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Post by FD1000 on Jan 17, 2023 22:53:55 GMT
FYI, here are some excerpts from an article in today's NYT: How Close Is the U.S. to Hitting the Debt Ceiling? How Bad Would That Be? "Strategists across Wall Street have sent out a raft of research assessing when the United States will exhaust its ability to stay under the debt limit — what’s known as the X-date — and how a default might ripple through asset classes.
T.D. Securities analysts think that the credit rating on U.S. debt is likely to be lowered if negotiations go badly, which could spook some investors. S&P Global Ratings downgraded U.S. debt in 2011, but other major rating agencies still award the sovereign their top assessment. They also expect that people will sell out of risky assets like stocks if a default occurs, while actually piling into some Treasury bonds.
In the month before the debt ceiling was raised in summer 2011, short-dated government bonds called bills swiftly fell in value, pushing their yield — indicative of the government’s cost of borrowing for three months — sharply higher. Stock prices fell, and the 10-year Treasury yield moved in the opposite direction, in part because it was still seen by investors as a safe place to park their cash.
Some investors have begun to look into protection in case the United States does renege on its debts. One trader at BNP Paribas recently sent some investors prices for U.S. credit default swaps, which provide some insurance in return for a small premium, paying out any money they lose if the government does not pay them on time. Such a price list is rare, with interest in protection on American debt usually low given the unlikeliness of default. The price of these contracts has steadily risen over the past six months, implying a higher, though still small, likelihood of a debt ceiling breach."
I for one hope there is a default. I'd really like to see the actual effects. I also want to see the default maintained for at a minimum 12 months. Nothing like the smell of Napalm in the morning!
You actually don't want to see it, especially not for months. It may be a world meltdown. Think 2008 or even 2020 at the bottom.
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Post by johnsmith on Jan 17, 2023 23:16:25 GMT
No, I really do. It's time to call the BS on this annual farce!
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Post by Chahta on Jan 17, 2023 23:43:23 GMT
No, I really do. It's time to call the BS on this annual farce!
On one level I am with you. It is a “line in the sand” that means absolutely nothing. I understand one group wants to contain spending and another group doesn’t. But spending will never be contained so time to get rid of the unceiling altogether.
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Post by johnsmith on Jan 18, 2023 22:45:13 GMT
On one level I am with you. It is a “line in the sand” that means absolutely nothing. I understand one group wants to contain spending and another group doesn’t. But spending will never be contained so time to get rid the unceiling altogether.
I don't know about "one group wants to contain spending and another group doesn’t".
What I've seen is both groups increase the deficit - just in different ways. One group give lots of lip service to "reduce the deficit" and when in power "increases the deficit" anyway. One group increases the deficit (no lip service).
Are hypocrites better?
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Post by marpro on Jan 19, 2023 18:49:29 GMT
I mentioned Sen. McConnell long ago in this thread related to the Debt Ceiling. He is in the news today from Louisville.
- “No, I would not be concerned about a financial crisis,” McConnell told a gaggle of reporters following an event at the University of Louisville to discuss disaster relief funding.
- “In the end, I think the important thing to remember is that America must never default on its debt. It never has, and it never will,” he said. “We’ll end up in some kind of negotiation with the administration over what the circumstances or conditions under which the debt ceiling be raised.”
I told you so. They will find a way about this issue.
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Post by Chahta on Jan 19, 2023 19:00:02 GMT
There will probably be $2t added to the debt ceiling, which is about $32t now. . I doubt anyone denies this is a bad thing. How many chances will there be to do something about debt? I can understand that a few cannot call all the shots but why can’t the many use common sense and DO SOMETHING?
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Post by gman57 on Jan 19, 2023 19:32:07 GMT
The debt ceiling is a joke. Total BS IMHO. Back in the 70's the debt ceiling was 400-500 billion (with a B). Now in the trillions! Who cares what the debt ceiling is, it means absolutely nothing. In 50 years it will be in the ??'s (what's after trillion). Who cares!
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Post by FD1000 on Jan 19, 2023 20:28:30 GMT
The debt ceiling is a joke. Total BS IMHO. Back in the 70's the debt ceiling was 400-500 billion (with a B). Now in the trillions! Who cares what the debt ceiling is, it means absolutely nothing. In 50 years it will be in the ??'s (what's after trillion). Who cares! +1 After the first page there was nothing new, but we still recycling the posts. The US will not default to the point of global disarray, end of story. The rest is just politics and wishful thinking. BTW, this thread should not be under bond brigade, it should be maybe under off-topic or market insight.
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Post by marpro on Jan 19, 2023 20:43:33 GMT
"BTW, this thread should not be under bond brigade, it should be maybe under off-topic or market insight."
+1. Probably under Market Insight.
