US Debt Ceiling

[farmerge]

The clock is still ticking LOUDLY towards June 1st. That is the day that theoretically the US could be unable to pay its bills. The consequences for world economic markets would be catastrophic.

As usual everyone believes something will be done soon by someone to ensure catastrophe doesn't befall us all.

The markets are getting decidedly edgy at the moment. Lots of red. I think by Friday unless there is serious clear progress there will be mass movement to risk-off mode ahead of the weekend. So maybe this is the time to sharpen the pencils and see how the mayhem of a sharply retreating stock market can be corralled ? (Won't be me..)

And then we can plan on coping with the unthinkable if the pieces don't fall into place.

I fear that this time there are too many people who are prepared to push the US economy over the default cliff. Donald Trump is certainly one of the strongest proponents of No Surrender for the Republicans

..................................
Our market is 80 points down and falling.

And one can only hope that the trumpet does not get another chance of being in the White House again.
Interesting to see that donald Jnr bagging D Snr on the idiot box tonight.

 

[Telamelo]

This explanation takes the cake lol haha

 

[Knobby22]

This explanation takes the cake lol haha

Koshies face!

 

[divs4ever]

Best explanation of US debt ceiling dilemma that I've heard lol haha

the real debt ceiling happens when the bond-buyers say NO ! ( and mean it )

so what was closing the US gold window if not a default ??

 

[Value Collector]

the real debt ceiling happens when the bond-buyers say NO ! ( and mean it )

so what was closing the US gold window if not a default ??

That’s when the printing presses wind up and the fed buys more.

Or, they just bring in a rule that only USA bonds are acceptable collateral for insurance companies and banks. These rules already partially exist. That would ensure a big market by itself, eg say it was illegal to sell car, life or home insurance unless those premiums being collected were stored in treasury bonds

 

[basilio]

So Biden and McCarthy have agreed on a formula to raise the debt level.

Next question is whether Congress and The Senate will pass a deal. Trump has said NO. If the MAGA followers in Congress follow his lead this deal may not get up and default will be on the table. From my persepective I don't believe McCarthy gained anything close to what the MAGA members were demanding.

Biden, McCarthy agree to raise US debt ceiling – what’s in the deal?

Sources reveal discretionary spending cap and changes to the federal food program, among other details

www.theguardian.com

The debt ceiling deal isn’t perfect but it’s the only one – and it must pass | Robert Reich

What happens from here depends on how many members of the House prefer governing to chaos

www.theguardian.com

 

[basilio]

Excellent overview of the politics of selling this deal to the Republicians and the Democrats.
It isn't in the bag yet.

Playbook: Debt deal dismay goes left and right

And the Trump vs. DeSantis rivalry ramps up.

www.politico.com

 

[divs4ever]

Or, they just bring in a rule that only USA bonds are acceptable collateral for insurance companies and banks. These rules already partially exist. That would ensure a big market by itself, eg say it was illegal to sell car, life or home insurance unless those premiums being collected were stored in treasury bonds

but that is precisely why those three ( or is it more ) US banks failed, they poured depositors cash into 10 year Treasuries ( and other interest-bearing securities , but got caught in 'the forced selling trap '

trust your government at your own peril

they will do anything in an emergency ( except remove 'emergency measures' in a timely manner )

 

[mullokintyre]

The whole debt ceiling thing is a bit of a Joke.
It only becomes a brinkmanship game when the colour of the incumbent administration is different to whoever controls congress and the senate.
When Reagan was president, he upped the debt ceiling 17 times, taking it from a paltry 985 billion to 2.8 trillion. So much for the lie about Republicans being more fiscally conservative.
The difference, a republican president with a republican controlled congress.
Similarly, GHW Bush raised it 4 times from 2.8 to 4.15 trillion, Clinton raised it four times from 4.37 to 5.95 , G H Bush raised it seven times to 11.3 trillion, Obama raised it on 7 occasions to 18.1Trillion, but also threw in a few periods when the debt ceiling was suspended.
Trump only had two increases, but he managed a few debt suspensions.
Debt was 19.9 trillion when came to office, it had ballooned to 27 trillion.
If you have a compliant congress and senate, debt ceilings are meaningless, either you raise it , or you suspend it.
The end result is the same.
Its only when the president is from a different party to the senate or congress that we have this charade.
Its interesting to go back and read the realiest comments on this thread, it seems that little has changed in 12 years.
Mick

 

[divs4ever]

