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The Government Shutdown Battle Is Over; Now The Real Soap Opera Ratings War Begins
For some reason, much ado is being made about the nothing that is last night's 11th (or technically 10th) hour aversion of a government shutdown. As we pointed out last week, it is not as if this strawman outcome, or for that matter the raising of the debt ceiling was ever in doubt: "look for both of these events to be consistently spun as key
positive outcomes, even though the chance of these things actually not
transpiring in a non-favorable light is non-existent." And sure enough, we are confident that the spin of this outcome will be extremely bullish even if in reality it is the perpetuation of a baseline status quo, while the alternative would have been unthinkable. In the grand scheme of things, this was nothing more than a free episode of political soap opera. The markets largely shrugged, because the Treasury Department still
would have been able to issue and service debt and the Fed would continues to goose markets higher courtesy of POMO. Yet as Reuters points out astutely: "The battle over the U.S. budget has ended. Now the war begins. The debate over this year's budget that took the U.S. government to within an hour of a shutdown is only a dress rehearsal for bigger spending clashes to come." Here is what to look forward to, as the beltway entertainment spigot is cranked out to the max.
Within weeks, the government will bump up against the limits of its borrowing authority and will require congressional action to avoid a debt default that would roil financial markets.
At the same time, Republicans in the House of Representatives are targeting bigger game in their budget plan for the next fiscal year, which starts on Oct. 1.
Their proposal would slash taxes and overhaul Medicaid and Medicare, government-run health programs for the poor and elderly. It is likely to be rejected by the Democratic-controlled Senate, setting up another showdown between the two chambers.
That fight could last well into the 2012 campaign season, when President Barack Obama, one-third of the U.S. Senate and the entire House will face voters.
The budget deal agreed on Friday, if it passes Congress next week, would amount to the largest domestic spending cut in U.S. history.
That's a victory for Republicans who won control of the House in November on a promise to scale back the government and take a bite out of recession-bloated budget deficits that have hovered around 10 percent of GDP in recent years.
And now looking onto the next strawman: the hike of the debt ceiling. Look for much sound and fury on that issue too, which ultimately result in up to a $3+ billion hike to the ceiling, enough to carry America through to after the presidential election. Look for even moresound and fury as the debt ceiling is for the first time ever well above total US GDP.
Treasury Secretary Timothy Geithner estimates the government could hit its current debt limit of $14.3 trillion by mid-May and has warned failure to raise it would be "catastrophic." Treasury could employ a variety of tricks to avoid defaulting for several weeks, but eventually it would run out of options.
An increase of at least $1 trillion is needed to keep the government running through the end of fiscal year on Sept. 30, according to a Reuters analysis. To last until the November 2012 election, the increase would need to be well over $2 trillion.
Raising the debt ceiling is always a politically difficult vote no matter the circumstances, but it will be a heavier lift for Republicans. Facing pressure from fiscally conservative Tea Party activists, they say they will not vote to raise the debt ceiling without significant concessions to slow government spending further.
That could force Treasury to spin its wheels for months while Congress works out a solution, said Ethan Siegal, a policy analyst with The Washington Exchange, which tracks political developments for investors.
"We do not know how that deal will be reached, or when it will be reached -- just that we believe a deal will be reached and that it will be very ugly," Siegal wrote in a research note on Thursday.
And in other upcoming sitcoms previews:
Next year's budget debate will not be pretty, either.
Democrats have already promised to block the Republican proposal to give states control over the Medicaid health program for the poor and turn the Medicare health program for retirees into a voucher system.
Democrats also have criticized House Budget Committee Chairman Paul Ryan's refusal to end tax breaks for wealthy oil companies or to propose other tax increases that many budget experts think are necessary to solve long-term fiscal woes.
And there will be a chance to reprise the recent fight over domestic spending, which focused largely on the discretionary programs whose funding levels are set by Congress each year.
Ryan is seeking another round of deep cuts in that area, which encompasses education, law enforcement, aid to the poor, and space exploration, but represents only about 14 percent of the U.S. annual budget.
In his plan for the 2012 fiscal year, Ryan would slice approximately $80 billion from those discretionary programs, while increasing defense spending about $28 billion.
"This is a big hit on non-security spending" on top of cuts already achieved this year, said one budget analyst and former White House budget official, who asked not to be identified.
