surreal moment for America

[Days]

Bingo! You are exactly correct. Are you familiar with the Eurodollar expansion (and now contraction)? That's where most of the CB's liquidity went - loans to invest in emerging market commodity and infrastructure projects (there's what - a half dozen or more entire cities in China with no one living in them. Now that the Fed has stopped expanding its balance sheet the process has reversed and now the hot money is leaving the EMs and acting like a reverse QE. So either the Fed And other developed market CBs) buys up all that paper or the world economy collapses. It's basically rearranging deck chairs on the Titanic at this point but who knows how long they can keep the plates spinning? It might be decades or it might be months. One thing for sure though is that no matter how long it lasts, there will be no economic recovery for the vast majority throughout. This "recovery" is only for bureaucrats and oligarchs. Heck of a job Bushbama...

Yeah, I stay up nights in a cold sweat worrying about how the bankers will compress all their over printing of synthetic money, but I'm sure they will pull through, after all, its just numbers in a computer getting crushed... literally crushed.

Meanwhile, back in the good ol' USA, we wait with baited breath for the global market to abandon all their investment for the past 30 years and return to our friendly shores all that manufacturing base that left... isn't that happening? What's this I hear about deep water hub ports for Pacific shipping lanes? How big are those new class of container ships? Too big for any port in the world except the new hub ports being built? (should be finished in 2020 with all of them) Do you think they intend to use that system? Guess maybe manufacturing won't be returning in my lifetime, eh? Let's get real, that market is never going to return, we have to build new markets.

 

[ObamacareForever]

It is a false notion used to terrorize the ignorant that the country automatically defaults if the debt ceiling isn't raised.

The federal govt will still collect $1.5 trillion in revenue. Thanks to The Feds Zero Interest Rate Policy (ZIRP), interest on the $20T debt is under $500B. Leaving our beloved central govt $1T to fund all its regime change wars, SSI, etc.

Not to mention Obama could issue a executive memorandum directive order to the IRS to collect a onetime govt service charge = to last years taxes.

This would be true if all the 1.5 T in tax reciepts were bundled and delievered nicely on the IRS' doorstep on January 1 of year. And even better if all the government's expenses were due on December 31 of every year. But in actuality the government's nor does anyone's else cash flows line up perfectly like that.

 

[ObamacareForever]

exacta-mundo.

I would argue that there's never been a "recovery" that came anywhere close to recovering what was lost. The intl bankers made their money going overseas with their capital investment into China and that side of the Pacific rim. All we got was a collapse and a smoke-and-mirrors recovery. Now we have a debt that is like 500% of GDP, and interest rates that mirror Japan. The road ahead is going to be all uphill in the mud.

Just printing more money does not rebuild the infrastructure, not when it is used to prop up existing stocks. This bull shit has been happening for 40 years and America still can't see why it isn't working.

Regardless of the amount of debt THE US accrues their is never any default risk. They still own the printing press. Hence the low interest rate. Hence the Japanese low rates

 

[Days]

Regardless of the amount of debt THE US accrues their is never any default risk. They still own the printing press. Hence the low interest rate. Hence the Japanese low rates

There is $13 trillion in Treasuries out there that will come due, to be paid in full; I'd call that a substantial risk of default; in fact, I'd go so far as to say, it is practically inevitable.

 

[ObamacareForever]

There is $13 trillion in Treasuries out there that will come due, to be paid in full; I'd call that a substantial risk of default; in fact, I'd go so far as to say, it is practically inevitable.

As long as they have the keys to the printing press default is impossible. If worse came to worse the government could inflate their way out of debt. Greece is different they handed their keys to the printing press over to Europe.

 

[Days]

As long as they have the keys to the printing press default is impossible. If worse came to worse the government could inflate their way out of debt. Greece is different they handed their keys to the printing press over to Europe.

Except one thing, they refuse to use the god damn thing for themselves. Minus JFK and Lincoln, no president has printed United States Notes. So yes, we are still a sovereign nation on paper, but in action?

 

[Lukey]

Yeah, I stay up nights in a cold sweat worrying about how the bankers will compress all their over printing of synthetic money, but I'm sure they will pull through, after all, its just numbers in a computer getting crushed... literally crushed.

Meanwhile, back in the good ol' USA, we wait with baited breath for the global market to abandon all their investment for the past 30 years and return to our friendly shores all that manufacturing base that left... isn't that happening? What's this I hear about deep water hub ports for Pacific shipping lanes? How big are those new class of container ships? Too big for any port in the world except the new hub ports being built? (should be finished in 2020 with all of them) Do you think they intend to use that system? Guess maybe manufacturing won't be returning in my lifetime, eh? Let's get real, that market is never going to return, we have to build new markets.

