The Debt Ceiling Debate Goes Gossip Girl: Obama Tweets That Boehner Is Now His BFF

Tyler Durden's picture

From Peter Tchir of TF Market Advisors

Teenage Girls

I am not sure when U.S. politicians changed from being elitist, self-serving, perk enjoying, hypocrites, to teenage girls, but it has happened.  Boehner sends a Dear John letter.  Obama complains that phone calls aren't being returned.  Reid is pulling petals from a flower repeating, 'he loves me', 'he loves me not'.  We have had to listen to stories about getting homework done on time and eating our peas.  I have seen this story before, actually multiple times a day, just turn on Disney network and you can watch the same story unfold over and over.  We all know how those shows end, everyone agrees that the other side wasn't totally wrong, there is an awkward group hug, and everyone is happy, until the next episode.

Happy Ending

This won't end any differently.  Some form of agreement will come out of this.  We will be told what a learning experience it has been, that we, the general public, are lucky that the fortitude of our leaders led them to a solution that 'although neither side got what they wanted' it is the best outcome for a bright and prosperous future.  We will be told that it was only by bringing it to the brink that politicians could lose their partisan shackles and do what is right for America, but now that they have worked together so closely once, and found common ground, they will use that newly found bond to create an even better future.  Never again will politicians cause unnecessary fear amongst the populace, as now they can all work together.  Well, at least until the first presidential election campaign commercials.

Some Simple Problems that should be addressed in any solution

If anyone was truly interested in fixing the problem in the long run, there are a couple of things they could focus on immediately.  First, let's remove the language that lets the Treasury, create IOU's of IOU's and not count it against the debt ceiling limit. It is curious that the government had the foresight to include such loopholes in various pension plans, but it is time to remove them.  That is not the sort of sleight of hand trick that a AAA country needs.  Let's just get rid of that language as that loophole should never be used again. 

Then let's address why the Fed has so many treasuries on its balance sheet.
The treasury pays interest to the Fed which then in turn pays it to the Treasury?  As far as I can tell, the Fed keeps the treasuries on their balance sheet because it allows them to pretend they aren't printing money.
Mr. Bernanke can mumble on about how he is creating electronic fractional reserves, but let's be honest and just admit that he is using the purchases and sales of treasuries as a way to create or remove money.  Ron Paul has suggested that cancelling the treasuries on the Fed balance sheet would provide breathing room under the ceiling, and I have to admit I agree with him.

Finally, we should address what to do with Freddie and Fannie.  Let's just nationalize them and assume their assets and their liabilities.  Would the debt count against the ceiling?  It should, but the assets should count against that.  With the size of the infusions the government has provided to these companies, we should stop pretending they don't have the full faith and guarantee of the U.S. government.  Just get it over with and assume all of their obligations and assets.  If we want to be a true AAA country going forward, then we stop playing accounting games.  The government should move all assets and liabilities on balance sheet.  History has clearly demonstrated that entities that employ off balance sheet tricks are not good counterparties to lend to. 

College Students

While U.S. politicians have regressed all the way back to their teenage years, European politicians have only gone back to their days in college.
Sitting around until the wee hours of the morning drinking, smoking, and discussing all the ways the world could be better.  How many college nights were spent going to bed a little fuzzy but so certain that you had discovered something wonderful.  Problems were solved and it all seemed so clear as you tucked yourself into bed.  Yet, somehow in the morning, you couldn't remember some things.  Other ideas, that had bordered on genius, in their simplicity the night before, now didn't stand up under closer inspection.  Then finally, you cringe at the thoughts that now just appear stupid in the light of day, wondering how so many smart people could have thought the plan made any sense the day before.  Maybe it is a co-incidence that Greece now likes to hold their votes well after the markets have closed (or maybe it is easier for the police to see the torches).  Maybe it is a co-incidence that the latest EU proposal came after an all-nighter between Merkel and Sarkozy.  Unlike teenage television shows, college students have to grow up and get a real job (or one on Wall Street).  The plans and hopes have to get put to the test in the real world.  Maybe Europe got it right this time, but I think the austerity Greece agreed to will continue to cause problems, and the latest EU bailout proposal may once again fail to live up to expectations as some things don't work as planned, some people don't react as expected, and some things just never made sense in the first place.

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rajat_bhatia's picture

Buy gold ! Buy Silver!

Long-John-Silver's picture

During an economic crash a moonshine still will produce liquid currency.

UGrev's picture

Growing my own.. oh wait. That would make me a white, middle class, gun owning, vegetable grower. Fuck me twice.. my ancestry goes back to the first king of norway. Holy shit!! I'm so boned!

Esso's picture

Man, that was funny. The Norway thingy put it right over the top.