The bottom line is that a few more billion will be cut here and there but nothing will ultimately change until such time as the bond vigilantes run out of [Insert insolvent country] is not [Insert another insolvent country] comparisons, and focus their overdue attention on the most insolvent country of them all.
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Buzz Lightyear : "To infinity ... and beyond!"
Debt Secretary Timothy Geithner says failure to raise the debt limit would be "catastrophic". He is correct. However, behind every curtain is a catastrophy. It's like getting to choose which way to die. While most would choose the quickest death, the Sadist Secretary is getting a real rise from water boarding the dollar over the last 2 1/2 years.
One of the beltway mouthpieces should ask the Messiah to explain the pending derivative market implosion. Naturally, the question will not be answered. The theater of threats against the peasants will forge on. Governments don't like heat in the kitchen.
How can they ask challenging questions when they're busy kissing his ass?
Their central banker overlords must have come down with an ultimatum. Or maybe the Tea Party members got edumacated that the government is the economy.
I understand the shutdown was not about a few million for abortions or PBS, but about the Democrats desire to hide the funding of the unauthorized war in Libya within the Afganistan and Iraq budget items. They got a defense spending raise and got to hide the money for Libya so they would not have a vote on record about the UN war in Libya to be used against them next year. The RINOs agreed to that. So if you think one party is better than the other, you are sadly mistaken. Outside of a couple of fairly honest people [say the 2 Pauls and Demint, maybe that new guy in Utah], the rest are bankster employees. Rubio is all for the illegal war, he is cheerleading more than Lindseed Gayham. What a RINO he turned out to be. Bought and paid for.
Same pimp - different corners.
yes this is theater and there was never a chance for a shutdown...it was political posturing by the republicans asserting its position at the table in the post-election theater....
and even though the amounts causing so much consternation were trivial - not even a rounding error - people are right to make a holy stink over the deficit....of course each party is nothing but opportunistic....both parties belittle deficits when in power and inveigh against them when out of power....it is pure hypocrisy...
where is 1.6 trillion usd of money going? it sure as fuck isn't going to unemployment, indigent people or anything of the kind....it is going to the plutocrats....has no one ever bothered to check where 1.6 trillion is deficits is going???
the republicans are using this crisis to dismantle welfare so that the plutocrats can keep even more of their ill-gotten gains...most of the money is going into the cia and foreign wars to 1. pay tribute 2. fight for the kleptocrats...
these massive deficits have not gone to help the citizenry by one cent....if this deficit were caused by decreased revenues - i.e. 1.1 trillion usd vs bushfraud - then that represents a colossal loss of gdp....
you are being lied to, fucked with, and screwed by this deficit spending circus....fuck obama, bernanke, geithner and the rockefeller plutocracy....
Ummm. This is why Soros is trying to establish a hardcore virtual presents. The more Soros distracts, the easier it is the convince the sheep into believing on the new alternative (Basel III) banking scam. The program will be sold as a change and hopey. The banks are the root cause to all present issues.
An American spokesman has passed away:
“I’m mad as hell and I’m not going to take this anymore!”
Sidney Lumet
There is more than enough revenue to prevent a "default". Baaaaah said the sheeple!
I'm anxious to see a Republican in the White House again, and see how the deficit will KEEP GROWING from year to year.
Even without "Obamacare", the deficit will keep growing, and even with a Republican in the White House, the deficit will surpass 2 trillion per year...
Then, I will watch some people, which today are so vocal, being completely silent and complacent about the deficit.
Don't you live in Brazil?
Why would you care? And why would we care if you did?
Oh wait, Obama did gift you with $2billion for your oil drilling industry. That is not insignificant for a second rate country.
Follow the money.
Did you know Soros profited off that, as well? Isn't that bad? A white devil profiting off the sweat and labor of your poor oppressed brown workers?
I'll give you this Zina. The Republicans are walking along the knife's edge now. The only way they can win in 2012 is if they are CREDIBLE about cutting spending. Cutting spending by .gov is the most important issue here in the USA, whether recognized by our electorate or by observers in other countries.
...
That Gini Curve (the wealth distribution imbalance curve so enamored by the Left here in America) any better in Brazil any better than here?
Republicans don't care about the deficit when they're in power. Democrats only care about things that Republicans care about, because their job is to lose.
USA debt growth has characteristic pre-crash signs in it-log-periodic growth pattern turning into super-exponential peak , meaning a correction (REDUCTION) by e.g. 3-5 trillion in 2013-2014. The buildup for this crash started at least at 1945, if not earlier. ( look Sornette/Johanson for how such crash buildup can be seen in growth patterns).
