Goldman On The Debt Ceiling: "It's Different This Time"

Tyler Durden's picture

As Obi-Wan Kenobi might have said "This is not the debt ceiling debacle you are looking for." That is the seeming 180-degree shift that Goldman appears to have taken with its latest missive on the pending 'discussions'. Their reasoning that this time is different is based on the fact that, in contrast to now, the S&P 500 seemed immune to 'cliff' risks and traded in the 1300 range for the first half of 2011, even as the macro backdrop began to sharply deteriorate. Their models suggest it was clear that risk sentiment was buoying the market even as macro fundamentals were deteriorating. Goldman's view is that the swift market 20% sell-off was in part a reflection of a levitating market reconnecting to still-deteriorating macro fundamentals, possibly catalyzed by the political debate. This time around, they claim, the macro backdrop is, at least for now, stable and far better then in 2011, which perhaps, will allow the market to better absorb the upcoming debt ceiling debate.

In Summer 2011, Macro data was weak but risk remained bd... until it caught down


Now, risks and stocks appear on the same trajectory - though European risks seem a little exuberant...


Hhhm, we are not so sure this 'levitated' market is perhaps just as prematurely exuberant as last summer... perhaps this chart will help them?


Of course, as always they have an out (though this is not their base case)

Of course all of this can change if the data weakens. And after a long patch of steady macro improvement, perhaps that is a current vulnerability, particularly for a market that has rewarded cyclical exposures consistently over the last several months. Indeed, early signs are that December GLI is pointing to a growth slowdown, which is consistent with our near-term US forecast, which calls for some slowing in 1Q before some reacceleration thereafter.

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THX 1178's picture

Different? This time? The Change we've been looking for?

Sudden Debt's picture

well, Moses is only in the desert for 4 years now looking for it together with his people.... I wonder how much longer he will be walking around looking for it....

to bad he destroyed the golden calf... I think it would have come handy later on...

knukles's picture

And the second 4 has not yet officially even begun.

What hath God wrought?
Truly a period of "Apocalyptic" proportions.

The mooch was right... he has changed our lives.

Tijuana Donkey Show's picture

Yes, he melted it down, based on a executive order. The commandments talk about false idols, not false fiat, so all the gold went to leadership.

vast-dom's picture

markets are UP! nothing to worry about. nothing is the same. don't worry be happy. 

Flakmeister's picture

Grant was just on CNBC.... I respect him as he is clearly no fool, but why can't someone ask him if the USD was backed by gold what would happen when all that putative gold in Ft. Knox is gone in about 18-24 months to pay for the oil imports???


PUD's picture

Yes! The unicorns will show up later in the year!! yeah!!! Free skittles!!

rqb1's picture

let me summarize, gs wants to sell, they want you to buy.

AccreditedEYE's picture

I'll tell you what what I DO like about LEW nomination... CNBC HATES it. LOL

rqb1's picture

i agree,   also did you hear how the president said timmy will go down as one of the greatest tres sec in history?  great man that timmy

AccreditedEYE's picture

Haha. Ya, heard it. Notice how he (Timmah) had to look down at the floor when the President was saying all the "good" he's done for the economy? He KNOWS he hasn't done jack for the average Joe, he can't even hide it.

francis_sawyer's picture

I used to quietly 'root' for muppets to get their asses handed to them [based on that sort of abbreviated synthesis]...


Then, one day, it dawned on me that it was all just joobux that I was rooting for or against...

Freddie's picture

I don't like Geithner but I think he may have a very tiny amount of a conscience left.  Geithner knows he helped destroy America for this evil gang.  

Bernake, Obama, Biden and Corzine are total sociopaths like Bill Clinton.  They have no remorse. Like the many cops who shot people's dogs for no reason.


samcontrol's picture

what about other evil gangs?

Getting Old Sucks's picture

Muppets, Muppets, where are thou my fair Muppets?

Sudden Debt's picture

Deny thy dollar and refuse thy flueshot,
Or if thou wilt not, be but sworn thy death

Rainman's picture

Yippeeee.....the People's Republik of Commiefornia has budgeted itself into a surplus....again !