The whole debt ceiling thing is a bit of a Joke.
It only becomes a brinkmanship game when the colour of the incumbent administration is different to whoever controls congress and the senate.
When Reagan was president, he upped the debt ceiling 17 times, taking it from a paltry 985 billion to 2.8 trillion. So much for the lie about Republicans being more fiscally conservative.
The difference, a republican president with a republican controlled congress.
Similarly, GHW Bush raised it 4 times from 2.8 to 4.15 trillion, Clinton raised it four times from 4.37 to 5.95 , G H Bush raised it seven times to 11.3 trillion, Obama raised it on 7 occasions to 18.1Trillion, but also threw in a few periods when the debt ceiling was suspended.
Trump only had two increases, but he managed a few debt suspensions.
Debt was 19.9 trillion when came to office, it had ballooned to 27 trillion.
If you have a compliant congress and senate, debt ceilings are meaningless, either you raise it , or you suspend it.
The end result is the same.
Its only when the president is from a different party to the senate or congress that we have this charade.
Its interesting to go back and read the realiest comments on this thread, it seems that little has changed in 12 years.
Mick

yes , but it was important to have a plan , just in case things went badly wrong ( say the rating agencies cut the US credit rating to BBB out of sheer frustration )

 

[basilio]

The whole debt ceiling thing is a bit of a Joke.
It only becomes a brinkmanship game when the colour of the incumbent administration is different to whoever controls congress and the senate.
When Reagan was president, he upped the debt ceiling 17 times, taking it from a paltry 985 billion to 2.8 trillion. So much for the lie about Republicans being more fiscally conservative.
The difference, a republican president with a republican controlled congress.
Similarly, GHW Bush raised it 4 times from 2.8 to 4.15 trillion, Clinton raised it four times from 4.37 to 5.95 , G H Bush raised it seven times to 11.3 trillion, Obama raised it on 7 occasions to 18.1Trillion, but also threw in a few periods when the debt ceiling was suspended. ( Check out the 2011 debt crisis when the Republicians refused to increase the debt.)
Trump only had two increases, but he managed a few debt suspensions.( He was only in office for a one term)
Debt was 19.9 trillion when came to office, it had ballooned to 27 trillion.
If you have a compliant congress and senate, debt ceilings are meaningless, either you raise it , or you suspend it.
The end result is the same.
Its only when the president is from a different party to the senate or congress that we have this charade.
Its interesting to go back and read the realiest comments on this thread, it seems that little has changed in 12 years.
Mick

Not sure where you get your information from Mick but there are at least 2 significant errors in your summary.

1) The Republicians screwed Obama in 2011 on the debt ceiling. It was an outcome that Biden remembered and would not accept again. That outcome hurt the US finacially as credit costs jumped as a result of the crisis
2) Trump was in office for only one term. The Democrats had a majority in the Senate after 2018 midterms but still waved through increases in debt ceiling.

Danger and deja vu: what 2011 can tell us about the US debt ceiling crisis

Congress appears to be facing its biggest debt standoff in years – and the consequences of default could be disastrous

www.theguardian.com

 

[mullokintyre]

Not sure where you get your information from Mick but there are at least 2 significant errors in your summary.

Not sure where you get your information from Mick but there are at least 2 significant errors in your summary.

1) The Republicians screwed Obama in 2011 on the debt ceiling. It was an outcome that Biden remembered and would not accept again. That outcome hurt the US finacially as credit costs jumped as a result of the crisis
2) Trump was in office for only one term. The Democrats had a majority in the Senate after 2018 midterms but still waved through increases in debt ceiling.

Danger and deja vu: what 2011 can tell us about the US debt ceiling crisis

Congress appears to be facing its biggest debt standoff in years – and the consequences of default could be disastrous

www.theguardian.com

The Republicians screwed Obama in 2011 on the debt ceiling. It was an outcome that Biden remembered and would not accept again. That outcome hurt the US finacially as credit costs jumped as a result of the crisis

2) Trump was in office for only one term. The Democrats had a majority in the Senate after 2018 midterms but still waved through increases in debt ceiling.

Danger and deja vu: what 2011 can tell us about the US debt ceiling crisis

Congress appears to be facing its biggest debt standoff in years – and the consequences of default could be disastrous

www.theguardian.com

It came from Here.
But I will accept my errors, although Obama still managed to increase the debt ceiling and suspend it all togethera few times prior to 2011 when the Republicans took control of congress.He still managed three other raises , without a compliant congress.
However, in general, apart from your two instances, all of those other 30 increases and suspensions came with a compliant congress.
Mick

 

[Smurf1976]

It isn't in the bag yet.

By thought here is "buy the rumour, sell the fact".

The market's bounced nicely on the news but I'm thinking that's more of a selling opportunity than a buying opportunity. Nothing fundamental has changed.

 

[Value Collector]

but that is precisely why those three ( or is it more ) US banks failed, they poured depositors cash into 10 year Treasuries ( and other interest-bearing securities , but got caught in 'the forced selling trap '

trust your government at your own peril

they will do anything in an emergency ( except remove 'emergency measures' in a timely manner )

It wasn’t the fact they invested in government bonds that got them in trouble, it was the fact they were over weight in very long dated bonds at the wrong time, eg when interest rates rose causing the market value to drop.

If they had shorter dated securities it wouldn’t have been and issue,

 

[farmerge]

So Biden and McCarthy have agreed on a formula to raise the debt level.