But by what mechanism? Here are few thoughts on that..
http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&start=100#p31678
Coincidentaly, 2013 timetable for debt correction ( crash reduction) coincides with independently derived graph for silver prices 2011-2012 which show a definite upwards trend (at level 100 usd).
http://saposjoint.net/Forum/download/file.php?id=2673
So its actual devaluation of world reserve currency, by tying it to PM at some rate ( higher than 100 usd for silver, higher than 3600 Usd for gold). Interesting approach with huge geopolitical consequences. I will check the continuation of that graph to see at what levels USD may be tied to PMs if it happens in 2013 or 2014.
I checked. If it happens in 2013, its basically the same 100 USD/ ounce ( 3600 USD for gold). If it happens in 2014, it will be 150 USD/ounce ( 5400 USD /ounce for gold).
Ivars,
First link was an interesting read. Thanks much.
Yeah, I expect another derivatives meltdown...tick...tick...tick
I'm speechless. (Yeah, alert the press.)
Biggest dog-n-pony show yet to take place in DC.
They need people off guard right now. Put out as many false bread crumb trails as possible for the dollar death that is coming.
They'll have to do better than this. Where is our false-flag? Just making the MSM pundits pant faster will get old fast.
Exactly, I feel the same way about following this whole debocle as I did watching the show "Lost." It really is a puzzle / maze for us to figure out, they're just waiting to drop the huge plot twist on us when the dollar finally dies.
www.forecastfortomorrow.com
Democtrats...Republicans......is all the same fucking day,man...
The Bankster LOVES you's all arguing amongst yourselves while they control the goverment.
Niether party can operate without them.
Both partys would lick the swaet off a Banksters Asshole for som Joo Bucks....
Take your monetary system back boys and girls,then argue over the petty change...
WAKE THE FUCK UP...!!!!
http://globalguerrillas.typepad.com/globalguerrillas/2011/04/journal-oil...
Political farce over sofa change.
Speaker Boner was uncharacteristically brief, to the point, without much flowery lingo. We think we have a deal. Here is the amount. Here is the schedule. Goodbye. Reading between the lines Speaker Boner doesn't seem too sure that the deal is going to pass. Something was bothering him, he was antagonized.
These events illustrate two clear facts:
The experiment in "central banking" has been an absolute, complete, utter failure.
The experiment in "central government" has been an absolute, complete, utter failure.
The time has come to stop playing games, stop spewing pointless soundbites, and simply terminate the federal reserve and federal government. They are rotten to the core, and utterly destructive. Terminate them... and the simple and good life that honest people deserve can return.
What about the dishonest people? Let them get what they deserve.
The higher the ceiling rises, the more f*ed we all are. It's shitty that probably 9 out of 10 citizens in America have no idea what's been going on. They'll go on living their lives like nothing happened, and nothing really did happen--we're still royally F-ed!
www.forecastfortomorrow.com
Politicians swinging from tree limbs would be change I could believe in.
Otherwise, it's just the good ole boys cutting services to the poor, so the rich can keep their tax breaks, and corporations like GE pay nothing. It'll be a good old, back patting time, with much ado about nothing, while the rich get richer, and the middle class finally just become a part of the ever growing poor.
It'll be ok though, everyone will end up getting screwed in the deals to come, well except the rich... No politicians will be harmed during any future shutdowns.
Besides, dancing with the stars is on, so what are we worried about, other than Max breaking his back trying to lift Kristie Alley? It's all ok, nothing to see here... go home... sleep well my sheep.
We all know our government is corrupt, amoral, unethical and bankrupt, yet none of us has the balls to do a damn thing about it other than bitch on internet forums. When someone does stand, I will stand with you... but sadly, it seems as if no one will ever stand. So, let's sink down into our arm chairs, and enjoy the ride to the bottom like the people on the Titanic did... cue the music, and bring me a glass of wine.
sums it all up:
http://www.youtube.com/watch?v=fFl3pWbfVX8
Highlight from Don Coxe, some great comments about why gold isn't in a bubble. Simply put, the risk free investment is becoming precious metals, not treasuries as in the past. Also his thoughts on oil.
http://goldandsilverlinings.com/?p=544
The whole spectacle was about symbols, not substance. Nothing has changed in Washington. Plan and prepare accordingly.