You can be my BFF (whatever that means. I hope it's not a homo thing).

UGrev's picture

I prefer to avoid acronyms like that because of their amBIguity. Aside from that, it's all true; event the thing about being boned.. herky berky borky bork bork borky berky bone-dy bone-dy.. shitski.. 

Eireann go Brach's picture

They are no different than monkeys slinging their own poo at each other at the zoo dressed in clown outfits!

Urban Redneck's picture

The shit slingers at the zoo are kept in cages where they can't reak havoc on the global economy.  Perhaps the National Zoo in Washington could provide a cage and house Barry and Boner until they fix this mess.  It would keep them both ot them off the golf course.

Rodent Freikorps's picture

Pistols at twenty paces is far more civilized.

-Michelle-'s picture

Did the 1100 meeting occur? 

Long-John-Silver's picture

If you have an 11:00 meeting and the press doesn't show up, did it really happen?

nmewn's picture

"Did the 1100 meeting occur?"

Yes.

And Boehner was drinking...hot tea ;-)

SoCalBusted's picture

Probably started at 11:25 OST (Obama Standard Time)

Sudden Debt's picture

I like the once that get economicly drunk!

 

Sudden Debt's picture

hmmm... and if you do it right they're blind...

You're a Pro he? :)

Long-John-Silver's picture

Going blind from drinking moonshine is caused from using chemicals to "dress up" the taste.

Also during prohibition inadequate equipment was used such as automobile radiators.

It is impossible to remove antifreeze from used radiators or radiators soldered with lead.

Proper copper or stainless steel distilling equipment used with sanitary mash will not cause health problems.

Sudden Debt's picture

I had a uncle who brewed "jenever". A bit stronger stuff then you're moonshine.

He used a milk can, lead plumming pipes and a whole lot of potatoes and grain.

I remember that when we came over as kids and when we where a bit sick or something, his cure was always a good shot.

I burned your throat and you lost and taste like for a day.

scatterbrains's picture

reminds me of an incident while picking up a bunch of glass carboys for homebrew from a polish immigrant dude. He had something similar to this in his garage and was willing to sell it but I didn't want to pay more then the scrap value of the copper, which even at $150 was a steal.. I'm such a cheap bastard some *all* of the time. He had that piece hooked up nice.. I remember his wife was a stunningly sexy blond polack.

francis_sawyer's picture

I know you are but what am I? - lol

caerus's picture

o also complained of being "left at the altar"

Long-John-Silver's picture

He should have been on the right of the altar.

HoofHearted's picture

And we all know that altar usually involves sacrifice. Who is going to get sacrificed this time? Of course, the American taxpayer. How many ever of those are left..

lilimarlene1's picture

He was left at the cradle and hasn't changed.

lolmao500's picture

Really?

http://www.washingtonpost.com/politics/health-care/obama-restarts-debt-t...

One day after a partisan blowup, President Barack Obama met for less than an hour Saturday with congressional leaders in crisis talks aimed at averting a national financial default in just 10 days.

Long-John-Silver's picture

Iceland has shown the world the proper way to deal with this type of financial situation.

SRV - ES339's picture

You do realize the GOP (austerity main street pays for Wall Street) position is very close to what the IMF / Banker position was in Iceland, don't you?

 

JLee2027's picture

That's a mis-representation . The GOP wants to cut spending, which benefits everyone in the long run.

Yes, there will be short term pain. Unavoidable. I suggest if you do not understand that borrowing 40% of your spending is a plan for disaster, then please do not reply.

snowball777's picture

Bullshit. The GOP wants to cut taxes not spending, tool.

JLee2027's picture

Bullshit. The GOP wants to cut taxes not spending, tool.

If you really believe that, you need medication. I can't help you further.

SRV - ES339's picture

Koolaide is full of sugar... you may want to back off a bit!

BTW... where were you and your friends when the GOP (under Bush) gave huge tax breaks to the top 2%, doubled the debt, and raised the debt limit 6 times in 8 years?

Long-John-Silver's picture

What makes you think I am a Republican or a Democrat?

I am a Southern Patriot ready for the coming economic collapse.

We are ready for this inevitable outcome, are you?

francis_sawyer's picture

The dog ate my homework...

Mongrel's picture

Excuse this dog while he returns to his own vomit . . .

Steroid's picture

' Maybe it is a co-incidence that Greece now likes to hold their votes well after the markets have closed (or maybe it is easier for the police to see the torches).  Maybe it is a co-incidence that the latest EU proposal came after an all-nighter between Merkel and Sarkozy.  Unlike teenage television shows, college students have to grow up and get a real job (or one on Wall Street).'

