Please re-read last Sunday’s blog titled “A Soap Opera for Economists.”  Watching the Asian markets open at 8PM tonight will also be “must-see” TV.  At this hour (1630 hours), Washington is swirling with rumors that a deal to raise the debt ceiling is imminent.  If true and announced before the Asian markets open, it will be fun to watch a strong rally.  If there is no announcement and the market believes there is no deal, it will continue to lose steam, drifting down.  If there is no deal at all and that is announced, you expect the bear to start eating Asia tonight and us tomorrow.

Without analysis, it is too early to comment on the deal.  However, I have been trolling the blogosphere of economists.  Just as politicians can quibble over any little thing (Witness:  Are rich people “fat cats” or “job creators?”), economists are already quibbling about the cost of the ugly process of raising the debt ceiling.  There is considerable debate over which did the most damage to the economy, i.e., the loss of self-confidence from the embarrassing debate or the Japanese tri-tragedy of earthquake/tsunami/meltdown.  While I have no answer to that question, I do believe both have had an impact, both bad.

However, the cost of this ugly episode may yet turn out to be profitable, if it really causes us to address the cost of waging unfunded wars and paying unfunded entitlements.  So far, it has done neither!  Since hope does spring eternal, let us pray . . .