Debt Ceiling 2011 Vs 2013 Compare And Contrast

Tyler Durden's picture

The last few months have seen US equity markets swinging from confidence to grave concerns (briefly) and back to exuberance even as the looming 'debt ceiling' and sequester remains dead ahead. The pattern is eerily similar in price (and volatility) terms to the movements ahead of the Summer 2011 'debt ceiling' debacle. What is just as concerning is, as Bloomberg's Chart of the Day shows, is the mass psychology aspect, as mentions of the words 'debt ceiling' are once again gathering pace, just as they did in 2011. Markets may not repeat, but they do echo; and as UBS' Art Cashin noted, this month marks the 40-year anniversary of a significant top in the market as stocks broke to all-time highs and "all appeared right with the world." Perhaps, it is our inexorably optimistic belief that the politicians will fix it all (or kick the can) at the last minute - so there is nothing to fear but fear itself; or perhaps this time, there is a line in the sand that both sides need to defend.

The S&P 500 has followed a very similar trajectory heading into this uncertainty - but moreover, the mentions of 'debt ceiling'; are picking up dramatically and will increasingly weigh on mass psychology...


and perhaps that is why the VIX term structure is also showing a very similar path of over-confidence (and longer-dated hedging)... an initial flare of risk (with spot VIX inverting to the curve) followed by a push out almng the curve (where we are now) which is followed by the front-end catching back up as the risk deadline becomes much more imminent


Charts: Bloomberg

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LawsofPhysics's picture

In 2011, there was still some retail money in the market that could be pulled out.  What does the retail pool look like now?  Does the Fed have complete control now via the Primary Dealer Proxy?


MillionDollarBonus_'s picture

We need to be spending more, not less. People expect welfare and social security, and there ain't no way they're giving these material posessions up to ease the burden "future generations". Young people are spoiled and need to be taught a lesson about personal responsibility. Young people don't understand anything about what it means to bust your ass for 5-8 hours a day in some lousy school or police department. Those pensions are written into legislation you little rascals, so don't even THINK about taking them away from us. And as for social security - it's running at a SURPLUS of IOUs, so don't even think about touching that either!    

Comay Mierda's picture

this should be an interesting read today.  GAAP Gubmint 2012 statements

economics9698's picture

Good stuff MDB but the slang, oh my gosh!

Watauga's picture

Zombie dollars.  Dead, but still out there, walking around, trying to mess you up.

AC_Doctor's picture

MillionDufusBoner with another spend now pay later moment.  Can I pay you for the hamburger next week?  Assmunch...

Watauga's picture

MDB is nothing but SARC.  Always.  Never read one of his posts that was not.  He is on your side.  He just attacks the stupidity differently.

economics9698's picture

This is pure speculation but I cannot help but think MDB is stuck in a obscure office in DC somewhere calculating the seasonal adjustment for commercial paper outstanding dreaming of the day when he will be allowed to be a human being again escaping the bondage of the wife, two kids, mortgage, two car payments, and the threat of divorce court looming over his head if he deviated from the normalcy of his society.

Just a guess. 

With ZH he is a hero and a escape artist extraordinaire!

spastic_colon's picture

......"bust your ass for 5-8 hours a day in some lousy school or police department".....


really?!.....thank you for counterdicting yourself and reinforcing the "you owe me" mantra of the liberal zealot.  We do not owe you or anyone for the choices you make.  There are as many teachers and public servants who only want those jobs for the guarantee of pension without accountability or contribution.  I also know several of each, and several who know they have a good thing going and keep their mouths shut.


sorry ZH'ers for stepping in this one, let the thread puke begin.

Watauga's picture

Again.  MDB is messing with around with sarcasm.  It is his modus operandi.

trav777's picture

was it really possible for his sarcasm to have been any MORE obvious?

He is trying to throw you cretins a hint and it's like there's nothing but blunt force full frontal trauma that won't sail right over your heads

Joe moneybags's picture

Spastic, you got your chops busted by a clever writer.

MeelionDollerBogus's picture

spending more what? FRESHLY printed dollars? Those of us who actually work for our money get no benefit from such spending so we shall not.

spastic_colon's picture well as the psychology that all will be resolved before "deadlines" which puts a bid in markets and why it will not be like 2011

Groundhog Day's picture

tech bubble.....cut interest rates and create a housing bubble....housing bubble.....cut interest rates to 0 and create a debt bubble....What can they inflate next? and how can they fix anything without the interest rate tool?  QE is already starting to lose it's luster.

I don't think the politicians are as dumb as they appear to be.  They know now the next one will be it so they are coordinating their efforts much more then before.  They will come to agreement before the deadline and the market will rally

GetZeeGold's picture



Germany called.....they wondered if we could step up that gold delivery schedule?

Sudden Debt's picture

you know...

ordering tungsten => 2 months

ordering gold coins from china => 3 months

goldplating the tungsten witht he gold from the coins and all... it's pretty bussy right now in that sector => 6 to 7 years


It sounds about right when they say 7 years.

magpie's picture

The delayed delivery makes it more plausible, instead of a "How about tomorrow ?" raising questions about a tungston job or even a (very very short term) radioactive isotope transmutation.

GetZeeGold's picture



Tradition takes time.

Joe moneybags's picture

Maxwell Smart: "Would you believe that Germany wants 300 tons of gold delivered in 7 years?"

