Debt Ceiling Charade: The Smart Options
Submitted by
CalculatedRisk on Sun, 07/24/2011 - 6:36am (413 comments)
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HomeGnome wrote:
The same way, I'm sure.
Rob Dawg wrote:
Not necessarily. Long-term holders would want to follow the rule. But there's a problem with repo purchases and derivative collateral. With a downgrade, if a substantial number of them prefer other forms of AA debt, then the price of, say, AA US securities will drop. Even a little could create massive trouble for highly-leveraged derivative players. They will thus want to sell to get ahead of the drop, which can in turn drive prices down to where less-leveraged players need to sell, and so forth and so on.
Basically, there's a real possibility of a classic financial panic situation. Even though the US could certainly pay, and almost certainly will, the feedback of the market can amplify a small amount of fear or rule-based selling to an unmanageable level.
Rob Dawg wrote:
How do banana republics do it?
What the heck would they "invest" in?
Some dopes will sell and some non-dopes will not.
Rob Dawg wrote:
Yup, that's what the "no action statement" would be. Sure, shareholders could still sue. Good luck with that.
Eric wrote:
They don't have the authority to overrule these rules--they aren't government mandated for the most part--part of the charters/ incorporation/ state law.
gabyjan wrote:
Cali houses don't have basements but if pushed we could provide 19 bedrooms. Then there is the garage, shop, tack room and hayroom.
Eric wrote:
Banana!!!
lawyerliz wrote:
Yup ditto. Always pleasant too. and have the standard US service ethic. I know - plural of anecdote is not data - so I took the liberty of googling hmm they used to use something called a CSI to measure customer satisfaction. I'm sure we can chart this - paging CR..
Fair Economist wrote:
Isn't that the classic start of a crash?
Mel wrote:
They're not overruling anything. They're just saying they won't prosecute.
ciao.
THE EMPEROR HAS NO CLOTHES!
So you sue your fund manager to force him to dump USTs at a huge loss to move into suddenly popular and expensive alternatives that are no safer? Not.
Eric wrote:
BANANA!
Fair!! How ya been?
How's the kid and SO?
Best point: We've got a budget deficit of $1.5 trillion; we're borrowing 42 cents on every dollar we spend; we have $14.5 trillion national debt. It is time to get serious about stopping the spending here in Washington, DC.
Yup!
pavel.chichikov wrote:
Depends heavily on where you think the value of fiat currency is headed. Its the life blood of the banksters and always has been.
How to create "debt" or more correctly debt slaves out of everyone. Read your history eventually they always manage to capture the governments in the end. Once captured sometimes governments revolt via hyperinflation and sometimes collapse because of internal or external conflict. If being a good study of history is stupid well perhaps they are however I doubt it. Next the financial system almost collapsed taking out all the banksters they have been given a mandate to solve their problems with no interference and and as I said before and open checkbook. I think we are beginning to see what this means.
Poorandunemployed wrote:
Hey! Move to Greenwood CA or Cool CA. No waiting. That 60 year old woman in the Cool PO with the tats and piercings, rings and bling is a sweety.
Fair Economist wrote:
Yes, this is a real possibility, and the only thing that would scare the tea party folks into doing something they vowed they would never do. Never say never in politics or economics, because it will come back to bite you hard.
Gold will hit $2k in a panic, and silver $65-70 is my guess.
Of course, it would make for a wide awake summer, instead of the sleepy doldrums.
Someday this war's gonna end...
sporkfed wrote:
Future liabilities must be brought in line with revenues through a combination of means, all of which involve lower purchasing power.
dilbert dogbert wrote:
Yeah, well, you don't want a nice stone lintel with carved images of the goddess Athena (wisdom) falling on the kiddies during recess. OTOH, in California money for public buildings has been hard to come by, especially schools. The elementary school I attended as a child is still there with the original building -- surrounded by lines and clusters of "temporary" classrooms up to 50 years old that hold many more students than the original building.
Some of this had to do with rapid population growth -- cheaper to expand an old school than build a new one -- but it's also about the money.
