The deadline to raise the debt ceiling is getting closer, and investors are getting more jittery:
According to the Wall Street Journal's experts, the current cost of insuring treasury debt corresponds to a belief in a 2% chance of default. There are a whole lot of caveats about this, but the conclusion nonetheless is that things are getting dicey.
Meanwhile, Republicans fiddle while Washington DC burns.
In a game of chicken, in order to be really credible you need to cut off the steering wheel, rip out the brake pedal and glue to accelerator to the floor. Then the other guy may take start to think you're serious.
but, but, but Republicans are always telling us that economic predictability is absolutely essential for market stability.
I'm trying to remember why the Dems did not raise the debt ceiling before the 2022 elections or during the lame duck Congress . Was it Manchin and Sinema ?
Was it that other priorities pushed it aside ?
Sargent and Waldman have a piece in the Washington Post about the debt ceiling issue and the position - read silence - of the supposed "moderate" Republicans in the House.
But they don't name names. Perhaps because there really aren't any moderates in the GOP any more. ? Where are the never Trumpers on this ? It is not enough to call out Trump when the rest of the MAGAistas are still calling the shots.
I think that addressing climate change and wealth/income inequality (and all the connected issues like universal healthcare) are the most important issues of the day. Then of course there's Ukraine fighting off Putin and China and authoritarians under every rock around the world. And of course all the issues around race, though I think addressing inequality is essential to that too.
I give the Biden administration a lot of credit for how much they have been able to accomplish into the teeth of a reactionary GOP but I don't see how we as a nation can truly address any of our major problems without destroying (democratically) the GOP until someone or someones in that party starts to move toward rational adulthood again. To borrow a phrase from Ford, that's job one.
Aaargh. Rant over.
Manchin said he'd only vote to raise the ceiling if the bill had bipartisan support. IOW, he was against it. There may have other factors, but w/o Manchin, Dems could not pass it during the lame duck.
Agree with you re Biden so far. "No negotiation" is exactly the right position to take. I don't know if WH will cut a deal in the end. It's impossible for me to imagine any deal with this GOP that would be better than ignoring the debt ceiling itself. Biden has the 14th A. on his side. The hostage takers have a water pistol. Call their bluff.
It's impossible for me to imagine any deal with this GOP that would be better than ignoring the debt ceiling itself. Biden has the 14th A. on his side. The hostage takers have a water pistol. Call their bluff.
Completely agree. The GOP stance is akin to holding a holding a gun to your kid's temple during a dispute with your spouse. It's reckless, immoral and treasonous. Democrats should not budge.
I wouldn't read too much into one relatively small indicator. It may be a sign of trouble ahead, or not. At best, it speaks about concerns of a small segment of investors.
The "markets" are multiple. There has been a lot of volatility with treasuries, but that may be mostly uncertainty about the actions of the Fed and the direction of the economy. The stock market does not seem to be overly worried about the debt ceiling. Not yet, anyway. The move in stock prices since October has been slowly but steadily constructive.
During the Obama years, as I recall, stocks were off mildly during the lead-up to a debt-ceiling agreement. Then stocks plummeted soon after an agreement was announced. The S&P downgrade of US debt in 2011 appears to have been the big factor in that case.
Best outcome is probably GOP members agree to raise ceiling with no strings.
Best realistic outcome is probably GOP fails to raise ceiling, Biden ignores the ceiling (claiming 14th Amendment obligations), and consensus is that the ceiling is now null and void. Some turbulence likely, but this would be good.
I think a "negotiated" deal with both sides agreeing to cuts would be a disaster. Biden should not go down this road.
Yeah, that's my best guess at where this is going, too. I have a sense that Biden may have some good solid counters to "the president who blew up the debt ceiling" framing. Not sure what they are, but, "the debt ceiling is nonsense" seems pretty good.
However, I classify this as "best outcome" not just "best realistic outcome". The debt ceiling is dumb. Put up, cut the budget, or shut up.
