Let the nation default?

[Sallow]

The only reason the nation will default on the debt is if Obama decides not to pay the $20-30B of interest that is coming due.

Considering the massive amounts of cash the Feds collect each month in tax receipts, there is plenty of money to pay the interest.

You say that like there's no war going on..

 

[KissMy]

The only reason the nation will default on the debt is if Obama decides not to pay the $20-30B of interest that is coming due.

Considering the massive amounts of cash the Feds collect each month in tax receipts, there is plenty of money to pay the interest.

SS Trust Fund is the largest holder of debt. It's rates will climb & P & I must be paid.

 

[Sunshine]

The only reason the nation will default on the debt is if Obama decides not to pay the $20-30B of interest that is coming due.

Considering the massive amounts of cash the Feds collect each month in tax receipts, there is plenty of money to pay the interest.

SS Trust Fund is the largest holder of debt. It's rates will climb & P & I must be paid.

SS is not fueling the deficit. The government stole our money.

 

[RKMBrown]

Treasury auction went badly today. The 4 week rate tripled. Yield curve is inverting. - source Bloomberg TV

Whoot! Here comes inflation.

 

[Flopper]

U.S. credit rating again in danger of downgrade: The three main credit rating agencies have all warned, in varying degrees, the United States rating could be cut should it hit an expected October 17...

Fitch said that the U.S. rating is at risk because failure to raise the debt ceiling sufficiently in advance of the deadline raises questions about the full faith and credit of the United States to honor its obligations. "This 'faith' is a key underpinning of the U.S. dollar's global reserve currency status and reason why the U.S. 'AAA' rating can tolerate a substantially higher level of public debt than other 'AAA' sovereigns,"

Fitch said if the debt ceiling isn't raised in a "timely manner," meaning several days prior to when the U.S. Treasury says it will have exhausted extraordinary measures and cash, it will launch "a formal review of the AAA rating and likely lead to a downgrade." Some on Wall Street believe the firm could cut even if a deal is reached in Congress.

"Depending on how contentious the negotiations are, there is an increasing probability that Fitch downgrades the rating from AAA to AA as the 'x' date is approached," Bank of America Merrill Lynch wrote in a note to clients on October 1.

Moody's said Failure to increase the ability for the government to issue debt to pay its bills could "theoretically affect all categories of government spending, including debt service."

STANDARD & POOR'S:

Standard & Poor's said If U.S. government debt is not serviced, it would lower the rating to selective default, or SD. It would remain there until delinquent principal and interest payments are made.

S&P cut the U.S. credit rating, lowering it to AA-plus from AAA in 2011. The cut occurred even after the U.S. government raised the debt limit in 2011. S&P cited the breakdown in the ability of the Democratic and Republican parties to govern effectively for the downgrade.

The credit agencies are more concerned with the ability of the two parties to work together for the good the country than they are the deficit. As the deficit continues to improve, the two parties in congress grow further apart.

Yr. Deficit (Billions)
2009 1530
2010 1386
2011 1350
2012 1120
2013 759
2014 744 ( president's budget)

History of Deficits and Surpluses In The United States

IMHO, voters should vote against ever single incumbent in both the Senate and the House. There is too much animosity between the two sides for them to work together. Voters need to send a clear signal to Washington, that enough is enough.

 

[bendog]

But this is about the TP's DUTY to defund a federal program, which it opposed and threatened to primary any goper who broke ranks, and which no goper voted for ... no matter what changes were offered ... because allowing it to stand would be akin to saying sayanara to representative government and empracing naked democracy

My god, they're on crack.

 

[KissMy]

Treasury auction went badly today. The 4 week rate tripled. Yield curve is inverting. - source Bloomberg TV

Yep. It certainly doesn't help with Obama out there talking down the markets and threatening Wall Street.

Obama is not threatening markets. China & Japan warned it yesterday. Helping to price in lunacy is a responsible thing to do to prevent economic panic shocks that destroy jobs, wealth & economy. Market panic shocks are the absolute worst thing for jobs, wealth & economy unlike a structured default like the Fed does when it buys bad debt & sterilizes it. Congress invented a cliff to fall off of & kill jobs.

 

[RKMBrown]

Treasury auction went badly today. The 4 week rate tripled. Yield curve is inverting. - source Bloomberg TV

Yep. It certainly doesn't help with Obama out there talking down the markets and threatening Wall Street.

Obama is not threatening markets. China & Japan warned it yesterday. Helping to price in lunacy is a responsible thing to do to prevent economic panic shocks that destroy jobs, wealth & economy. Market panic shocks are the absolute worst thing for jobs, wealth & economy unlike a structured default like the Fed does when it buys bad debt & sterilizes it. Congress invented a cliff to fall off of & kill jobs.

Give us 20Trillion now or we kill your jobs... Yawn...

 

[Vandalshandle]

I have to admit, Kiss, that the total denial on the Right is a frightening thing, indeed. They honestly don't believe that this path is the road to hell. With that in mind, anything is possible, including default and depression.

 

[RKMBrown]

I have to admit, Kiss, that the total denial on the Right is a frightening thing, indeed. They honestly don't believe that this path is the road to hell. With that in mind, anything is possible, including default and depression.