Long run, maybe the cheap school buildings were the best bet. I expect some areas to depopulate -- heck, they have already, post boom. And bubble areas like mine have lost families in favor of older couples or singles, and are closing elementary schools even as the population stays the same. No use building a monster with a 100-year-life if you're not sure there'll be any kids around.
Maybe someday the demographics will calm down and it'll be smart to build to last again -- always cheaper in the long run. And those decorative lintels can be made of architectural foam.
memmel wrote:
john law haz got us!
I wish I was stupid and earned millions!
I think the stupid people give smart bankers their hard earned money and in return, the bankers play stupid to make the customers happy!
I've been very busy, too busy to keep up with things and have something intelligent to say. Kid and SO are fine, but the adoption is running very slow for bureaucratic and California state budget reasons. I need deficit spending on time, but it doesn't seem to work.
Oh gosh, I thought kid was adopted, like, a year ago?
Rob Dawg wrote:
Many funds clearly state they only invest in AAA rated securities--I don't think fund managers have as much leeway--or as much courage--as you presume. Municipal pension plans have to hold a certain percentage in AAA securities--and we both know those municipal fund managers will follow that rule. No--there will be blood on Wall Street.
Citizen AllenM wrote:
Middle age does a job on hair, skin, eyesight, sex, boobs and butts.
"All good things . . . " It's time for us to leave this storybook town and return to our own mundane existence.
Later
Expanding on Gold... Precious Metals ETFs
All the wrong people are buying precious metals, this is late stage panic driven stupid money buying gold at all time highs... if you thought Casey Serin was bad for the housing bubble, watch what happens when Aunt Martha is all in on gold. Greater fools were not just made for houses.
Greenwood?
Very cool.
I used to live Pt Arena.
Elk, Mendocino County, California - Wikipedia, the free encyclopedia
But you may be referring to the one in the Sierra Foothills.
km4 wrote:
The problem is not spending, which is basically at historical levels. The problem is extremely low taxes, especially on the rich, which are lower than they've been since the 50's, when they need to be much higher due to additional obligations the feds have appropriately taken on, notably SS and Medicare.. The only spending which really needs to be cut is national "defense" and ag subsidies. The approriate cuts are indeed quite large - hundreds of billions per year - but not on the scale needed to bring the budget back into cyclical balance.
pavel.chichikov wrote:
Two or more wives or husbands at the same time for sure. Clones? How about a couple of extra arms? Even eyes in the back of the head?
Mel wrote:
I'm counting on it Mel!
Critical Update Notificat... wrote:
As someone who has believed in gold as a hedge and nothing more, I am considering a casual saunter toward the Exit sign.
Career postal employees are either civil service or fers. If you were hired after 1984-85 you are fers.
I'm assuming Evodevo is a substitute rural carrier. They are basically only paid when they work
and earn no benefits. A fers benefit plan will allow a career mailman to retire after 20 years with a minimum
Retirement age of 56-57 and receive about $825 a month in pension. The retirees health care premium
comes out of the $825, so you are looking at around a $500 pension. Congress has been siphoning
money out of the Postal System for decades. Now, they require the postal service to pre fund all
Retirement and health care costs at an accelerated schedule. This was done to bankrupt the postal service
In the eyes of the public.
Critical Update Notificat... wrote:
How many banks are going to give Aunt Martha a 500k no-doc loan to buy gold? The upside pressure can't approach the insanity of the housing bubble.
Serin! At least with gold it is much harder to leverage.
Fair Economist wrote:
Iraq
Afghanistan
Pakistan
Yemen
Somalia
Libya
lawyerliz wrote:
Moved in a year ago. Adoption takes longer. In olden days it would have been 6-9 months given his legal situation coming in, possibly accelerated due to some situational circumstances. But as it is an appeals court sat on the case for 10 months. Supposedly they've heard it and as soon as somebody at family services can spend the time to read the decision it may start progressing.
Fair Economist wrote:
I think it would be more accurate to say that long-term holders want their money back. They want rules that insure that return.
Rob Dawg wrote:
Well, only for housing-type leverage ratios:
UGL Basic Chart | ProShares Ultra Gold Stock - Yahoo! Finance
My sil used to be a surgical nurse (got cancer, had to quit). They tried to accomodate tats, but couldn't always.
