Jump to content
House Price Crash Forum
The Masked Tulip

The Us Debt Ceiling Thread

Recommended Posts

Is this US debt ceiling stuff going to have an affect on stocks, IRs, house prices, etc? Or is it just another red herring that will see stocks soar on the 17th of the month or immediately after.

I have been having a read of articles, and listen to financial videos, about this and you have one group who are saying that a deal will be reached, another group saying a fudge will be reached and a last group saying that the world is about to fall in, stocks crash and IRs shoot up.

It is reminding me of what happened last December when, as you may recall, we were warned the sky was about to fall in and then, on January 2nd, stocks soared for about 6 - 8 weeks.

I listened to a video by this Gross bloke of PIMCO this morning and I could make out what he was saying. Everything seemed, um, hedged. He talked about stocks crashing and then finished by saying something like "Of course this won't happen".

He mentioned something about Sterling and UK gilts and people fleeing to them if the US defaults but then, if I read it right, he also said that everything could be taken down around the world and IRs shoot up.

Views on any of it people?

Edited by The Masked Tulip

Share this post


Link to post
Share on other sites

They will have there little pantomime called shut down then shake hands and carry on printing

Yes, I am inclined to think that. They will have 5 days or a fortnight of their egos being inflated by news crews - meanwhile millions ofordinary Americans are worried sick - and then they will come to an agreement and print.

Do US Senators and Congressmen still get paid when other government workers do not? Does the POTUS?

They were talking about this on the radio last night with 2 US commentators and they were of the opinion that both sides would now have egg on their face is either stood down. They have made Obamacare such a big deal apparently. But I still think it is all going to be a storm in a tea cup. Print.

Share this post


Link to post
Share on other sites

Yes, I am inclined to think that. They will have 5 days or a fortnight of their egos being inflated by news crews - meanwhile millions ofordinary Americans are worried sick - and then they will come to an agreement and print.

Do US Senators and Congressmen still get paid when other government workers do not? Does the POTUS?

They were talking about this on the radio last night with 2 US commentators and they were of the opinion that both sides would now have egg on their face is either stood down. They have made Obamacare such a big deal apparently. But I still think it is all going to be a storm in a tea cup. Print.

Well they have crossed a line not crossed since `95 was it the last time they shut down like this? So before the 2008 crisis and before the existence of this website, so the tea is now splashing on the saucer and it may be panto in some form but I reckon they have real problems with decision making which will keep giving the markets uncertainty.

Share this post


Link to post
Share on other sites

+1, Just like the taper tantrum, they will patch it up and continue expanding the debt.

It's the little episodes like this that are weaning the rest of the world away from the dollar and weakening it's reserve status.

Share this post


Link to post
Share on other sites

Yes, I am inclined to think that. They will have 5 days or a fortnight of their egos being inflated by news crews - meanwhile millions ofordinary Americans are worried sick - and then they will come to an agreement and print.

Do US Senators and Congressmen still get paid when other government workers do not? Does the POTUS?

They were talking about this on the radio last night with 2 US commentators and they were of the opinion that both sides would now have egg on their face is either stood down. They have made Obamacare such a big deal apparently. But I still think it is all going to be a storm in a tea cup. Print.

I think if it goes to a fortnight markets will get very jittery, time to double up the tracker fund payments?

Share this post


Link to post
Share on other sites

What happened to stocks the last time this happened during the Clinton days? Anyone know? Were US stocks affected or not? What about FTSE and other markets?

Can`t remember, wasn`t particularly interested in such things at the time, I think the financial world is much different, more interlinked now though?

Share this post


Link to post
Share on other sites

The only good I can see in this little charade is the fact it must be becoming harder to justify hitting the print button for them to go to this length

Yes, and maybe there is backroom pressure to stop printing from countries being adversely affected by printing, don`t know how much clout they would have though?

Share this post


Link to post
Share on other sites

The only good I can see in this little charade is the fact it must be becoming harder to justify hitting the print button for them to go to this length

This Gross guy thinks that Yellen will take over and just print more. But will call it forward guidance lik Carney.

Share this post


Link to post
Share on other sites

http://www.bloomberg.com/news/2013-10-02/treasury-uses-final-measures-to-avoid-breaching-debt-limit-1-.html

..

Lew, in a letter addressed to House Speaker John Boehner dated yesterday, repeated that the measures will be exhausted no later than Oct. 17.

When that happens, “we will be left to meet our country’s commitments at that time with only approximately $30 billion,” he said, “far short of net expenditures on certain days, which can be as high as $60 billion.”

..

The U.S. budget deficit in June was 4.3 percent of gross domestic product, down from 10.1 percent in February 2010 and the narrowest since November 2008, when Barack Obama was elected to his first term, according to data compiled by Bloomberg from the Treasury Department and the Bureau of Economic Analysis.

..

The so-called extraordinary measures used by the Treasury are accounting maneuvers allowing the government to avoid breaching the $16.7 trillion debt ceiling. They include allowing the government to enter into a debt swap with the Federal Financing Bank and the Civil Service Retirement and Disability Fund.

So all the money they now have is down to accounting tricks.

Share this post


Link to post
Share on other sites

According to this site, the US Government borrowed 43% of its total expenditure in 2011.

The obvious conclusion to draw from that is that if borrowing does cease completely on the 17th, the effect will be rather more significant than of yesterday's 'sllimdown'.

Share this post


Link to post
Share on other sites

According to this site, the US Government borrowed 43% of its total expenditure in 2011.

The obvious conclusion to draw from that is that if borrowing does cease completely on the 17th, the effect will be rather more significant than of yesterday's 'sllimdown'.

Yep if they decide to really play hard ball the consequences of the shutdown is going to have a very big effect on GDP if the stats are accurate. I wonder how long govt employers can go without pay for? I'm guessing many will have mortgages etc... to pay. There will certainly be a lot of worried people out there.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   202 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.