Money where your mouth is?

I'll lay down some interweb bucks that this "crisis" does not result in us defaulting on interest payments for our national debt.

 

[hazlnut]

Question:

What exactly are the "Dems" supposed to talk about?

Hey Dems, we don't like the Affordable Care ACT signed into LAW by the twice-elected President. Although most of the LAW is NOT covered under discretionary spending -- we'd still like to talk about "defunding" it -- in other words, we really just want to stall and/or repeal the law WITHOUT winning control of the Senate and the White House. We know the Dems who voted for the law won their states in 2012 with double-digits, however they should still be willing to "meet us half-way".

Hey Dems, you know all those Tea Party extremists who won their seats in gerrymandered districts in red states -- Steve King, Louis Gohmert, Joe Barton, Michele Bachmann??? Yeah, those idiots. Well, it turns out that quite a few of them come from districts far, far away from The New York Stock Exchange, NASDAQ, the Chicago Mercantile Exchange, CBOE, BATS -- hell, they're so clueless, they thought there was only one stock exchange in the U.S. Anyway, most of their constitutes don't have personal investment portfolios or own any stock at all. Those with Pension probably think the money grows through prayer and forcing poor mothers to have babies they can't feed. We're talking about lots of middle class whites with no real stake in the game. Fat, dumb, $2 Blackjack players watching a Trillion Dollar Poker game via CCTV. They honestly don't care if the game stops and we spiral into another Great Depression. Well, they will when they lose their jobs and their pensions, but these Tea Folks are not what you'd call forward thinkers... In fact, the word 'progressive', to them, means Liberal Marxist Black Kenyan. So, there's the Rub. 20 or so U.S. Congressmen will tank the entire country because they represent middle aged white people with no significant investments.


Hey Dems, funny story -- are you familiar with the last book in the New Testament, Revelations? Turns out some folks aren't aware that book is an example of allegorical apocalyptic fiction, a type of fictional narrative popular in the early days of the Christian Church. This form of prose remains popular today. Every Christian loves a good yarn about the end of the word. Anywho, like I was saying, some folks think the Book of Revelations is prophecy and they're so in love with the notion of Jesus (a made up demigod character who steals his Virgin Birth backstory from a Mesopotamian demigod) J.C. son of God coming back to earth and throwing down with Satan (President Barack Obama) that they're inclined to speed things along. You know, instigate an Israeli / Palestine conflict in which the Dome of the Rock is leveled. OR the deliberate sinking of the economy by having the United States default on its debt. And as shit luck would have it, we have 20 or so of these idiots in Congress right now!! And they are chomping at the bit to get things rollin', bring on the Apocalypse!!



Hey Dems, have you heard this one? A Canadian walks into a bar, says "I'm running for U.S. Senate as a Texan." The Bartender says, "If Texas sends an elitist blue-blood Ivy League asshole who's not even American to Congress, then God help us, the end is nigh."

 

[kaz]

Perhaps you'd like to sell me a put option then?

You aren't paying attention to what's happening. It's acting like the market did prior to August 2011.

The market didn't believe the politicians were batshit insane in August 2011 when they were last fucking around with the debt ceiling. Then, when they realized that, indeed, the politicians may be batshit insane, the market fell 15%-20% in 10 trading days.

Since then, the market has become inured to some extent to a default. It believes the Republicans will not go over the cliff because of Obamacare.

I see, so:

1) The market doesn't remember August 2011 like you do, so they are doing the same thing again.

2) You know that this isn't already built into the price.

They love people like you who assume you know more than they do, you rack up the transaction costs of trading. Lots of people out guess the market once. Nobody does it consistently over time.

What is built into the price is the belief that they will do a deal, like they did in August 2011 and on New Years Eve re the Sequester. Every single person whom I speak or listen to believes a deal will get done, even though some of them are starting to hedge.

There are three logical options.

1) They believe a deal will get done
2) They have already incorporated a deal not getting done into the pricing
3) They don't think a deal not getting done affects valuations as much as politicians say it will.

I have a hard time believing #1. Anyone following this at all recognizes that both sides are now dug in and Obamacare is a very emotional issue. I read the Wall Street Journal every day, and there is no lack of reality in the reporting. Your contention that the basic national news is not getting to Wall Street just doesn't pass the smell test. As for the second and third, I don't know. But that prices are drifting down says to me it's a combination of the two.

If you think it's already in the price, you should be selling deep OTM puts by the truckload. I wouldn't advise it though.

You aren't really listening to me. I have opinions, but I keep saying in all our discussions clearly that I don't trade on the assumption I know more than The Street. I know that I don't. So I trade on my risk tolerance, investment time line, diversification that that sort of thing. Nobody who has told me like you do they know more than The Street has backed it up with any pattern over time.

 

[kaz]

I see, so:

1) The market doesn't remember August 2011 like you do, so they are doing the same thing again.

2) You know that this isn't already built into the price.

They love people like you who assume you know more than they do, you rack up the transaction costs of trading. Lots of people out guess the market once. Nobody does it consistently over time.

