US Debt Ceiling To Be Hit June 1st - Thoughts?
As above. Thoughts?
I don't live in the US, but obviously this would have catastrophic impacts on the global markets. We've already been through so much pain, can't imagine any more.
I think it's pretty sick how certain people in the US are holding the entire global economy to ransom... Millions of jobs around the world are at stake.
This happens almost every other year and the US government always continues to kick the can. It's hardly holding the global economy hostage, the global economy is filled with the gluttons who enabled this in the first place. What makes you think this time will be any different?
Division within the House. Internal bickering
WOW you're right. I never thought the two parties with completely opposite policy prescriptions might have difficulty agreeing on things. This has never happened before! Next thing you're going to tell me is a Senate vote may be forced to go to a tiebreaker?! We're all doomed!
Well they passed the first deadline already a few months back
Pretty sure an extension of the budget/raising of the debt ceiling has had to happen several times and never matters. What is different here?
It's highly unlikely that we actually hit the debt ceiling and there isn't some sort of truce or compromise to avoid hitting it - one side will scream loudly, the other will act as if they just granted three wishes after jumping out of a lamp, both will then rave about how their efforts saved us from the brink of Armageddon. If this isn't a manufactured crisis in plain sight, I don't know what is.
It's also a great example of how politics distorts everything around it. We are allowed to incur liabilities far out into the future, yet cap our ability to pay them - which makes no logical sense. It makes state budgets look normal in comparison - even though they have all sorts of games they can play to get around the balance budget imperative they have.
It's the ultimate entitlement - we, still, despite our best efforts are the safe haven asset. Dollars, Treasuries, etc. all are flight to safety. Yet we play with fire every few years, kick the can, and then accept larger deficits going forward that simply speed up the problem. It's tangential, and probably irrelevant to waste the words, but there is an underlying spending problem no matter how you slice it. We have to figure it out, and I do empathize with those who raise the issue - the problem is they equally don't care when they are adding to the deficit in good times with tax cuts. Whatever. Rant over.
Hope you're right.
I won't dispute the probable outcome, but I have to say that this "both sides" take is a bad one. American voters routinely understand that it is the GOP who engineer these crises, and routinely punish them, at least according to polling results.
Once again, please don't make this a both sides issue. Only one side of the aisle ever contests the debt ceiling, and that is "conservatives". Anyone who has followed politics in this country for the last decade or two understands why that is: a party with an abysmal demographic outlook is doing it's best to influence policy without recourse to the voters.
You, and many others, are conflating two issues. The budget process is what adds to the deficit (though you're right to call out that things like the 2017 tax cut were outrageous); raising the debt ceiling is merely the mechanism that enables the US Government to pay for costs it has already incurred. The appropriate time for anyone to be negotiating, in bad faith (for the GOP) or otherwise, is when setting a budget. This is why there is an argument that the 14th Amendment might allow Mr Biden to unilaterally issue a trillion dollar coin or whatever other crazy idea is on the table.
At the end of the day this is just the same kind of shenanigans that conservatives love to play in every other facet of our public life: deliberately undermine institutions and gut public trust by refusing to do their jobs, and then turn around and point to their engineered crisis as an example of why government is broken. We saw it with Mr McConnell's subversion of his Constitutional duty in regards to advising and consenting on Mr Garland's SCOTUS appointment, and we see it again here. So lets call a spade a spade, and not this bullshit "enlightened centrism" nonsense
The Republican House has already passed a debt ceiling increase. They aren't "contesting" anything. What world do you live in? Are you posting from another dimension and it's showing up here in this reality? Now it's up to the Democrat Senate to take a vote on it, take it to conference committee with the House to hash out differences, and send it to the President for signature or veto.
Agreed. Basically a non-issue political grandstanding issue which ends in continuance
The probability of the US defaulting is about the same probability of me playing centerfield for the NY Mets.
My buddy's cousin (MD at GS/MS) used to play centerfield for the NY Yankees.
It's incredible that people see this as a genuine likelihood. I would be willing to bet the US government uses modern nukes in a military engagement before it willingly allows a default on its debt. It's more likely the rest of the world collectively decides they're done with our bullshit printing press at the Fed abusing the global financial markets and moves off the dollar themselves, which ironically might trigger the aforementioned scenario as a last ditch grasp for global supremacy.
I believe the odds of default are very low. However, they are more significant than they were previously. This can be reflected in the CDS 5 Years USD. The slight uptick in the chance of US default has caused the CDS spread to widen. Although the government will likely increase the debt ceiling there are risks such as not striking a deal within the timeframe of which Congress, the House, and the White House schedules align, which is only 7 days in May (Link to article).
What I believe investors are betting is not neccessarily a default on US debt but rather a temporary "extension" to allow them more time to reach a deal.
My view is that US spending has spirled out of control, and the widening divergence of our Congress/House has caused a slower, less efficient government. With this in mind, it is obvious that this same scenario will continue to occur more frequently. Eventually, there will be an unlikely event that affects the negotiations of a deal leading to the default on US debt.
Trade idea: Short CDS 5 Year USD, Long CDS 10 Year USD, Long CDS 20 Year USD
How to bet on default as a retail trader?
Don't think my broker gives me access to CDS
Thanks!
Go short the US market. Short spy or Put spread SPY. Then go long Chinese yuan.
So easy to just raise the retirement age a couple years even France managed to do it unbelievable
Fuck that
1. The idea that the right wing can basically hold the entire economy hostage to jam in provisions that are extremely unpopular to everyday Americans is fucked up. And the worst part is, they'll just blame Biden if it happens.
2. Their cuts are garbage policy. Instead of an 18% cut to all agencies which is somewhat reasonable, especially if Biden can negotiate it down to something like 10%, they're going to cut every single agency's budget in half just to please the military industrial complex. The truth that the far right doesn't want you to hear is that there isn't really much discretionary spending at all outside of defense.
Sint deleniti corporis magnam occaecati natus. Magnam sed fugiat sed beatae natus. Et in enim ea quod. Fugit et praesentium sunt dolorem voluptatum architecto. Aut aut consequatur libero cupiditate possimus porro. Repudiandae provident possimus aut adipisci. Sint omnis recusandae doloremque.
Molestiae aliquid quod eveniet asperiores velit minus. Porro rerum ut maxime consequuntur dolorem consequatur consequatur libero. Necessitatibus consequatur modi ratione voluptas quia. Expedita sapiente odio expedita aut qui a cumque.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Magni et ut quia blanditiis adipisci. Quisquam earum tempora minima consectetur veniam occaecati. Eius quis soluta dolorem facilis omnis. Molestiae numquam vel asperiores voluptatibus aut.