Next question is whether Congress and The Senate will pass a deal. Trump has said NO. If the MAGA followers in Congress follow his lead this deal may not get up and default will be on the table. From my persepective I don't believe McCarthy gained anything close to what the MAGA members were demanding.

Biden, McCarthy agree to raise US debt ceiling – what’s in the deal?

Sources reveal discretionary spending cap and changes to the federal food program, among other details

www.theguardian.com

The debt ceiling deal isn’t perfect but it’s the only one – and it must pass | Robert Reich

What happens from here depends on how many members of the House prefer governing to chaos

www.theguardian.com

Is the Trumpet a de facto President. Hopefully not. One moron in the world is enough and we have him here in the obese form of Fat Clive.

 

[basilio]

Is the Trumpet a de facto President. Hopefully not. One moron in the world is enough and we have him here in the obese form of Fat Clive.

No but he holds considerable sway over the extreme MAGA Republicians who want to die in a ditch (and pull the whole US economy in with em) on not allowing the debt ceiling to rise.

Trump hasn't opened his mouth yet since the Biden/McCarthy announced the deal. Both parties are already aware they will need cross party voting to ensure the debt bills are passed. And there is no guarantee the whips will be successful.

 

[farmerge]

No but he holds considerable sway over the extreme MAGA Republicians who want to die in a ditch (and pull the whole US economy in with em) on not allowing the debt ceiling to rise.

Trump hasn't opened his mouth yet since the Biden/McCarthy announced the deal. Both parties are already aware they will need cross party voting to ensure the debt bills are passed. And there is no guarantee the whips will be successful.

isn't it amazing that the peasant masses can't see past their collective noses, only being lead along by it because the schoolyard bully mutters I am always right, believe what I said say.

 

[basilio]

isn't it amazing that the peasant masses can't see past their collective noses, only being lead along by it because the schoolyard bully mutters I am always right, believe what I said say.

Weellll... The whole point of being a charismatic sociopath is convincing people you are always right and you must believe what I say. Trump is a masterful sociopath.
I'm not sure if many of your fellow posters on ASF would like to be grouped as the "peasant masses". And the hundreds of Trump supporting Republican Senators, Congressmen and women, and thousands of State based Trump supporters say Hi .

The facts are that Trump operates through fear. He dominates and abuses people. He has destroyed all overt opposition to him in the Republican Party. Those left either actually believe what he says or keep mum to keep their head. All Republican politicians who have called out his lies have been drummed out of the party.

It was, Bob Woodward recalls, “an almost Shakespearean moment”. He and a Washington Post colleague were interviewing Donald Trump in March 2016. They asked how Trump defines power. The then presidential candidate replied: “Real power is – I don’t even want to use the word – fear.”

Woodward recalls that it was like “Hamlet’s aside, turning to the audience to say: ‘This is what’s really going on, this is what it’s really about. I want it to be known but I don’t want it to be known.’ That great ambivalence of the politician speaking a dangerous truth.”

Bob Woodward: 'Too many people are emotionally unhinged about Trump'

The journalist, who has now written about nine US presidents, discusses his new book, Fear, and how he believes the media should have responded to Trump

www.theguardian.com

 

[farmerge]

Weellll... The whole point of being a charismatic sociopath is convincing people you are always right and you must believe what I say. Trump is a masterful sociopath.
I'm not sure if many of your fellow posters on ASF would like to be grouped as the "peasant masses". And the hundreds of Trump supporting Republican Senators, Congressmen and women, and thousands of State based Trump supporters say Hi .

The facts are that Trump operates through fear. He dominates and abuses people. He has destroyed all overt opposition to him in the Republican Party. Those left either actually believe what he says or keep mum to keep their head. All Republican politicians who have called out his lies have been drummed out of the party.

It was, Bob Woodward recalls, “an almost Shakespearean moment”. He and a Washington Post colleague were interviewing Donald Trump in March 2016. They asked how Trump defines power. The then presidential candidate replied: “Real power is – I don’t even want to use the word – fear.”

Woodward recalls that it was like “Hamlet’s aside, turning to the audience to say: ‘This is what’s really going on, this is what it’s really about. I want it to be known but I don’t want it to be known.’ That great ambivalence of the politician speaking a dangerous truth.”

Bob Woodward: 'Too many people are emotionally unhinged about Trump'

The journalist, who has now written about nine US presidents, discusses his new book, Fear, and how he believes the media should have responded to Trump

www.theguardian.com

Good morning Mr basillo My reference to the peasant masses, I was referring to the rent a rabble mob that hang of every utterance this moron makes, NOT to or about the knowlegeable ASF posters.

 

[basilio]

Good morning Mr basillo My reference to the peasant masses, I was referring to the rent a rabble mob that hang of every utterance this moron makes, NOT to or about the knowlegeable ASF posters.

Indeed !! Absolutely !! There is such a world of difference here and it would be totally unworthy to even imagine such a juxtaposition.