In the old days, the threat of bonds being defaulted on made the bonds less attractive to investors. Now we live in the land of Oz, and default threats make investors rush to buy the bonds. Here’s Bloomberg:
The currency’s outperformance — steamrolling even the traditional safe-haven yen, which fell to six-month lows past 140 per dollar last week — reflects the US’s unique position at the center of the global financial system. Even when the nation is flirting with default, investors have little choice but to flock to dollar-denominated assets like Treasuries for protection.
An MLIV Pulse survey earlier this month showed US debt was second only to gold as the most popular asset to buy in the event of a default.
In the old days, if a candidate was enmeshed in a scandal his rivals would rush to take advantage of the situation—criticizing his behavior. Now we live in the land of Oz, where rivals rush to defend the person they are running against when it is discovered that he committed sexual assault. Here’s Time magazine:
But when the time came to actually stand up to him, Trump’s primary rivals and political enablers were too cowardly or calculating to throw much of a punch. Nikki Haley, Trump’s major declared opponent and former U.N. Ambassador, dismissed the potential indictment on Fox News as “more about revenge than it is about justice.” Another active candidate, businessman Vivek Ramaswamy, went further, blasting the “disastrously politicized prosecution” and calling on other Republicans to condemn it. Former Vice President Mike Pence, who is openly considering a run, told an interviewer the probe “reeks of the kind of political prosecution we endured in the days of the Russia hoax.”
PS. This quote from Tyler Cowen explains why I completely ignored the debt ceiling “drama”:
There may yet be a final round of drama, but the people who treated this event as the nothing burger it is were on the right track the whole way through.