Tats would be fun, if you could remove them when you wanted.
Personally, I don't even have pierced ears.
As long as bound feet don't get into fashion.
Off topic: hope springs eternal Two new Portland area shopping centers may provide glimpse into the future | OregonLive.com
And OR is supposedly not as oversupplied w/retail square footage/capita much of the rest of the US is (not including NYC). Wouldn't know that from my town or the town 10 miles to the south.
If the fund investment policies are fundamental (and many of them are), they can only be changed by holding a shareholder vote.
Proxy votes are expensive and always uncertain.
If not enough shareholders bother to vote, then the existing rules remain in place.
@Fair Economist
key problems include
1. Merica can pay its bills only if other countries and investors continue to lend us $100 Billion every month ( $150 Billion a mo. soon )
2. budget deficit of $1.5 trillion; we're borrowing 42 cents on every dollar we spend
3. $14.5 trillion national debt and growing fast U.S. National Debt Clock : Real Time
4. extremely low taxes, especially on the rich ( agree )
5. Corporations paying lowest taxes since 1950's e.g. GE pays zero
dilbert dogbert wrote:
Rules?
We don't need rules.
Ask Eric and Dawg.
We can just not enforce them or just ignore them.
How do banana republics do it?
HomeGnome wrote:
With appeal.
Mr Slippery wrote:
Maybe. But if you adjust for inflation, the price of gold right now is in the price range that gold maintained around 1980 -- with that one-day spike to $850 (2200~ in our money) in the middle. IOW, by the standards of recent history, price is as crazy now as it was in the early '80s, absent that one-day spike. The only question here is can it get even crazier before the inevitable and I'm not sure I care to find out.
JP wrote:
groan.
lawyerliz wrote:
Since we tend to reduce everything to investment opportunities here -- if you find some entrepreneur with a cheap and easy method for removing permanent tattoos, get in on the ground floor. That's an even safer bet than cheap energy.
Enjoy your stroll, Bob Dobbs.
No
km4 wrote:
To fix the budget deficit you must first fix the trade deficit. Raise the debt limit and then focus on the trade deficit. Only after that's fixed, can we fix the budget deficit. You both have it backwards.
Once again traderwalt my first pt also speaks to the trade deficit !
1. Merica can pay its bills only if other countries and investors continue to lend us $100 Billion every month ( $150 Billion a mo. soon )
HomeGnome wrote:
Just to be clear: I agree with you, it's wrong.
But it's what will happen.
CR, this isn't a "charade" as you call it.
This is part of a very real political operation whose purpose is nothing less than to create a corporate state.
Fascism.
Bob Dobbs wrote:
Of course it can, that is the nature of markets. I haven't seen or heard much of the Aunt Martha buying anecdotes. Everyone I know is still selling their jewelry, not buying.
Eric wrote:
I misunderstood.
Sadly, if it reaches that point, I agree that it will.
BANANA!
this has to have been posted already...
Global Currencies: The Euro, The Yen, and the Bitcoin? - CNBC (hmm, I guess not)
mp wrote:
they won't believe it, mp.
Lehman. LTCM. Bear Stearns. TARP. GM. We no longer even bother to pretend.
Poorandunemployed wrote:
Ahh, so I guess there are no lazy people in 'merica. OK then, it's solved!
Rob Dawg wrote:
BANANA!
Call your broker!
Mr Slippery wrote:
I guess my question would be then, who's buying the gold from the jewelry they're selling? I have heard stories of top 1- and 2-percenters locally making six-figure purchases of physical gold. Or is it all heading out of country? I haven't a clue.
HomeGnome wrote:
Gnome, I'm beyond caring about what anyone believes.
I'm just stating my opinion, that's all.
Take it or leave it.
Citizen AllenM wrote:
And straight 15% income tax. No loopholes.
mp wrote:
It's my opinion as well.
Corporatism under the
is gunna be awesome.
km4 wrote:
You do understand what he eludes to, right?
Just checking for consistency in your posts.