Sudden Debt's picture

the magic calculator does it again!!!! Hoehay!!!!

PAWNMAN's picture

Dems just won a supermajority in the legislature out here. Any "surplus" will disappear like a fart in the wind.

knukles's picture

But guvnor Moonbeam and his fearless Lunatics have a surplus of fart winds.
Ah, the natural bountiful insanity of California
Hark, I hear a California Barking Spider Chirping!

Seasmoke's picture

And there is your signal to SELL !

michiganmaven's picture

Yup those 6400 people about to get axed at American Express and 1600 at MS are gonna "make it different" this time.... who needs jobs? Dont we all just get free credit cards that Obama pays off now? 

tallen's picture

I had an interview at GS recently. Talked about my bullishness on gold for part of it and the two other interviewers looked at me, one of which who almost looked horrified to propose gold as an investment. Anyone who thinks gold is in a bubble should take the time to talk to people in asset management.

Freddie's picture

I hope they did not steal your soul while you were there.   Horrifed proposing gold as an investment?  LOL!  Was it an interview or were you there taking the piss out of them?

taking the piss out of which is an expression meaning to mock, tease, ridicule, or scoff

Did you tell them you are a ZH fan and part of the peanut gallery?

electricgorilla's picture

Jack Lew. Jack means to steal and Lew means Place. Steal from what place? The treasury of course.

Bluntly Put's picture

Baseless stock value levitation will continue until morale improves.

- The Ministry of Morale

fonzannoon's picture

Ben is on auto pilot. The only hurdles the market faces are the ones fabricated by CNBS so they can wear a pin and annoy the balls off me with some slogan

Darth Raider's picture

" Obi-Wan once thought as you do. You don't know the power of the Dark Side."

itstippy's picture

So, then, the fundamentals are sound?

As long as the FED continues conjuring up $85B per month to buy the entire output of Treasury's deficit bonds and the GSE's MBS junk we'll be OK.


hooligan2009's picture


RopeADope's picture

So I gather Goldman has sold a lot of risk this year and told the Fed and D.C. to make sure its different this time around.

MrButtoMcFarty's picture

Running debt "limits" like yellow lights.....serious discussion of minting a $1,000,000,000,000 coin.....fearless and coherent leadership from our elected elite!!


Full Faith and Confidence Bitchez!!

khakuda's picture

The one difference is the $85 billion of monthly monetization. That trumps all the political BS for now. Bernanke put the fix in. All news is good news. Look for the mother of all equity bubbles to build. When the crash comes, when higher commodity prices come, it will be the speculators and profiteers fault.

loveyajimbo's picture

And when the SHTF... the markets crash and gold/silver start to... WAIT!!!  Obunga comes out with another executive order... and all gold bullion must be turned in at a conveinent FEMA camp near you... for $35/oz.  Sharia law, Bitchez!!!

Go Tribe's picture

They'll come for my silver, I'll give them my lead.

mt paul's picture

dog stole

my trillion dollar coin ..

AnAnonymous's picture

You're lucky, bro.

Me, that's a nigga stole my trillion dollar coin...


Signed: an American.

akak's picture

Dude, some chink stole my dog, threw him into a wok, chowed him down and then shat on the side of a road!

Signed: An American visitor to China

TheFourthStooge-ing's picture


Dude, some chink stole my dog, threw him into a wok, chowed him down and then shat on the side of a road!

Poo poo platter.

AnAnonymous style.

akak's picture

Also roadside poo poo splatter.

AnAnonymous style.


PS: Seek and ye shall find symmetry.

Downtoolong's picture

"It's Different This Time"

“Because, if we don’t make up some alarming, bullshit story which is so complicated that it nonetheless sounds like we know what we’re talking about, then no one will panic or trade anymore and we won’t make any money. “

It doesn’t sound to me like things have changed at all at Goldman Sachs.

yogibear's picture

The vampire squid is doing god's work. Their swiping your money and putting to better use, like adding on to their estates in the Cayman Islands.