Justin Fox — Understanding the Game Being Played in Washington

Game theoretical analysis.

The secret to success is maintaing a credible threat by appearing to be irrational, or actually being irrational. Fox doesn't draw the conclusion, but I will — that's why those behind the veil have picked the crazies to represent their interests.

The Harvard Business Review — HBR Blog Network
Understanding the Game Being Played in Washington
Justin Fox

Zero Hedge — More Than Half Of Republicans Prepared To Let US Default

House Speaker John Boehner “may need a shutdown just to get it out of their system,” said a top GOP leadership adviser. “We might need to do that for member-management purposes — so they have an endgame and can show their constituents they’re fighting.”

Zero Hedge
More Than Half Of Republicans Prepared To Let US Default
Submitted by Tyler Durden

Odds on a default and government shutdown are mounting.

Kevin Drum — Platinum Coins and Banana Republics

The answer to the cebt ceiling nonsense is to force Republicans back into some semblence of responsibility and prudence. In the long term, it's the only way we survive. Barack Obama appears to understand that.

Mother Jones
Platinum Coins and Banana Republics
Kevin Drum

Bruce Kasting — Ben B. Nixed The Coin - What Does That Mean?

Very plausible analysis. It's not just a US domestic matter.

Zero Hedge
Ben B. Nixed The Coin - What Does That Mean?
Bruce Kasting

Joshua Holland — 7 Theories Why Obama Keeps Getting Burned (Or Doesn't!) Negotiating with Republicans

You decide. Or maybe there is an eighth, ninth....?

AlterNet

7 Theories Why Obama Keeps Getting Burned (Or Doesn't!) Negotiating with Republicans
Joshua Holland

John Carney — Here's Obama's Message to GOP by Appointing Lew Treasury Secretary

If Obama wanted to appoint a man who could personify his no negotiation pledge, there would be no better pick than Lew.

CNBC NetNet
Here's Obama's Message to GOP by Appointing Lew Treasury Secretary
John Carney | Senior Editor

Does the negotiator in chief suck? Probably.

The GOP's plan to force Medicare and Social Security cuts under threat of a debt default could prove wildly unpopular with the right White House framing, and Obama has proved himself pretty capable in this department.

The problem is what happens when, having crafted a favorable backdrop to the negotiation, it comes time for him to close the deal. And this is where the just-completed "cliff" episode is still disconcerting. Because it turns out Obama made a critical if underappreciated mistake in the final hours of the back and forth: sending Joe Biden to haggle with Senate Republican leader Mitch McConnell once McConnell's talks with his Democratic counterpart, Harry Reid, had broken down.

From my after-the-fact discussions with Democratic aides in the House and Senate leadership, it’s clear that Reid had a plan for resolving the cliff and considered the breakdown of his talks with McConnell very much a part of it. By involving Biden, Obama undercut Reid and signaled that he wanted a deal so badly he was unwilling to leave anything to chance, even when the odds overwhelmingly favored him. It suggested that even if Obama plays his cards exceedingly well in the run-up to the debt-limit showdown, he could still come away with a worse deal than he deserves because of his willingness to make concessions in the closing moments. [emphasis added]

The New Republic
The Inside Story of How Obama Could Have Gotten a Better Tax Deal
Noam Scheiber

Jared Bernstein — The Next Debt Ceiling Debate: Too Ugly to Write About

The R’s have proved to be impossible to negotiate with over this issue.... 

Basic game theory, well known to highly advanced academics and mobsters: when dealing with an intractable, unreliable opponent, the side with a) the most leverage, and b) the skills to use that leverage can win.  The administration has such leverage in both the scheduled defense cuts and tax increases.  Stand firm on both counts even if it means facing the fiscal cliff, for to cave is to walk a big step closer to permanence of the Bush tax cuts, to say bye-bye to new revs, to take defense spending off the table, and to say hello to even deeper cuts in discretionary programs to help the least advantaged.

Read it at On the Economy
The Next Debt Ceiling Debate: Too Ugly to Write About

by Jared Bernstein