More are beginning to believe it
Eludes. Best typo ever.
Comrade Kristina wrote:
there's 16 TRILLION reasons to believe....
Fed audit: $16 trillion in loans to banks in less than three years « Hot Air
mp wrote:
When I read mention of the "super congress," I just about upchucked. They're proposing to work around the 17th Amendment, which required that senators be elected directly instead of by state legislatures as had been the design. Thus the senate was staffed by nothing but party bosses. If that's the "logic" they see in Washington to make the system continue working, yes, fascism.
Already here now, really, with most Americans talking jobs and their "representatives" talking deficits and tax cuts. This would just cement it. And if "super congress" doesn't pass now, it'll come up again. It's what our owners want -- all power concentrated at the smallest point possible, where it can be most easily and efficiently controlled.
Bob Dobbs wrote:
TOTAL informational awareness
HomeGnome wrote:
Globalism is the prime mover--freer trade means leveling world economies. Free flowing capital facilitates this--std of living here is doomed--but corporate profits are doing well.
adornosghost wrote:
Obama says he needs another $6BILLION to keep that efficient operation working. It needs a radical overhaul.
3days/wk delivery to a neighborhood post box. I really don't need my mail. I get it every other day from my mailbox, mostly junk. I may drop it to 1X/wk opening my mailbox.
bearly wrote:
how will income be defined? Differentiating income from capital gains from that of earned (wage or self employment) income is part of the problem of unequal taxation in the US.
Bob Dobbs wrote:
Well, central banks -- the people that create currency from nothing -- have been big buyers the last two years.
http://www.ft.com/intl/cms/s/0/cbc02e10-7637-11e0-b4f7-00144feabdc0,s01=1.html
They don't usually offer explanations when they buy.
So, were just trying to make the banks whole while keeping the taxpayers on the hook, right ?
This shell game is getting a little harder to follow.
bearly wrote:
Postal Service to pay less for homes to relocate workers - CNN.com
Get rid of the debt ceiling and end the charade of trying to prevent hyperinflation and the destruction of the economy (quicker)?
Mel wrote:
The Security State is a freaking CASH COW!!!
When the rules madate suicide, you ignore the rules.
Financial or otherwise.
Unless you want to commit suicide, of course.
bearly wrote:
personally i call it supervising ,im good at it.
One final point about the "Super Congress."
It was tried in California the past few years in our contentious Dem/Repub budget negotiations: the "Gang of Five," Dem and Repub leaders of both houses plus the governor. All budgets were negotiated by those five alone. It solved nothing because the divisions politically here were as contentious as at the national level. Except, of course, to limit anything like democratic input into the negotiations.
That's fine for the debt ceiling, CR. What do you suggest we do about the debt?
Hyperinflation?
If I hear any more talk about hyperinflation, I'm gonna puke.
The only thing hyperinflating here is right wing extremist rhetoric.
lawyerliz wrote:
Yes, that whole bill of rights thing gets in the way of catching terrorists.
USA PATRIOT Act - Wikipedia, the free encyclopedia
How do banana republics do it?
Ok, tariffs is ok by me.
Enough tariffs to cover the pollution equivalence. to start. This isn't really hard.
More importantly, what do we do about the unconstitutional Fed charade?
notice how checkless paydays arent mention
my bank put in a plan for dealing with the "debt ceiling crisis"
think about it!
see what your bank has in place
I thought it was a mere 2T over and over again?
Corporatism is a euphemism.
bearly wrote:
Of course Obama gets this. How many times has Geithner said that exports needed to increase?
Dollar Down: Geithner: "Need to Increase Exports, Compete Globally" Code For: "Need a Weaker Dollar" | Commodity Articles
It is after all:
Of course, in order to increase exports within a reasonable time frame you need a lower Dollar which is achieved via QEx.
What's also essential is that the biggest single import item (oil) gets more expensive. This is particularly important as the U.S. is the biggest user of it per capita. In order to rebalance the Current Account this needs to be addressed and only lower consumption per capita vs. world per capita consumption can address it. And what is the most effective means to address it? QEx.
