Full Faith and Credit

As things stand, the US Treasury is going to run out of money next Tuesday, and the USA will no longer be able to pay its bills.  There is a cap - currently 14.294 trillion dollars - on the amount of debt the Treasury can issue, which is preventing it from borrowing any more money.  It needs agreement in Congress to raise the limit, and that agreement has not been forthcoming, because some Republicans - enough to block progress in the House of Representatives - are unwilling to agree unless they get their own way on absolutely everything.  Increases of the limit usually happen about once a year, and approval has been used before for political bargaining, but never to anything like this extent.

There's been some discussion of the notion that if the cap is not raised, since the Executive is going to have to ignore some of its instructions from Congress, it might as well ignore the cap.  Obama says his legal advice is that he can't do that, but speculation continues...

I think it more likely than not that some sort of a deal will be reached just in time.  If it is not, I would expect the Federal Reserve to find a way to "print" electronic money to keep things going.  And if that fails, they will prioritize debt payments, so the US will not default on its bonds (though it would default on its obligations to employees and pensioners).

Nevertheless, the bond markets are not going to take this lightly.  Bond investors care very much whether they are going to get paid back or not (and credit ratings are no more than a guide to that, so the possibility of a ratings downgrade is not the whole story).  The fact that powerful politicians are willing to play chicken with the USA's ability to pay its debts will already have affected the market's confidence.

As it happens, US Treasury bond prices have not fallen.  Investors might be somewhat shaken by what's going on, but they can't think where else to put the money - the global financial system would be rocked by any sort of a US default, and US Treasuries would probably remain a relatively secure investment, especially compared with anything else denominated in dollars.  But that could change.  At some time in the future, the US is going to find the markets demanding higher yields because it knows that US politicians don't take paying their debts that seriously.

Mobile Phone Hacking

There's a furore about mobile 'phone hacking by agents of the News of the World.  What reports do not make clear is that none of this has been tapping according to its usual meaning of covertly listening in on telephone conversations.   What's happened, at least in every case that's been reported so far, is that voicemail messages have been illicitly accessed.

Once you have a 'phone number there are two ways to get unauthorized access to its voicemail.  One way is to discovered the 4-digit passcode usually used for security.  In the past mobile 'phones had a default passcode, which many users never changed - this has been abolished by most or all providers in the last few years.  Or users may choose an easily guessable passcode, or it may be possible to persuade the service provider to reset it for you (date of birth, mother's maiden name: this sort of check is not very difficult to defeat).  The other mechanism is that many mobile 'phones allow you to turn off passcode checking for when you call the 'phone from itself.  This relies on caller ID to determine the number you're calling from.  And caller ID is quite easy to spoof - various websites offer this as an inexpensive service.

I'd advise anyone to assume that voicemail messages are not private.  (I hate voicemail anyway.  I almost never listen to it.  If you want to tell me something when I'm not there, use SMS or email.)

Incidentally, I was watching the Tour de France yesterday when an advert came on promoting a product that spies on SMS messages.  I believe that this is software to be installed on an internet-connected smartphone, which thereafter sends information including SMS messages to a website where you can see it.