Kevin Drum asked whether the shutdown is increasing the money in the Treasury kitty and whether Lew should be hemming and hawing more on the October 17th default date.

http://www.motherjon...omment-1074577850

Sorry, Kevin, you seem to have been bewitched by Ted Cruz. The question of whether payments can be prioritized (and they can't: http://www.marketpla...void-debt-ceiling ) is utterly irrelevant. The proper question is, if the U.S. went to sell debt on October 18 having announced that it's suspending payments on other obligations, would anyone buy the debt? And even if lenders could be found, what would be the terms?

If the U.S. isn't sending social security checks or making payroll or paying rent on its office space, how confident would a bond holder -- say, the central bank of China -- be that they'd actually get repaid? When the debt comes due, do you think the Tea Party would actually enforce their promise to pay China first? More importantly, does China perceive that the Tea Party would permit them to be paid first?

In addition, the ratings agencies would be under severe pressure to downgrade the United States (probably to speculative), which would require virtually every fiduciary to dump their holdings of government debt.

In sum, there would be a complete shitstorm. This is not something technocratic. When Lehman Brothers couldn't roll over its overnight debt (and it had billions in assets), all hell broke loose and it took five years and massive government intervention to recover.

If you need to put it in terms closer to home: if your brother-in-law promised (promised!!) to pay you back out of the first dollars of his paycheck, but he's three months behind on his rent, how much would you lend him?

Emphasis added.

It's going to get ugly very quickly unless Boehner lets a clean debt limit increase come up.

Cheers,
Scott.