We Are No Longer a Serious Country – Paul Krugman

“If you’re explaining, you’re losing.” This line is usually attributed to Ronald Reagan. Whoever said it definitely had a point, and not just about politics. If you’re trying to explain to people, be they voters or bond investors, that you aren’t really as bad or untrustworthy as you seem, you’re already in deep trouble. So when I saw Scott Bessent, the treasury secretary, declaring Sunday that “The United States of America is never going to default, that is never going to happen,” my reaction was, “Uh-oh.” And it’s not just me. For generations investors have treated U.S. government debt as the ultimate safe asset. Whenever disaster strikes — even if it’s disaster largely made in America, like the 2008 subprime crisis — bond buyers pile into U.S. Treasuries, because America is a serious country, and the idea that we would fail to honor our debts was unthinkable. But are we still that country? Markets seem to have doubts. Yesterday the Financial Times had a neat chart showing that t ... Read full article.