So much for the engrossing "Debts of our lives" soap opera. In the most expected outcome possible, the "best hypocritical actor" Oscar winners known as Republicans have caved and according to chief Senate republican sock puppet Mitch McConnell "Congress and the White House could raise the debt limit for a few months while they seek a comprehensive, long-term budget deal." Of course, when the $300 billion or so "temporary" hike which will last the US government for just under two months, we will get another temporary extension, and then another, and so forth, until the current batch of Oscar winners is voted out en masse yet again, only to be replaced with another set of sock puppets, and the posturing and the drama, not to mention the comedy, can begin anew. Luckily the G-Fund will at least get a temporary reprieve until its is plundered again, some time in late August, early September, when the debt ceiling is breached again, and an unmanageable debt load has been resolved through... the issuance of more debt. Don't be surprised to see the net notional US CDS outstanding to continue its torrid pace of sequential increase.
Congressional Republicans, particularly in the House of Representatives, have balked at raising the debt ceiling unless it is accompanied by significant spending cuts.
McConnell said on Sunday the ceiling could be raised enough to last a few months so that negotiations can continue on a larger deal that would include changes to so-called entitlement programs like Medicare.
"The president and the vice president, everybody knows you have to tackle entitlement reform," McConnell said on CBS's "Face the Nation."
"If we can't do that, then we'll probably end up with a very short-term proposal over, you know, a few months. And we'll be back having the same discussion again in the fall," McConnell said.
Elsewhere, Biden continued to baffle everyone with recordsetting stupidity, as he aims to "reduce the country's stubborn budget deficits by $4 trillion over the next 10 years in order to give lawmakers the political cover to raise the debt ceiling." So let's get this straight: these morons can't cut $1 today, but they can cut about 30% of US GDP in deficit spending over the next decade?
Of course, topping it all off will be the quid pro quo, which we predicted when we discussed the imminent extension of the payroll tax cut, namely that Democrats will get their infinitely extendable debt ceiling, republicans get more tax cuts, and Wall Street gets QE3, because with China, Japan, Russia and American households selling US paper, and the ECB insolvent courtesy of a freshly redefaulted Greece, there will be nobody else left to monetize the upcoming barrage of new issuance, absent a 300+ bps rise in prevailing rates, which will send home prices lower by about 25% and guarantee that the next US civil/class war begins in under 3 years.