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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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Thu, 01/17/2013 - 10:33 | Link to Comment LawsofPhysics
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?

Tylers...?

Thu, 01/17/2013 - 10:38 | Link to Comment MillionDollarBonus_
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!    

Thu, 01/17/2013 - 10:46 | Link to Comment Dr. Engali
Dr. Engali's picture

Isn't the Bernanky buck an IOU?

Thu, 01/17/2013 - 10:54 | Link to Comment Comay Mierda
Comay Mierda's picture

this should be an interesting read today.  GAAP Gubmint 2012 statements http://www.fms.treas.gov/fr/index.html

Thu, 01/17/2013 - 13:14 | Link to Comment economics9698
economics9698's picture

Good stuff MDB but the slang, oh my gosh!

Thu, 01/17/2013 - 11:22 | Link to Comment Watauga
Watauga's picture

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

Thu, 01/17/2013 - 11:03 | Link to Comment AC_Doctor
AC_Doctor's picture

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

Thu, 01/17/2013 - 11:23 | Link to Comment Watauga
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.

Thu, 01/17/2013 - 13:26 | Link to Comment economics9698
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!

Fri, 01/18/2013 - 21:33 | Link to Comment Papasmurf
Papasmurf's picture

lulz

Thu, 01/17/2013 - 11:03 | Link to Comment spastic_colon
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.

Thu, 01/17/2013 - 11:24 | Link to Comment Watauga
Watauga's picture

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

Thu, 01/17/2013 - 11:45 | Link to Comment trav777
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

Thu, 01/17/2013 - 11:47 | Link to Comment Joe moneybags
Joe moneybags's picture

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

Thu, 01/17/2013 - 12:38 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

MDB is the resident satirist.  

Sat, 01/19/2013 - 15:51 | Link to Comment MeelionDollerBogus
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.

Thu, 01/17/2013 - 10:43 | Link to Comment spastic_colon
spastic_colon's picture

yes....as 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

Thu, 01/17/2013 - 10:47 | Link to Comment Groundhog Day
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

Thu, 01/17/2013 - 10:34 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

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

Thu, 01/17/2013 - 10:36 | Link to Comment Sudden Debt
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.

Thu, 01/17/2013 - 10:49 | Link to Comment magpie
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.

Thu, 01/17/2013 - 10:54 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Tradition takes time.

Thu, 01/17/2013 - 11:56 | Link to Comment Joe moneybags
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?"

Thu, 01/17/2013 - 10:34 | Link to Comment Cognitive Dissonance
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.

Thu, 01/17/2013 - 10:37 | Link to Comment Sudden Debt
Sudden Debt's picture

mass psychology...

HA HA!

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

 

Thu, 01/17/2013 - 10:41 | Link to Comment SheepDog-One
SheepDog-One's picture

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

Thu, 01/17/2013 - 10:44 | Link to Comment Cognitive Dissonance
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.

Thu, 01/17/2013 - 10:34 | Link to Comment Sudden Debt
Sudden Debt's picture

This time it's different.

Thu, 01/17/2013 - 10:45 | Link to Comment gjp
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 ...

Thu, 01/17/2013 - 10:35 | Link to Comment Iam Yue2
Iam Yue2's picture

 

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

Thu, 01/17/2013 - 10:37 | Link to Comment LawsofPhysics
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.

Thu, 01/17/2013 - 10:51 | Link to Comment fuu
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.

Thu, 01/17/2013 - 10:38 | Link to Comment Dr. Engali
Dr. Engali's picture

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

Thu, 01/17/2013 - 10:45 | Link to Comment yogibear
yogibear's picture

Higher and higher debt limits. 

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

Thu, 01/17/2013 - 10:38 | Link to Comment SheepDog-One
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!!

Thu, 01/17/2013 - 10:42 | Link to Comment SheepDog-One
SheepDog-One's picture

'Mass psychology' of Bernank and Geithner? 

Who are they talking about here? 

Thu, 01/17/2013 - 10:43 | Link to Comment yogibear
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.

Thu, 01/17/2013 - 10:47 | Link to Comment MFLTucson
MFLTucson's picture

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

Thu, 01/17/2013 - 11:06 | Link to Comment DeadFred
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.

Thu, 01/17/2013 - 10:43 | Link to Comment Confundido
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?

Thu, 01/17/2013 - 10:46 | Link to Comment MFLTucson
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.

Thu, 01/17/2013 - 10:44 | Link to Comment MFLTucson
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.

Thu, 01/17/2013 - 10:44 | Link to Comment Confundido
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?

Thu, 01/17/2013 - 10:46 | Link to Comment tooriskytoinvest
tooriskytoinvest's picture

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

http://investmentwatchblog.com/united-states-march-june-2013-unpluggig-t...

Thu, 01/17/2013 - 10:56 | Link to Comment Seasmoke
Seasmoke's picture

Collapsing upwards

Thu, 01/17/2013 - 10:56 | Link to Comment Shevva
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.

Thu, 01/17/2013 - 11:09 | Link to Comment SmoothCoolSmoke
SmoothCoolSmoke's picture

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

Thu, 01/17/2013 - 11:12 | Link to Comment Yen Cross
Yen Cross's picture

 It's all ball bearings these days!  Typical day at the Fed.

Thu, 01/17/2013 - 11:16 | Link to Comment SmoothCoolSmoke
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.

Thu, 01/17/2013 - 11:31 | Link to Comment magpie
magpie's picture

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

Thu, 01/17/2013 - 12:00 | Link to Comment retiringteach
retiringteach's picture

so right-zh fools keep waiting for the sun not to rise-all the while missing the beginnings of the next bulll stock market-as gold drifts below $1,000, each day will be the low!

Fri, 01/18/2013 - 05:59 | Link to Comment Melody7773
Melody7773's picture

No wonder the debt limit is higher now then it was in 2011. Our National Debt is way bigger, prices constantly grow, no fax payday loans online and student loans are being irresponsibly taken (thanks God with these new mortgage regulations we can hope that people who really can't afford them will not get them, but again, with our "smart" banks it is rather hard to expect some honestly from them). With the debt hitting the ceiling again we are left in an uncertainty, we have no idea what expecting us in future. Oh wait, sure we know: another total collapse!

 

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