Agent Ninety Nine: "I find that hard to believe."

Max: "Well, would you believe they want 300 shares of GLD eft, delivered by the end of the century?"

Ninety Nine: " Hmmmmm..."

Max: "How about a portrait of Bernanke, delivered in a gold-painted frame?"

Cognitive Dissonance's picture

"What is just as concerning is, as Bloomberg's Chart of the Day shows, is the mass psychology aspect,...."

It was always and will forever be about mass psychology. Nothing has changed except that it has become much more overt and in your face.

Sudden Debt's picture

mass psychology...


I wonder if 1% of the population realizes what a debt ceiling is and why it's put there in the first place.


SheepDog-One's picture

Doesn't matter as long as they put a new iPoor on layaway with interest!

Cognitive Dissonance's picture

In order for the Ponzi to continue the mindfull and mindless must maintain their faith and belief regardless of whether it is simply a default position or an informed view. But please understand that our faith and belief does not have to be total and without doubt.

Participation, regardless of whether it is willing, agnostic, mindless, hostile or even forced, is still participation. This is the primary reason why the system still limps along.

Sudden Debt's picture

This time it's different.

gjp's picture

It really is different this time.  Nothing matters, the central banks and politicians are now without doubt all in as the market's bitch, the market knows it, and is happy to ignore a little melodramatic foreplay when it knows it'll get whatever it wants once the lights go down ...

Iam Yue2's picture


BlackRock; Credit Suisse and Notz Stucki are all warning of complacent markets; but Mr Market he no hear.

LawsofPhysics's picture

See my question above.  If the Fed and primary dealers, along with those forced to play via their 401k plan, are the entire market, does it really matter?  Should excellerate the destruction of the dollar and repatriation of all those reserves sooner rather than later one would think.

fuu's picture

I've been wondering about those "transaction accounts" that banks can buy stocks directly out of with excess deposit cash.

Do the IB/PDs have "transaction accounts" with each other.

Do the funds in those accounts count as deposits?

How many pension funds have "transaction accounts" with the IB/PDs.

How many total shares of stock are held in "transaction accounts" across the IB/PDs.

Not finding many answers but I'm still looking.

Dr. Engali's picture

They won't "fix" anything, but they most certainly will kick the can.

yogibear's picture

Higher and higher debt limits. 

State bailouts coming, plenty more spending, Post office, Social Security,etc.

SheepDog-One's picture

Meh....who cares! Even in 2011 the drop was recovered plus a bunch more in only a couple months! Partytime USA go go!!

SheepDog-One's picture

'Mass psychology' of Bernank and Geithner? 

Who are they talking about here? 

yogibear's picture

The US will be at $25 trillion at the end of Obama's term.

About 10,000/day are collecting Social Security.

Plenty of IOUs to make good on. Food Stamps will soon be over 50 million. 

More cell phones,
free funding for new illegals to US citizens,

state bailouts coming.

Obama knows he has control of the Republicans and they are scared.

MFLTucson's picture

But he does not have control over the people and that is what matters.

DeadFred's picture

I wonder if Obama knows the wisdom of not cornering a scared or wounded animal? He strikes me as one who would enjoy taunting a boxed in opponent. The Republicans can pull down the pillars of the temple if they want to play the long game. Two or three years of depression will make voters forget who voted for what. They'll only remember whether they are better or worse than they wete earlier. I wonder if the Repubs owners would allow it? There is as much money to be made on the dump as there is on the pump.

Confundido's picture

I guess the Fed was purchasing gold as the algos drove it to $1,668/oz? If so, should we expect series of fake jobs numbers releases to buy at 8:30am?

MFLTucson's picture

How else can they give Germany its gold back, ours is all gone when Robert Rubin and Billy Blue skirt leased it out for paper IOU's.

MFLTucson's picture

"The last few months have seen US equity markets swinging from confidence to grave concerns"

Need to look at who and what is influencing the markests and it is not retail buyers, it is outright fraud and decpetion from the Bernanke money printing charade.  There is no making sense of this market an no place to invest, the sytem is ruined and no longer functioning on any fundamentals.

Confundido's picture

I guess the Fed was purchasing gold as the algos drove it to $1,668/oz? If so, should we expect series of fake jobs numbers releases to buy at 8:30am? How many jobs claims are needed until they can finally gather the gold they owe to the Germans and Dutch?

tooriskytoinvest's picture

United States, March-June 2013 – Unpluggig the world’s sick man: last impact phase of the global systemic crisis

Seasmoke's picture

Collapsing upwards

Shevva's picture

Actually all debt will be converted to Zons, so 1 Zon = $1000.

Zons will also be made of choclate and transported through Death valley, twice, before delivery.

Welcome to the NWO, same as the OWO but with much high taxes.

SmoothCoolSmoke's picture

DC will be raised as soon as all in Congress have their SPY calls in place.

SmoothCoolSmoke's picture

OT.  I am still waiting for some, any mention of the dramatic turnaround Gov. Moonbeam has made in Cali.  I assume what has been reported (debt tamed) is true as ZH has had no comment.  It looks like Cai is not Greece, a bet that would have made yo a fortune here on ZH.

Again, the silence here speaks volumes.

magpie's picture

please correct me but was that not an one time tax windfall