In a consumption driven, demand side, Keynesian view of national economic policy, which we have arguably had almost exclusively since Milton Friedman observed in the mid-sixties that "we are all Keynesians now," it should come as no surprise that production is driven to the least cost locations and supply arrives on ever enlarging container ships. This is so clearly logical that it is why I keep saying economics isn't rocket science. Except for a couple of brief periods where attempts were made to employ a more supply side approach, we have seen our manufacturing base erode and incomes along with it. We have decided that we don't need to really produce anything here so we have become a nation of workers flipping burgers for each other and feeding/wiping each others' asses. Until we send the Keynesians packing, I expect that the economic decline will continue.

 

[Days]

In a consumption driven, demand side, Keynesian view of national economic policy, which we have arguably had almost exclusively since Milton Friedman observed in the mid-sixties that "we are all Keynesians now," it should come as no surprise that production is driven to the least cost locations and supply arrives on ever enlarging container ships. This is so clearly logical that it is why I keep saying economics isn't rocket science. Except for a couple of brief periods where attempts were made to employ a more supply side approach, we have seen our manufacturing base erode and incomes along with it. We have decided that we don't need to really produce anything here so we have become a nation of workers flipping burgers for each other and feeding/wiping each others' asses. Until we send the Keynesians packing, I expect that the economic decline will continue.

All very true and exactly why we need to build new markets, that old manufacturing base is never coming back. BTW, the new hub ports for Pacific shipping lanes is just the normal way of handling any shipping service; the US post Office uses hubs, FedEx uses hubs, anyone big goes to hubs. Asian shipping desperately needs the sanity of hub ports; however, none of those hubs will be needed on our side of the Pacific, they are all going into western Rim waters. My only point was; this is massive scale, it involves building container ships half again larger than the current scale and the ports are easily the largest in the history of the planet. This is all just to handle the current traffic. My underlying point was this; the people investing in all this are not going to turn around and build it a 2nd time some where else just to compete with themselves.

BTW, we sent 3 Aircraft Carriers to patrol those shipping lanes for pirates. That's the American way; the military looks after our commercial interests. Now, all we have to figure out is how to start filling all those container ships we send back empty!

 

[Days]

We're not "defaulting" on any bonds. We're just refusing to float new issuance, other than to replace retiring paper.

If that occurs, Boehner supporters are worried that it could seriously jeopardize the ability of Congress to reach an accord with the White House on hot-button fiscal issues, potentially prompting the first-ever U.S. default in November and a government shutdown in December.(LINK)

that's like the 3rd time now, that I've seen the default word used.

Paul Ryan doesn't look like he wants to risk having to face that battle as soon as he is handed the gavel. Hence, please John, stay on a long enough to clean this part of the barn!

John Boehner quote (I hope I get this right)...

"My job is to daily get 218 frogs to stay in a wheelbarrow long enough to get things done"

 

[Lukey]

If that occurs, Boehner supporters are worried that it could seriously jeopardize the ability of Congress to reach an accord with the White House on hot-button fiscal issues, potentially prompting the first-ever U.S. default in November and a government shutdown in December.(LINK)

that's like the 3rd time now, that I've seen the default word used.

Paul Ryan doesn't look like he wants to risk having to face that battle as soon as he is handed the gavel. Hence, please John, stay on a long enough to clean this part of the barn!

John Boehner quote (I hope I get this right)...

"My job is to daily get 218 frogs to stay in a wheelbarrow long enough to get things done"

Where is the articulate Republican spokes person who can explain that refusing to fund pre-authorized spending that requires borrowing in excess of the current debt limit is NOT A DEFAULT! This isn't rocket science. Geez these politicians are dumb asses!

 

[Days]

Where is the articulate Republican spokes person who can explain that refusing to fund pre-authorized spending that requires borrowing in excess of the current debt limit is NOT A DEFAULT! This isn't rocket science. Geez these politicians are dumb asses!

Well, you are 100% correct, if that is what this is. It absolutely amazes me that these journalists wouldn't even know what defaulting on the debt is... the bonds sent for redemption sit long enough to be considered in non-payment. I would think that after 30 days that money was past due, but no one would bandy about the word default until 90 days. Even then, the banks will gladly take late payment. I'm quite sure the USSR default was a result of the USSR announcing they had no intention of redeeming any more bonds. The Germany defaults came after losing world wars. Ecuador announced they were going into default but Chavez ran to their rescue and paid on their bonds... bad guy that he was.

