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US Debt Ceiling

Knobby22

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It appears the big win the Republicans got was to stop Biden spending additional money to catch tax evaders (80 billion).
In effect they want they want to make it optional for the wealthy to pay tax. Honestly the USA self harm keeps continuing.
It is sobering.
 
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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,


everyone assumes those long-dated Treasuries were bought at par ( face-value ) ... were they ?
there must have been some attraction to (potentially ) tying up customers money for 10 to 30 years ( especially a bank not a pension fund )

using the bonds as collateral in some other investment vehicle perhaps

given the low interest rates when those bonds were purchased i am amazed they didn't buy TIPS ( inflation-adjusted Treasuries or a floating rate interest-bearing bonds )

am still wondering why long duration and note short-term-mid-term

but will we ever know the reasoning after all these were NOT small banks they had billions under management
 
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It appears the big win the Republicans got was to stop Biden spending additional money to catch tax evaders (80 billion).
In effect they want they want to make it optional for the wealthy to pay tax. Honestly the USA self harm keeps continuing.
It is sobering.
hopefully that trend towards self-harm is not contagious ( but i fear it is )
 
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It appears the big win the Republicans got was to stop Biden spending additional money to catch tax evaders (80 billion).
In effect they want they want to make it optional for the wealthy to pay tax. Honestly the USA self harm keeps continuing.
It is sobering.

Not so sure about that Knobby. This was the analysis on Politico. Perhaps more of a flesh wound ?

IRS cuts

A portion of the $80 billion in funding Democrats pushed through for the IRS last year would be clawed back. That pot of money is supposed to help the agency super-charge its ability to go after wealthy tax cheats, modernize its IT systems and improve customer service.
Republicans have been on a tear against the funding for months, saying it would primarily be used to go after average taxpayers, despite the Biden administration’s vow not to increase usual audit rates for those making less than $400,000.

While the administration fought to wall off the money, the cut is expected to be relatively small compared with what the GOP had pushed for all year. House Republicans used their first vote after taking over the chamber this year to call for rescinding more than $70 billion of the funding, while leaving some money intact for taxpayer service improvements.

The debt-limit agreement probably won’t please either side, though Republican lawmakers have more reason to be disgruntled than Democrats since the funding isn’t being eliminated.


 

Value Collector

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everyone assumes those long-dated Treasuries were bought at par ( face-value ) ... were they ?
there must have been some attraction to (potentially ) tying up customers money for 10 to 30 years ( especially a bank not a pension fund )

using the bonds as collateral in some other investment vehicle perhaps

given the low interest rates when those bonds were purchased i am amazed they didn't buy TIPS ( inflation-adjusted Treasuries or a floating rate interest-bearing bonds )

am still wondering why long duration and note short-term-mid-term

but will we ever know the reasoning after all these were NOT small banks they had billions under management
I believe they had built their business by offering depositors a slightly higher interest rate on their at call deposits.

This higher interest rate was funded but putting the deposits to work in longer dated government bonds and private ABS.

It’s an ok strategy provided either the total pool of deposit remains static, withdrawals and deposits stay in balance or the market value of the securities is static

But if deposits out match withdrawals while the market value of the securities drops, the bank is in trouble.
 

Value Collector

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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.
Turns out Desantis is running for President, if he gets in America is going to be crazier than it already is.
 

Dona Ferentes

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US lawmakers approved the debt ceiling and budget cuts package, easing concern about a default in the world’s largest economy.

US lawmakers from both parties joined to approve the bill 314-117 Wednesday evening (Thursday AEST), sending the measure to the Senate for consideration as a default deadline draws near...
 
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US lawmakers approved the debt ceiling and budget cuts package, easing concern about a default in the world’s largest economy.

US lawmakers from both parties joined to approve the bill 314-117 Wednesday evening (Thursday AEST), sending the measure to the Senate for consideration as a default deadline draws near...
Playing politics at its worst.
 

Dona Ferentes

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and now...

US President Joe Biden has signed legislation lifting the nation's debt ceiling and averting an unprecedented default on the federal government's debt.

Key points:​

  • The legislation was signed with two days to spare until the Treasury Department warned the US would start running out of money
  • Raising the nation's debt limit to $US31.4 trillion will ensure the government can borrow to pay debts already incurred
  • The final agreement will suspend the debt limit until 2025 and restrict government spending
 
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and now...

US President Joe Biden has signed legislation lifting the nation's debt ceiling and averting an unprecedented default on the federal government's debt.

Key points:​

  • The legislation was signed with two days to spare until the Treasury Department warned the US would start running out of money
  • Raising the nation's debt limit to $US31.4 trillion will ensure the government can borrow to pay debts already incurred
  • The final agreement will suspend the debt limit until 2025 and restrict government spending
Shows the stupidity of it all.
The debt ceiling is artificial if its suspended.
So the Feds can rack up trillions more in debt until 2025.
Just like Obama, Trump, did.
Whats the bet that by 2025 comes around and the debt ceiling comes out of suspension that the debt has already gone over this new and improved debt ceiling.
By then there will he a new president, senate congress and probably new senate and congressional leaders of both parties who will have to "worry" about it.
Mick
 
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and now...

US President Joe Biden has signed legislation lifting the nation's debt ceiling and averting an unprecedented default on the federal government's debt.

Key points:​

  • The legislation was signed with two days to spare until the Treasury Department warned the US would start running out of money
  • Raising the nation's debt limit to $US31.4 trillion will ensure the government can borrow to pay debts already incurred
  • The final agreement will suspend the debt limit until 2025 and restrict government spending
Almost seems like Monopoly Money with these figures
 
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