One other blogger took his nameplate with him — I'm not sure who; the rest left theirs.  But this is what was in front of each one of us as we sat down to discuss matters at the US Treasury.  Treasury officials had similar nameplates.  It dictated where we would sit as well.  From the front of the room on the left, for bloggers it was Financial Armageddon, (Megan McArdle — not there), Accrued Interest, and Across the Curve.  On the right, Naked Capitalism, Kid Dynamite, Interfluidity, Me, and Marginal Revolution.  Aside from putting the two bloggers with the most traffic at the front, there did not seem to be any rhyme or reason to the seating.

The Treasury officials presenting generally sat in front, a few sat to the side and behind us.  It made for an interesting dynamic during the portion of the meeting where some bloggers disagreed over whether derivatives should be exchange traded or not.  The folks from the Treasury grinned.  See?  These aren't easy questions to answer!  For me, with a middle view (bring interest rate swaps to exchanges first and see how they work, then try other instruments that are less liquid), I found the exchange to be a waste of precious time, but it was revealing of the attitudes of those in the Treasury.  I knew what the bloggers thought already.

The Biggest Financial Problem

I've written a number of pieces on why debt matters. (Or, where is the breaking point?)  I am in the process of reviewing This Time is Different: Eight Centuries of Financial Folly — a book that deals with the reality of sovereign defaults over the last 800 years.

Surprise! Over-indebted countries do default on their debt more often than less-indebted countries.  During the current crisis, we have two mechanisms running to blunt the troubles.  The government is running a large deficit, and the central bank is sucking in longer-dated bonds to lower interest rates.  I talked about why lower interest rates are not necessarily a blessing yesterday.  Today's thoughts are on deficits.