Perot Warns of Takeover
Steven L. Taylor
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Tuesday, October 2, 2012
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13 comments
Via USAT:
And, somewhat ominously, he warns that another country could establish supremacy over the United States if it continues to go deeper and deeper into debt.
“The last thing I ever want to see is our country taken over because we’re so financially weak, we can’t do anything,” Perot says.
I presume this is linked to foreign held debt, but it still makes no sense. Maybe he has been watching Red Dawn or something.
In other news, and to relief of both candidates, Perot has declined to issue an endorsement.
About Steven L. Taylor
Steven L. Taylor is a Professor of Political Science and a College of Arts and Sciences Dean. His main areas of expertise include parties, elections, and the institutional design of democracies. His most recent book is the co-authored
A Different Democracy: American Government in a 31-Country Perspective. He earned his Ph.D. from the University of Texas and his BA from the University of California, Irvine. He has been blogging since 2003 (originally at the now defunct Poliblog).
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And here I thought Perot was still locked in the basement with the Crazy Aunt
Another idictment of the Business Exectutive as President model.
I was wondering just yesterday, was he even still alive.
He could’ve given Netanyahu some help re: visual aids in the UN speech. Always kinda liked Perot’s little charts — like he didn’t think the voters were too stupid to follow along.
So what’s going to happen, exactly? The country will get repo-ed? Will Harry Dean Stanton be involved?
Well, Perot is at that age at which dementia is not merely a future hypothetical. But let’s not be naive nor loopy. And let’s not smoke out of USAT’s crack pipe. Perot here is not speaking literally. He’s not that out to lunch. It’s not as if a foreign lender can foreclose on America. Perot knows that. He’s speaking figuratively and metaphorically.
They don’t call debt “leverage” for nothing. Lenders have leverage over debtors. Secured vs. unsecured is not determinative. Public vs. private debt is not determinative. Any lender has sway over any borrower. When it comes to public debts owed by the U.S. to another country it’s not as if the U.S. can file bankruptcy. Some day, some time, some place, some way, shape or form, those debts will come due. And they’ll need to be paid.
Leverage also has untoward collateral effects.
Let’s say, ahem, hypothetically, the U.S. owed a foreign nation vast gobs of money. We’ll call that foreign creditor Chuck.
Chuck is sort of itchy about this patch of land in the middle of somewhere. Chuck says the land is his and the current occupant belongs to him too. But the occupant, we’ll call him Timmy, disagrees. And the U.S. and Timmy are real close. One day Chuck decides to beat Timmy to a pulp. The U.S. tells Chuck to back off and that if Chuck doesn’t do so the U.S. will come to Timmy’s aid. See, here’s where that huge loan the U.S. owes to Chuck becomes a very, very serious problem. Chuck tells the U.S. that unless the U.S. stays out of the business between Chuck and Timmy that Chuck (1) won’t lend the U.S. any more money, (2) will sell the existing loan owed by the U.S. to a loan shark, (3) that Chuck will spread the word among all the other lenders that the U.S. is not creditworthy. At that point this U.S. will be in a pickle. It’ll be facing the specter of having to pay a lot more interest to borrow money. A helluva lot more interest. And since the other debt owed by the U.S. is so huge the reality is that even a tiny increase in interest rates would have a disasterous effect.
Leverage.
Owing money is a bitch. Eventually the bill comes due. That’s when the party turns into a nasty hangover. That’s when you can’t even come to the aid of your friends in need. Because you yourself have become dependent.
Did you know, Mr Romanof, that Mr Perot and Mr Clint Eastwood were both born in 1930? At least Mr Perot is not arguing with the furniture as far as we know.
And as for your concern about our friend Chuck who holds our mortgage while he beats up our friend Timmy (presumably Lassie is locked in the shed scratching and whining)…. The reason your homespun allegory has any meaning is that in the world you and I live in, Chuck can send uniformed officers of the court to enforce his rights to our property.
In the world in which the United States and (to just pick an example) the Peoples’ Republic of China are actors, there is no police force and no court. So if the PRC sufficiently arouses the United States (by for example attacking Taiwan) and we in the US stop them, they are left holding large dollar denominated Treasury Bonds that we will simply refuse to honor. I think even you can see who is the biggest loser in that confrontation.
This would perhaps make the market for future Treasury Bonds smaller. But surely even a Romanof can — by squinting fiercely by the dim light of your burning intellect — see that the PRC is absolutely incapable of ‘foreclosing’ on the United States in any meaningful way. Surely! Surely?
We don’t borrow money from other countries. In fact it is absurd to argue we borrow our own currency from foreign powers. China doesn’t give us dollars, we give them dollars and they swap them for Treasurys.
@JohnMcC:
But surely even a Romanof can — by squinting fiercely by the dim light of your burning intellect — see that the PRC is absolutely incapable of ‘foreclosing’ on the United States in any meaningful way.
I’m telling you, they will wait until we are not home and take our country back to their lot, the scoundrels.
I’m prepared to let them have a number of areas right now. I could make a list.
Ross is a billionaire crank.
By the way, did they ever find out if (as Ross alleged a few years back) the CIA planned to disrupt his daughter’s wedding?
@JohnMcC:
Yes, then the Chinese drop all these bonds on the market, destroying it´s value and the ability to finance a trillion dollar deficit.
@Andre Kenji: A foolish thing to write. China can dump every last Treasury and the effect on the market for U.S. bonds will be nil.
I recall a Dave Barry column on Ross.
Perot, he said, would be going along in a speech making perfect sense, then he’d say something like, “AND THE REPUBLICANS HAVE PUT A GIANT RADIOACTIVE SCORPION IN MY CELLAR!!!!”