JUST about everything you have read or heard about the US political brawl over spending, Obamacare and the debt ceiling, is almost certainly wrong.
In particular, that the whole world has been taken right to the edge of a financial crash at least as bad and indeed likely to be much more dramatic and more fundamentally destructive than the Global Financial Crisis, thanks to crazy Republican Tea Party extremists.
Specifically, that unless the US Congress votes to increase the US government ceiling overnight, the US will default on its debts, banana republic - or indeed Greek republic - style.
The truth is, that would only happen if the Obama administration deliberately chose to break not just the law but its fundamental constitutional obligations.
To refuse to repay debt even though it had the money to do so; itself, deliberately triggering an unnecessary default.
As rating agency Moody's said this week: "We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact.''
This turns on two simple truths.
First, the US government is constitutionally required to prioritise its debt obligations. Secondly, self-evidently, it can repay debt maturities with new borrowings - as that would not increase its total debt.
It just can't increase the amount of debt on issue. So, because it is running a budget deficit, it would have to cut back on its non-debt outlays. Things like social welfare and defence.
Yes, that would be damaging and disruptive. It would NOT be a debt default.
There's a third possibility which I have not seen raised anywhere. There would not appear to be anything to stop the Federal Reserve buying the maturing debt from bond holders and not presenting it to Treasury for repayment.
That would leave the government free to use the moneys otherwise to be paid to maturing debt holders, to spend on defence, social welfare and the rest.
We might never find out, at least not this time, if the issue has been rendered - temporarily - academic overnight by a deal in Congress.
The debt ceiling is one part of a much broader, more fundamental and indeed existential battle underway in the US - caricatured asininely by the media there and here as crazy extremist Tea Party types prepared - indeed wanting - to topple the whole structure of government in the US; and insouciant to or indeed happy if it topples the world as well.
It's driven by a mix of three media dynamics. The inherent government-is-good bias of the media. Sheer stupidity and incompetence. And what I describe as 'drive-by analysis'.
It is almost literally incomprehensible even to local US mainstream media, and certainly media here and in Europe, why Americans don't just sign off on ever-rising government spending, debt and intrusion in to their lives.
This is captured in a piece by Financial Times commentator Martin Wolf, who kicked off a strident call for the debt ceiling to be abolished entirely with:
"Some laws are too dangerous to be allowed to remain on the books. Take, for example, the US debt ceiling.
Heck, in the eyes of Wolf, why worry about a $US17 trillion debt - and as Obama himself said, when voting as a senator against increasing the debt ceiling back in 2006, that's trillion with a T - heading for who knows what: $30 trillion? $50 trillion?
Just maybe, some Americans might think that running a government where 20c or so of every dollar it spends has to be borrowed, can only end in tears. And when it does, a disaster much worse than anything that could happen now.
One very honourable exception to the thousands of words of crud that have spewed out over this, came from RBS Morgans's economist Malcolm Knox.
In the context of the perceived `wisdom' that only crazy extremist Republicans would shutdown the government, Knox detailed that it's happened 17 times previously since 1976; and 15 of those were by Democrats; and indeed five were Democrats shutting down a Democrat president!
Knox also pointed out how Obama manipulated a similar fight over the `fiscal cliff' at the start of the year to `game the process'. Now he's trying to pretend all-purity.
All this is mere byplay to the fundamental problem, that under Obama, a big structural deficit has opened up, with the government now spending about 4 per cent more of GDP than in 2001.
In Australian terms that would be $65 billion extra a year. In the US it's closer to $700 billion. The prime reason for the blowout, according to Knox, is Obamacare.
One might critique the political wisdom of what the Republicans have done. But it's neither extremist, not legislatively improper.
Yes, Obamacare is the law. But it also has to be funded; and it is perfectly legitimate for the Congress to seek to set the terms on which that funding will be provided. In the context of the broader issue of too-much spending.
If you don't do it now, when do you do it? Manana, a man with the European-style wisdom of a Wolf would respond.
Indeed, preferably manana never. Get rid of the debt ceiling and let the US borrow another $10 trillion. Heck, make it $100 trillion. We can always get the Fed to buy some of it by printing money.
but I was tricked by certain media, but its hard to convince my congressman about how yankee it is to not raise the debt ceiling after spending all this time writing him about how yankee it was to raise the ceiling.