 

[LeRoy_Was_Here]

I am almost wondering if there is a reason nobody wants to be Speaker of the House right now. Boehner, suddenly, wants out. Now. Nobody wants to take his place (except for apparently a couple of guys who cannot get the votes). Nobody who CAN get the votes wants it.

Is this just coincidence?
I don't believe in coincidence.
Apparently this is NOT a good time to be Speaker of the House.
I wonder why.

Some of the proposed candidates for the Speaker of the House position MIGHT have Presidential aspirations. I'm pretty sure Paul Ryan does, for instance. And the last person to have served as Speaker of the House who went on to become President was James K. Polk. That was a LONG time ago. If Paul Ryan is smart----and I'm pretty sure he is----and if he wants to become President some day----and I'm pretty sure he does----he will turn DOWN the position of Speaker of the House.

 

[LeRoy_Was_Here]

Either raise taxes or cut spending.

It should be a combination of both, of course, heavily tilted towards spending cuts. Yet in one of the Republican primary debates back in 2012, EVERY ONE of the Republicans running for President vowed that they would REJECT a compromise that involved $9 of spending cuts for every $1 of revenue increases.

With ZERO willingness to compromise, is anyone surprised that nothing gets done?

Meanwhile, yes, of COURSE the national debt is a ball and chain on the growth of the American economy.

 

[JuliefromOhio]

I am almost wondering if there is a reason nobody wants to be Speaker of the House right now. Boehner, suddenly, wants out. Now. Nobody wants to take his place (except for apparently a couple of guys who cannot get the votes). Nobody who CAN get the votes wants it.

Is this just coincidence?
I don't believe in coincidence.
Apparently this is NOT a good time to be Speaker of the House.
I wonder why.

you wonder why the Republican-led House is unmanageable?

 

[Lukey]

It should be a combination of both, of course, heavily tilted towards spending cuts. Yet in one of the Republican primary debates back in 2012, EVERY ONE of the Republicans running for President vowed that they would REJECT a compromise that involved $9 of spending cuts for every $1 of revenue increases.

With ZERO willingness to compromise, is anyone surprised that nothing gets done?

Meanwhile, yes, of COURSE the national debt is a ball and chain on the growth of the American economy.

That's because no Republican can win national office on a platform of raising taxes (at least that was the conventional wisdom of the time). That is what has me so flummoxed over Trump's success, despite readily endorsing tax increases (on the rich). I guess the zeitgeist is changing.

 

[Arkady]

We're not "defaulting" on any bonds. We're just refusing to float new issuance, other than to replace retiring paper.

The problem is, without new issuance, where does the money come from to cover legally required spending? Does someone step in and illegally block spending that's required by law? Does someone step in and illegally seize extra taxes that were not allowed by law? How do you make the equation balance, when none of the three factors (spending, taxes, and debt) are legally allowed to change without a new law, and they don't balance?

 

[LeRoy_Was_Here]

That's because no Republican can win national office on a platform of raising taxes (at least that was the conventional wisdom of the time). That is what has me so flummoxed over Trump's success, despite readily endorsing tax increases (on the rich). I guess the zeitgeist is changing.

Well, I, too, am flummoxed (nice word) by the success of Donald Trump. I just DON'T understand the appeal of the man. I find him to be downright repellent and even repulsive.

 

[Lukey]

Well, I, too, am flummoxed (nice word) by the success of Donald Trump. I just DON'T understand the appeal of the man. I find him to be downright repellent and even repulsive.

I can only imagine that it's his insistence on being completely impolitic. A lot of people are sick of the crap they are fed by politicians, who seem to lie with complete impunity. That's really the only redeeming quality I see in Trump.

 

[LeRoy_Was_Here]

I can only imagine that it's his insistence on being completely impolitic. A lot of people are sick of the crap they are fed by politicians, who seem to lie with complete impunity. That's really the only redeeming quality I see in Trump.

I have heard it said that the people who are Trump supporters are people who want to send a giant single-finger message to both Washington, D.C., and Wall Street. And that may be true. I would classify Trump as a populist demagogue. I would also call him a huckster and a snake-oil salesman, with simple solutions to complex problems.

 

[Lukey]

The problem is, without new issuance, where does the money come from to cover legally required spending? Does someone step in and illegally block spending that's required by law? Does someone step in and illegally seize extra taxes that were not allowed by law? How do you make the equation balance, when none of the three factors (spending, taxes, and debt) are legally allowed to change without a new law, and they don't balance?

There is no "legally required spending." There is budget "authority" which is the authority to BUDGET, not spend. If the spending requires borrowing above the debt limit automatic across the board cuts go into effect.