Let DC burn. It’s a war.
Obviously your comment is consistent with your general Justin-philosophy of "I am not X so I welcome harm to X," but here not only your morality but your premise is wrong: if DC "burns" in this situation with the debt ceiling breached, the whole country and much of the global economy will feel the pain.
Well, that’s not really it. In this brief response I’m alluding to the war with republicans. I’m simply saying we can let the republicans do their worst and let the American people, who have put these lunatics in power, suffer the consequences. It is a war. We can’t beat them. Their ideology must be exposed and discredited.
So yeah… let them blow up the economy. Those who gave republicans a majority in the US house should get their wish.
Classic Justin. “Anything that doesn’t directly affect me can go to hell” amorality combined with ”I want to watch it all burn” nihilism. Fck off.
Well sure. Why would I give a fuck about you? I don’t know you, but from your replies, You’re mean!
I’m just ambivalent. I have a small circle of people whose welfare I concern myself with. And you aren’t in it!
Republicans don't care if DC burns, see Jan 6th, as long as Biden gets blamed for it--or more precisely, they don't get blamed for it by their own voters.
In the last couple of days, the rate on a 1 month TBill has plunged compared to a 2 month TBill.
They are pretty sure it is the default risk. You'll get paid in a month. You might not get paid in 2 months.
One solution is the the Treasury to issue some bonds with a super high yield.
What would you pay for a $1,000 bond that pays $1,000 interest every 6 months for 30 years?
Stupid accounting would count it as a $1,000 debt but you will be receiving $60,000 in interest plus $1,000 in 30 years.
So if you would pay $50k for it then the Treasury found $49k of "free money" it could spend that wouldn't be affected by the debt ceiling.
One solution is the the Treasury to issue some bonds with a super high yield.
Right. It's hard to imagine there are five SC votes to stop this.
Now that's "fiscal responsibility" ... Republican style.
This was always going to be a disaster. The Crazy Caucus has zero reason to support any kind of compromise and the only things left on the table are Biden's signature achievements and the IRS agents needed to pay for them.
Biden's a fool if he blinks. Let the markets burn.
Are you going to pay my food and rent in Euros and not worthless dollars? If not stfu.
I don’t think that Biden’s helpless in this situation. As many others have pointed out, he can simply ignore the Republicans and maintain the status quo under the rubric of the 14th Amendment. At which point, it would be entirely up to the Republican Supreme Court to decide whether to default and crash the world economy. Which is something I don’t see them doing in the run up to the 2024 election.
Reentry into civilian life is hard for veterans, who are more likely than the general population to experience mental illness, including depression and post-traumatic stress disorder, or to have other disabilities as a result of their service. This all makes them likelier to be unhoused and have low-wage jobs, and less likely to receive regular, adequate health care than the civilian population.
https://www.dailykos.com/stories/2023/4/21/2165109/-House-Republican-bill-will-screw-over-veterans
Magnitogorsk, Russia,
https://i.redd.it/rdc3khyq39va1.jpg
T-Rump is all over that East Block meow. Don't you just know it?
By summer: Updated Budget Control Act, creating new levels of sequestration to increase the debt ceiling.
Come Oct 1: 1-2 month gov't shutdown after new fiscal year starts w/o a budget or continuation.
Oh, it appears some of the concern is about banks, actually.
And who is selling those CDS's? Why, hedge funds, brokerages, Masters of the Universe ("MOTU"s), and other associated Republican puppeteers of course.
The marionettes will continue jumping until 11:53 PM on D-Day when suddenly their strings will all be snipped, they will lie lifeless on the floor of the House of Representatives, the Debt Ceiling Rise will fly through by acclamation, and all those CDS's will plummet to pennies on the thousand. At that time the issuers will Hoover them back up, and all will be well.
Hang in there, Joe. Don't blink. Make the MOTU's squirm looking at the looming payout if the shears don't work or the marionettes turn out to be little boys after all.......