What is built into the price is the belief that they will do a deal, like they did in August 2011 and on New Years Eve re the Sequester. Every single person whom I speak or listen to believes a deal will get done, even though some of them are starting to hedge.

If you think it's already in the price, you should be selling deep OTM puts by the truckload. I wouldn't advise it though.

FYI pC4 of the WSJ today titled "Money managers on market: why worry?" No one thinks a deal won't get done. And as I type this, a money manager on cnbc is saying the same thing.

The only way I see a deal getting done on time right now is if Boehner collapses. I'm going to have to admit based on the past that's a possibility, but I find it hard to believe that he pushed it this far and he's actually being embraced by the right then he's going to do that and be more hated than he was before.

Which is why I keep going back to that this wasn't unexpected and that the reaction of a deal not getting done isn't as catastrophic as the leftists want it to be. The people who were sent home by the government know they are going to get paid. They aren't sweating. We're not in a Greece situation, at least not yet. The idea that we would be treated like Greece isn't really realistic.

 

[Redfish]

Wrong. But thanks for trying.

NO, I am not wrong, I spent over 40 years dealing with govt funding. I know precisely how it works.

No govt money can be spent until the project or program is authorized and the money appropriated for it. congress cannot appropriate money they don't yet have.

each appropriation is identified by a line of accounting which used to be called a zipper sheet. It means that money has been set aside and cannot be used for anything else.

Some programs use multi year funding and require an annual appropriation.

The problem is that since obozo has never allowed a budget to be put in place, he is just spending whatever he wants and ignoring the fiscal rules of the govt.

I see. So your point is that I'm right only by facts and evidence and you are wrong only because Obama is ignoring the rules and getting away with it?

I don't get your point yet. By my measure the government allocated more spending than they had revenue. Or perhaps you can explain to me how congress set aside money that it did not have.

its obvious that you don't get it. There is plenty of money coming to the treasury this month to pay the interest on the debt, income taxes are still being collected, the IRS is not shut down.

more debt is needed to cover new expenditures, not to pay old bills.

 

[Spoonman]

If someone calls you and threatens to ruin your credit, if you don't do what they want you to do, they can be arrested for extortion.

So can the FBI arrest House Republicans for extortion?

dude, face it, if i was $17 trillion in debt my credit would already be ruined. who the hell are you kidding? We need to start reducing the debt

 

[Vandalshandle]

I have to admit, Kiss, that the total denial on the Right is a frightening thing, indeed. They honestly don't believe that this path is the road to hell. With that in mind, anything is possible, including default and depression.

Money where your mouth is?

I'll lay down some interweb bucks that this "crisis" does not result in us defaulting on interest payments for our national debt.

As a matter of fact, as I posted just yesterday on this thread, I sold every last share of stock I owned at 4 PM Eastern time, Monday of this week.

 

[Contumacious]

Question:

What exactly are the "Dems" supposed to talk about?

Hey Dems, we don't like the Affordable Care ACT signed into LAW by the twice-elected President. Although most of the LAW is NOT covered under discretionary spending -- we'd still like to talk about "defunding" it -- in other words, we really just want to stall and/or repeal the law WITHOUT winning control of the Senate and the White House. I]

Well, THIS IS what I want them to talk about:

It’s obvious why the majority has cooked up this amendment in secret, has introduced it in the middle of a snowstorm, has scheduled the Senate to come in session at midnight, has scheduled a vote for 1 a.m., is insisting that it be passed before Christmas — because they don’t want the American people to know what’s in it,” said


Senator Lamar Alexander, Republican of Tennessee.

.

.

 

[KissMy]

Yep. It certainly doesn't help with Obama out there talking down the markets and threatening Wall Street.

Obama is not threatening markets. China & Japan warned it yesterday. Helping to price in lunacy is a responsible thing to do to prevent economic panic shocks that destroy jobs, wealth & economy. Market panic shocks are the absolute worst thing for jobs, wealth & economy unlike a structured default like the Fed does when it buys bad debt & sterilizes it. Congress invented a cliff to fall off of & kill jobs.

Give us 20Trillion now or we kill your jobs... Yawn...

The United States mistakenly defaulted on some Treasury bills in April 1979 we paid a steep price for stiffing bondholders. We corrected the mistake & made them whole but the interest rates shot up 5%. They went from 9% to 14% & it took 8 long years before rates came back down to 9%. This would destroy the US economy if it happened today. Yet we now are intentionally going to default. Bondholders will certainly be more pissed about that than they were for the mistake in 1979.

A disorderly default will cost way, way more money than giving into democrats & letting the Fed orderly default it. Way more money than raising it ever will. Lehman Brothers & Greece were far smaller, well anticipated, orderly & ring-fenced. It will cost massive bailouts to stop the bank holidays, riots, supporting the unemployed & restarting the economy in the event of a panic driven disorderly default.

Argentina's chaotic bankruptcy a decade ago triggered riots, looting and dozens of deaths. The prospect of that horror scenario playing out due to a disorderly default remains all too real.

 

[Toro]

Treasury auction went badly today. The 4 week rate tripled. Yield curve is inverting. - source Bloomberg TV

CDS on the front month has spiked.

 

[MisterBeale]