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Post by chang on Jan 19, 2023 22:07:43 GMT
Since the topic is the debt ceiling, the thread was moved from the Bond Brigade forum to the Off-Topic forum.
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Post by steadyeddy on Jan 20, 2023 1:10:28 GMT
This is an orchestrated crisis... and I hope it is resolved quickly. We have seen this movie before....
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Post by Chahta on Jan 20, 2023 1:15:22 GMT
Yep, it is called spend to infinity. Every year.
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Post by fred495 on Jan 20, 2023 1:22:17 GMT
This is an orchestrated crisis... and I hope it is resolved quickly. We have seen this movie before.... You may be right, eddy. Without playing partisan politics, I don't understand why the Democrats didn't lift the debt ceiling last year when they controlled all three branches of government? It takes a simple majority in both House and Senate and the signature of the President to do so. They could have easily done it before December 31, 2022. Fred
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Post by Chahta on Jan 20, 2023 2:33:10 GMT
fred495 , if you think about it, it is easily answered.
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Post by steadyeddy on Jan 20, 2023 3:57:36 GMT
To the best of my knowledge, debt ceiling is typically raised only in a crisis mode.
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Post by fred495 on Jan 20, 2023 4:19:45 GMT
To the best of my knowledge, debt ceiling is typically raised only in a crisis mode. But, to the best of my limited knowledge and based on a Google search, "Since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit – 49 times under Republican presidents and 29 times under Democratic presidents."
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Post by FD1000 on Jan 20, 2023 4:43:08 GMT
Since the topic is the debt ceiling, the thread was moved from the Bond Brigade forum to the Off-Topic forum. Great move. I see this thread in 4 sites now. Looks like someone is pushing it
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Post by Mustang on Jan 20, 2023 11:49:53 GMT
There will probably be $2t added to the debt ceiling, which is about $32t now. . I doubt anyone denies this is a bad thing. How many chances will there be to do something about debt? I can understand that a few cannot call all the shots but why can’t the many use common sense and DO SOMETHING? Because being reelected is more important than anything. It is so important that Congress convinces itself that endlessly increasing the debt is good for the country when they actually know it isn't. Debt ceilings are an attempt by Congress to control their own urges. But they are always set in the future. When they reach it they always set another higher limit at some other future date. Obviously, the attempt at forcing self-control failed. That's around 100 years of failure. The best that can be said for debt ceilings is that it makes Congress pause a bit to think about it before it continues spending more than it has.
Both parties love to spend. They have different priorities but they love to spend. It buys votes. Some say we don't need a debt limit. After all the attempt to rein in spending failed and we have a system where we can spend endlessly. The Treasury Department issues debt and the Federal Reserve buys it with newly printed money. Its so easy that we should probably just print more so every body can have some. Everyone likes free money.
The problem is inflation. Free money gets supply and demand out of balance. Free money buys votes but it really doesn't allow individual to buy more goods and services. People are just as poor as they were to begin with they just have more, less valuable dollars in their pockets. If the government prints money fast enough we end up with hyperinflation and a total collapse of the monetary system. Other countries have done that. Since our Federal Reserve watches inflation closely hyperinflation is unlikely unless Congress goes completely insane.
I don't mind if Congress pauses to reflect on the debt and deficit spending but they don't. Debt ceiling debates are just arguments about where to spend the newly printed money.
P.S. In a past life I was a supporter of the Balanced Budget Amendment. Such an amendment could never get 2/3 votes in Congress. But people were concerned enough that states called for a new Constitutional Convention. They were one state short. Then a couple of state rescinded their votes for fear the Convention could address issues other than the budget. So close yet so far away.
But I now realize that wouldn't have worked either. There would have been a clause for emergencies and Congress would simply have declared an emergency whenever they wanted to spend more. And they would have been correct. Hitting the debt ceiling and being unable to pay bills is an emergency. So, in my old age, I have no hope at all that spending will ever be under control. It buys votes.
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Post by habsui on Jan 20, 2023 20:56:01 GMT
Since the topic is the debt ceiling, the thread was moved from the Bond Brigade forum to the Off-Topic forum. Great move. I see this thread in 4 sites now. Looks like someone is pushing it Glass house..
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Post by marpro on Jan 20, 2023 21:17:22 GMT
Irrespective of the websites, here is the latest on this now. They create the mess and show it to people that they are solving it. McCarthy has been boxed now.
On the top, now trump wades in too.
Now, what can McCarthy do? Nothing much. I told you so long ago.
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Post by FD1000 on Jan 20, 2023 21:40:25 GMT
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Post by chang on Jan 20, 2023 22:50:27 GMT
Locking this thread, which appears to be heading toward a political discussion. We only have one rule here...
Edit: Several recent posts deleted at the request of the poster. Be assured however that this thread required locking.
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