The Interest Rate Spike Story Seems Incoherent

According to the Wall Stree Journal tick-tock, President Obama told John Boehner that the road in which they don't reach a fiscal-cliff agreement features "a spike in interest rates and a global recession." As Paul Krugman argues, and Brad DeLong follows with even more detail, this is an extremely unlikely particular case of the general myth of the bond vigilantes. Now, that said, I wouldn't draw any broad conclusions about Obama's view of macroeconomics from the fact that two Wall Street Journal reporters say that someone reliable said that Obama said this to Boehner. The reporters may be misunderstanding. Their source may be lying. Obama may have been lying to Boehner. Shit happens. But still it's more troubling than if we had an account of the president giving a brilliant and accurate description of the basic economics of the situation. Krugman says that possible confusion ...