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BofAML Warns Hope For The Best; Prepare For The Worst
A plausible debt ceiling agreement is finally on the table, but BofAML doesn'tt expect a deal until next week or later.
Via BofAML,
Hope springs eternal
After a long period of inaction in Washington, politicians are finally coming out of their stupor. Yesterday, House Speaker John Boehner met with members of the House Republican Conference to propose a six-week extension of the debt ceiling. While the text of the legislation is not yet available as we go to print, the bill would reportedly suspend the debt ceiling until November 22 and prohibit the Treasury Department from using extraordinary measures to extend debt payments beyond that time. It also would create a process for budget negotiations between the two parties. Separately, the president is also in the process of meeting with groups from both the Senate and the House. While these meetings raise hopes of a quick deal — and caused a 2% jump in the stock market — we believe a deal is more likely next week (or later) than this week.
The devil’s in the details
As in past budget negotiations, there are usually a number of false starts before an actual deal is done. With these bills, the devil is always in the details. The president is unlikely to quickly agree to a short-term extension, in our view, and will likely instead hold out for a 6- or 12-month extension. He is also unlikely to support a bill that creates a new deadline and thereby by another potential brinkmanship moment.
A clean bill of health?
From the other side of the aisle, a relatively clean bill could violate not one, but two Republican rules:
- The Boehner Rule — any increase in the debt ceiling must be matched by an equal cut in spending over the next 10 years.
- The Hassert rule — the Speaker will not allow a vote on a bill unless a majority of the majority party supports it.
Comments by conservative leader Representative Steve Scalese (R-LA), suggest conservative resistance to the Boehner proposal. Thus the bill may split the Republicans and require heavy support from Democrats.
Why do now what you can put off until later?
The other challenge is that little seems to get done until the last minute in Washington these days. October 17 is a soft deadline: the Treasury will still have plenty of cash. As we note in this week’s Macro viewpoint, the real deadlines are later when cash runs out. This creates a risk of a long-delayed agreement. It also means a high risk of miscalculation where “last minute” suddenly becomes “too late” and the government defaults on a payment of some sort.
Extending the debt ceiling for a significant period of time would be an important step forward, removing the more important of the two shutdown threats. However, efforts to fund and reopen the government have been put on the back burner and could stay there until the debt ceiling is resolved.
Our motto: hope for the best; prepare for the worst.
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Don't go limp Boehner
Everytime I load a page on ZH today, I get a giant Chase takeover ad. It looks like they really know their audience.
Those fucking ads where the volume comes on out of the blue are really on my last fucking nerve.
What ads?
http://www.ghostery.com
" It alsomeans a high risk of miscalculation where “last minute” suddenly becomes “too late” and the government defaults on a payment of some sort."
Total FUD bullshit, the federal government brings in plenty of tax revenue, there is NO REASON they would be forced to default. Rather they would only be forced to cut SPENDING elsewhere, which is what they need to do anyway.
I don't think the fraud in our system has ever been more transparent from the top level to the boobs on TV selling it.. It's comical.
Who says there is plenty of cash? Get that widow on the set, we need dirty laundry.
Adblock Plus is your friend.
It's almost like they're practicing for a future default and running a training program now to gauge reaction
great...
any increase in the debt ceiling must be matched by an equal cut in spending over the next 10 years...
SOMEBODY ELSE WILL CLEAN UP THIS MESS BUT NOT US tactics...
alias...
KICK CAN!! YES WE CAN!!!
Politicians have been saying this crap for decades, since Reagan....'OK we'll pass this spending, but in 10 years and you guys better cut! I'm seriously!'....of course it never happens, why should it?
Market rally Thursday was totally unjustified.
Things are so bad.....it's bullish. Welcome to the paradox market.
We'll wake to record high markets one day, with a currency that wouldn't buy a sack of groceries if you had a briefcase full of it.
If the market goes down after the deal is reached much like it did after the no taper back in September, this may be a sign of risk aversion gaining a stronger footing.
best- every single fucking banker and hedgefund manager, and our president fucking die.
worst- the above does not happen.
unfortunately, i am prepraring for the worst in this case.
does anyone else get all misty eyed and nostalgic when they think back to the good old days when BAC was telling us to expect a disorderly selloff on the 10yr to 3.5%
PMs are getting pouded this AM. Ouch!
You know for the life of me I can't figure out why 90% of the people on here are not long stocks and short (paper gold, especially the miners) and essentially let the bernak give them the profits to fund their phyz purchases.
Forex to phyz for me. Same idea, though.
Fair enough. Good for you.
Notice in this historical war documentary that the only way to beat the giant was to jump on it's back.
http://www.youtube.com/watch?v=EE2TZAdoaS8
BofAML is more focused on off-loading onto or buying from the uninformed than they are in informing (even if they had a clue).
another blatent metals smash, as Yellen is so bullish for PM;s eh?
A bit of a can-kick for a month is being mulled over....that's not a solution to anything.
of fucking course gold is getting whacked again.
we have the biggest fucking cunt as our new fed chair person who will increase qe, and gold fucking gets clobbered.
seems like one of those days where gold will prob fall like 80 or so.
its al fucking bullshit.
gold and silver pounded, s&p futures and dow futures green, and if the dow and s&p had lost as many pts as it had gained yesterday, futures would fucking skyrocket today, and we would here this bullshit of how its a relief rally.
Thismarketisrigged beat me to it.
Forget about Kicking the Can...
Hows about Kicking A Politician?
Where's E. F. Hutton when you really need him? oh! Ask Chitigroup what they think about .......... (shhh)
FUCK YOU BOFAML!!!1!! Benjamin Disraeli said that!
"I am prepared for the worst, but hope for the best"
You expect a banker to give credit where due?
They are all CUNTS.
I have expected NOTHING BUT THE WORST since 2008 FU BOFAM
http://www.marketwatch.com/story/why-america-needs-a-debt-default-2013-10-11
Why America needs a debt 'default'
Commentary: Is it time to hit the reset button?
By Anthony Mirhaydari
It's clear the fiscal fight in Washington isn't going to end anytime soon.
Sure, a short-extension to the debt ceiling is under discussion, according to reports, but that will only open the door to contentious budget talks over issues like entitlement reform and changes to the tax code. The two parties remain far apart: Republicans want to balance the budget in 10 years, while Democrats want another trillion in taxes and spending.
There's too much at stake and the choices are tough. But what if we didn't have to make it?
What if we took the easy way out that didn't require the sacrifices — such as higher taxes, lower spending, and fewer entitlement benefits — that Democrats and Republicans are playing hardball over in the first place?
What if we could avoid the nightmare that would be a debt-ceiling breech, which would force us to choose between ruining the Treasury's reputation as a risk-free investment but provide checks to seniors on Social Security, or leave grandma in the lurch but pay our creditors in Tokyo and Beijing?
The more I think about the extent of the problems facing this country, the more apparent it is that a hard reset is needed. I'm talking about a debt default, but not in the traditional sense. And the Federal Reserve would play a key role.