FDR said we had nothing to fear but fear itself. Unlike his calming predecessor, President Obama seems to be stoking fear. As New York Post columnist Charles Gasparino writes today:



I’ve lost count of how many times President Obama and Treasury Secretary Tim Geithner have said over the last three days that America might default if the debt-ceiling impasse continues. For the good of the country, let’s hope the markets have forgotten as well.



It’s hard to see how Obama, Geithner or White House Chief of Staff Bill Daley could have had the good of the country in mind as they made the rounds of the Sunday talk shows — spreading dire predictions about default if the debt ceiling isn’t raised in the fashion that they and their Democratic allies believe appropriate.



For all their apocalyptic talk, they’re still demanding a budget deal filled with jobs-killing taxes, even as unemployment remains north of 9 percent.


Gasparino agrees that default would be a disaster (did you know that even your credit cards might not work?). But he adds that, even if the debt ceiling is not raised before August 2, the government could do a good job of managing default. The government takes in $2 trillion in tax revenues every year and about $200 billion of this goes for interest on the debt. Secretary Tim Geithner could cover the bond payments. He would have to hold off sending some checks, for sure. You can bet your bottom dollar-if you still have one-that the administration would makes its choices of what bills not to pay based a desire to cause maximum suffering. They believe that that ultimately is the way to getting what they want: higher taxes.


A default would only harm you and me, but it would have a result Obama & Co. don’t want: interest rates would be so high afterwards and for decades to come that government spending would be cut by-well-default.



So why are Obama & Co. using the “D word” so obsessively? Here’s two possibilities:



One: They really mean it. Obama would rather stiff bondholders than cut the size of government. I find that hard to believe, even though he’s devoted his years in office to expanding government so dramatically.


Two: Obama’s crew loves chaos. Remember: These guys rode to victory in 2008 largely because of the financial collapse — and won with promises to lead a moderate economic course that put Americans back to work. 


As Major Garrett of National Journal points out, our dire situation can only be salvaged by a piece of legislation that addresses the issue. There is no such piece of legislation, though both the House and Senate are putting together legislation, “moving separately and willfully ignoring the peculiar politics of each chamber:”  



The 11th-hour arrival (deus ex machina comes to mind) of debt-ceiling proposals is meant to calm markets in Asia, Europe and America. What the political class seems to under-appreciate (or miss entirely) is that traders don’t traffic in spin, talking points, frameworks, outlines or executive summaries. Traders live in a cold, bloodless world of data. When there isn’t any data, they look for the next best thing – a bill, actual legislation that underling traders and trading houses can translate into data. Absent that, traders move on their own and ride the market psychology, and with other tangible, countable forces and factors.



Washington can’t calm markets with talk anymore.


It makes me furious that jerks in Washington, who are incapable of doing their jobs, can have such a profound effect on my own life.