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The End of the Dollar?

From The Weekly Standard:

The fuss about a possible default if our warring politicians fail to agree on an increase in the debt ceiling is good fun for reporters: the president removed himself from the negotiations in favor of a visit to the Palace and says he won’t agree to cut spending unless the Republicans agree to raise taxes on the rich, variously defined as families earning more than $250,000 per year and “millionaires and billionaires.” Some Republicans say they don’t fear default because keeping the ceiling on spending will reassure financial markets and prevent a downgrade of U.S. Treasuries even if there is a brief and well managed default. And all parties to the dispute are enjoying the sense of importance that comes with being key players in the “crisis”—politicians relish the spotlight. And all know that the crisis will be resolved by a last-minute deal that allows everyone to claim victory but postpones meaningful decisions until after the 2012 elections. All the negotiators, but not all investors. The gross value of contracts insuring against a U.S. default, although still small relative to the size of the Treasury debt market, has doubled from a year ago.

Read the rest at The Weekly Standard.

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