.” Why?
EJ: The debt ceiling debate reminds me of that old Seinfeld episode, "A Show about Nothing." It was a manufactured crisis, right up there with weapons of mass destruction and the Iraq War. There is no question in my mind that the probability of a bond crisis over the debt ceiling was zero. The only question is, To what purpose?
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CI: Why wasn't the US debt ceiling crisis relevant in this scenario?
EJ: Not a single government bond default has ever resulted from a debtor government’s self-imposed debt limit. The US business media is popularizing a fiction that one day a country hits a self-imposed debt limit set by the legislature and the next day it defaults on its debt, that a debt limit has some bearing on creditworthiness and interest rates.
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