Via Meadia has avoided the media frenzy over the debt talks. Our central forecast has been and remains that there would most likely be an agreement, but that it wouldn’t do much for either the deficit or the economy. That forecast appears to be on track.The response to yesterday’s deal across financial markets parallels the typical response to the various EU fudges and compromises over the last 18 months: a burst of initial excitement that quickly wears off as the world takes a deeper look at what was and wasn’t done.President Obama’s instincts for compromise do him credit as a human being but do not seem to be helping him as a national leader. He’s gone from a stimulus that the Keynesians said was too small and too poorly organized to an austerity drive that conservatives consider spendthrift and that the credit rating agencies say may not ward off a downgrade.I’ve written about this President’s instinctive lunge for the ‘sour spot’: the compromise that satisfies nobody and doesn’t solve the problem. That has defined his Middle East policy; it defined the health care bill. He has now chosen it, twice, for his economic model.We shall see.
Debt Deal Sour Spot
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