Hmmmmm.
lawyerliz wrote:
It's suicide only for the fund clients--could be prison for the fund manager.
you must be a shill because you act like hyperinflation can't happen or has never happened...hard to believe it could but that is/was probably what folks always think before the policies make it inevitable...
can they do this?
House Republicans Prepared to Act Alone on Debt Plan, Boehner Says - FoxNews.com
The benefits to the public from the postal service far outweigh the costs to the public.
If you want the cost of online commerce to jump, just eliminate the postal service and
watch companies like Amazon down to small businesses find out that their business
model doesn't work any more. The function of the postal service is to promote commerce,
not to operate as a business, just like the highway system.
snaff wrote:
The car hasn't even been on the market for a year yet.
Get your facts straight. Ever heard of Google?
Thx for checking but my dynamic range far exceeds people on this board
Boehner fears stock falls if debt talks fail - Americas - Al Jazeera English
they know and they are watching
Top senator warns US reaching 'brink of default' - Channel NewsAsia
adornosghost wrote:
Yes. The eastern foothills of Tennessee located in the Sierra foothills. Retirement area for the Bay Area. Great RE arbitrage!
Mendo was a favorite for vacations when the kids were little. Good memories.
Gonna miss the Santa Rosa Sailing Club Regatta in Tomales Bay this year. Boo Hoo. Another place for great memories.
mp wrote:
You are on your way to action.
bearly wrote:
I live on a horse ranch, so my mail will end up in the bottom of a pickup truck if delivered to the physical address.
All goes to a PO Box, which may be a more realistic model as we contract to a simpler society (the optimist view).
RE wrote:
Or, something that's at least partially under his control, fix the import side. The bulk of imports (for now) is energy. We have plenty of oil and generations of know NatGas. He could have used to 800BB to intergrate that into our transportation infrastucture.
traderwalt wrote:
I guess I am more of a Doomer than you guys as you talk about fixing things. The impossible fix I think about is combination of money and politics. That will never be fixed so nothing will be fixed. Enjoy.
The big banking bailout loans bailed out the global financial system...now international banking needs to be bailed out again....so an example of getting in deeper in loans/debt doesn't always work out.
Mel wrote:
I always think this is an unfortunate term - leveling. I think it means accentuating the differences in income. Higher highs and lower lows.
The debt ceiling is not a joke. It is the last vestige of the notion that the government needs the people's CONSENT to raise debt. Without it, raising debt would become automatic and invisible.
The debt ceiling forces politicians to debate and discuss it.
Yes, the debt ceiling will be raised.
Yes, there will be arguments and compromise.
Yes, there will be political posturing.
No, there will be no default.
Like the dance before the hunt, these rituals remind us of WHY we are doing what we are doing, even if the dance no longer serves its original purpose.
The US Army operates on a two-year budget. The reason for this is stated in the Constitution:
"To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;"
Our founders did not want to allow a large standing army, so they limited the appropriations for armies to no more than two years. You cut off an army by cutting off its funding.
In the post-WWII era, we collectively decided we needed a large standing Army, so Congress goes through the "charade" of continuing its existence on a rolling basis every two years. Our leaders didn't want to go to the bother of amending the Constitution.
Congress no longer debates whether we shall have a US Army anymore, so it continues ad infinitum.
So if eternal and rising debt is what you want, by all means let's end the "charade" of having to actually vote on it every year.
The whole voting and debate thing is such an inconvenience, isn't it? In fact, why don't we just appoint a dictator so we don't have to trouble ourselves anymore.
sporkfed wrote:
No, you will see companies like FedEx, UPS, and local distributors expand to door-to-door service.
We will also see the end of junk mail when it becomes too costly to plaster every home in America with needless paper.
I probably get a dozen pieces of mail a year that I really want.
"The debt ceiling is a joke. It serves no purpose except political posturing. It is not about the deficit - it is about paying the bills, and the U.S. will pay the bills."
This simply couldn't be less true! The debt ceiling is necessary like limits are necessary for children. Americans are a lazy, immature, unbalanced, ill-disciplined rabble. Always were, always will be. Without limits - and even with them - they will run amok. Depend on it.