Priceless, though I wouldn't degrade college students. After all, we are talking about parasites. Comparing to cockroaches, or rather bedbugs would be more fitting. They are all scared of light, too.

no life's picture

I wonder who's in the "driver's seat"??

slewie the pi-rat's picture

here it is again:  Ron Paul has suggested that cancelling the treasuries on the Fed balance sheet would provide breathing room under the ceiling, and I have to admit I agree with him.

how?  when?  it is one thing to declare that roast beast should be served at dinner.  but doesn't someone need to kill the fuker, first? 

slewie the pi-rat's picture

whoever read this and didn't like me asking for more info, is the chairsatan just s'posed to give us the ~$1.5 tril.  or let us borrow it?  loan it to timmah? 

last i heard you needed to pay for stuff you wanted, even if you were the goobermint.  but maybe all the nice folks who own the FED and these US Treasury instruments would like a little favorable press, so they are gonna kick it down to us.  works for me!

i liked the idea when i first read it in nomi prins' piece.  after all, the FED "created" much of the "money"  to put these T's on its balance sheet, just as the US "created" the T debt instruments. 

so, i'm sure when the good bansters, pols, and other folks get this all worked out, they'll let us know.

unless it's all pure fuking bullshit at this point, of course.

in which case someone on zH or someplace might ask them to back their "play" with more information, or just stop blowing smoke up people's asses and just shut the fuk up. 

again:  how does this work? 

oogs66's picture

I am confused of how they can just cancel it, but at the same time, if the U.S. was a corporation, one wholly owned subsidiary just issued debt, which was purchased by another wholly owned subsidiary.  At the holding company level, is there any net debt?  If this was a company, the exact same debt would show up as an asset on one side and a liability on another.  Weird.  If the Fed had to do something to buy the treasuries, it would seem like a loss if they just wiped it out, but all the Fed did was place some zero's in the accounts of PD's.  Is there another way they could have done it?

Since for the country as a whole, it is a net zero position, is there some way to get rid of it?  Is the purchase of treasuries by the Fed necessary, or just a way to confuse the hell out of people?

 

slewie the pi-rat's picture

ok, but the FED is a private corporation, whose chairperson is nominated by the prez and approved by the senate, like an ambassador, or a cabinet member, but the FED is s'posed to be, by law, protected from politics in its deliberations and decisions, and guided by its legal mandates. after all, deze boyz can create money for banking and for the monetary policy of the nation, which is why all the reporting and answering to congress;  beyond all the bullshit, monetary policy is discussed at a very high level;  just look at alan greenspan's tapes!

no, the banksters own the FED.  and "we" owe whoever hold our bonds, which the US gave them when they loaned us their hard-earned (or printed-by-bankster) cash. 

the congress in in charge of fiscal policy (budget:  bal or unbalanced?  how much?  how will goobermint $$$'s be spent, and so on).  the prez either signs or vetoes the budget bill, which also includes all the fiatscoes for what the prez runs:  the military, and all the branches, agencies, and weaponzi endeavors of this nation. 

we borrow from everybody. 

obviously, r_paul and the benzelbub both have this here info.  the question:  well why don't you just forgive us the debt?  makes a ton of freaking sense, doesn't it?  unless...one owns the debt or is a fuking bankster and here, we're 0-for2!

analagously, why didn't central banks just "forgive" greece's debt?  ireland's? 

i don't feel too bad not knowing much more about how this wonderful wizardry works.  like dorothy learned in oz: actually, it doesn't!

cosmictrainwreck's picture

I'll have a slab of that roast beast (you did kill it, dintcha?).... with a side of hot buttered groat clusters

ISEEIT's picture

I think many of you just don't get it. The "radical, extremist, crazed, cult member, wacko, teabaggers" are in fact the real deal. Unlike most of us on ZH they became politically active and put the blood, sweat, and tears into this game. They are as serious as a heart attack and we will in fact default if president asshat doesn't fold.

The most likely scenerio? President asshat pulls the 14th admendment card. The "teabaggers" will not fold. These people are indeed extremist if you happen to be a looter within the regime. We are terrorist as defined by the regime.

If you believe that it is just business as usual then I respectfully suggest that you are wrong. Tactically, holding the battle here and now is dangerous and possibly reckless. It's what they have chosen to do though. Unlike the 'progressive' caucus (communist), the republicans don't have a dossier on each member to use against them as force.

I'm on record that either asshat pulls a 14th admendment stunt or we default.

JLee2027's picture

President asshat pulls the 14th admendment card. 

And I would expect the Supreme Court acts instantly and shuts that down. It's clearly BS. The President cannot borrow money, only Congress can. Article 1, Section 8.

francis_sawyer's picture

If Hilary would just give back all the China she stole, we could resolve this rather quickly...