Rebutted by Jared Bernstein | On the Economy:
Listening to the radio tonight, I heard some economics commentator give yet another rant about how our debt has reached crisis proportions, we’re borrowing billions a day, the end is near, yada yada. The moderator had the presence of mind to inquire how this could be so, when our gov’t is able to borrow at such low rates. “The bond market is crazy... traders are in denial... it’s a bubble... the end is near... yada yada,” came the reply.... [But] the bond market is global, and it is pricing risk very differently in countries with very different sovereign debt profiles... ergo, the market cannot be selectively crazy, i.e., sane when pricing Greek, Irish, or Portuguese debt, crazy when pricing US debt.
So I reject this particular hysteria. US debt in cheap because it’s a risky world out there and we, along with Germany, remain among the safest bets. Investors may be getting nervous, but the price signals tell us they believe Congress will soon stop screwing around and raise the debt ceiling...
And, I would add, put the long-term financing of the social insurance state on a firm basis.