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New Trading Week Starts With No Debt Ceiling Deal: Senate At An Impasse, House Isolated

Tyler Durden's picture




 

With the House, as previously reported, now out of the debt ceiling negotiations, it is all up to the Senate to reach some compromise with 4 days until the midnight of the first X-Date. Unfortunately, or maybe fortunately, at least going into Monday, there is no deal, and not even a glimmer of what a potential deal may look like. Yes, Democrat leader Harry Reid did said on Sunday that he had a "productive conversation" with Senate Republican leader Mitch McConnell on efforts to reopen the U.S. government and raise the federal debt limit, Reuters reports, but that's as far as it gets. "Our discussions were substantive, and we'll continue those discussions. I'm optimistic about the prospects for a positive conclusion to the issues before this country today," Reid said in remarks on the Senate floor. He did not provide any specifics of the conversation. Democrats and Republicans remain divided over spending levels in any temporary government-funding measure.

Notably, instead of bickering over Obamacare, a topic long since dead and buried (and considering the abysmal, and "glitchy" rollout of the Affordable Care Act over the past two weeks, the GOP may not need to life a finger to crush Obamacare which may end up DOA on its own), the Senate is now debating over spending and funding levels, in a flashback to both 2011 and 2012. Politico reports:

Senate leaders remained stuck Sunday over federal funding levels and the length of an increase to the national borrowing limit as they struggled to cut a last-ditch deal to reopen the government and avert the first-ever U.S. debt default.

 

With the government shutdown approaching its third week and the country poised to exhaust its borrowing authority Thursday, Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell were still trying to hammer out a potential deal. But as of Sunday afternoon, significant hurdles remained, and McConnell slammed Democratic leaders for rebuffing a proposal by Sen. Susan Collins (R-Maine) to end the impasse.

 

Reid and McConnell didn’t speak by phone until mid-Sunday afternoon, a call that a Democratic source characterized as “cordial but inconclusive.” It was the first time Reid called since the two leaders had met Saturday morning, a GOP aide said.

 

“Our discussions were substantive, and we’ll continue those discussions,” Reid said on the floor late Sunday afternoon. “I’m optimistic about the prospects for a positive conclusion to the issues before this country today.”

 

Sen. Chuck Schumer (D-N.Y.), a close Reid ally, said the two men were “moving closer” after their “good talk today.”

Chuck Schumer is best known, of course, for being Wall Street's best paid marionette, and the man who yesterday finally made it quite clear what the stakes were: it's all about the stocks. Alas, judging by where the Futures are about to open, tomorrow will not be a good day for the P&L of either Schumer, or his lobbyists.

As for the market, we are rapidly approaching the debt ceiling deadline, one which Republicans stated yesterday may be crossed:

Monday now will be critical. With financial markets fearful of a prolonged impasse, there is little margin for error before Thursday, when the Treasury Department warns the government will begin to run out of money and could fail to pay its bills for the first time in history. That possibility would intensify a budget crisis that started Oct. 1 when government agencies shuttered for the first time in 17 years because of lawmakers’ inability to pass a funding bill on time.

 

It’s far from clear how the high-stakes fight will play out this week. Republicans have already dropped their push to gut Obamacare, which prompted the shutdown in the first place. But McConnell has yet to accept Democratic demands for higher spending levels for at least a portion of the current fiscal year.

In other words, as we expected, last week's game of chicken came to a non-resolution far too early. The real outcome will have to literally wait until the 11th hour which may come on October 17, or just after. And following yet another stock market drop that pulls everyone out of the current hypnosis that all is well following last week's headfake 500 DJIA point rally. Yet with bond markets closed tomorrow: so far the only actual market that has been flashing a warning sign in the face of soaring Bill yields and spiking overnight general collateral rates, stocks may be up to their idiotic own once again, and screw everything up as they tend to do in a Ben Bernanke-centrally planned, HFT-momentum ignited market.

 

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Sun, 10/13/2013 - 18:02 | 4051074 malikai
malikai's picture

..and BTC just broke $146.

So long Silk Road dip.

Sun, 10/13/2013 - 18:28 | 4051130 CPL
CPL's picture

Think of it as improved optics and marketing angle on a currency that was suffering from a poor image problem and adoption because of associations.  Life, lemons, lemonaide, etc.

Sun, 10/13/2013 - 18:39 | 4051160 Pure Evil
Pure Evil's picture

 

 

"Obamacare ... may end up DOA on its own"

 

Never underestimate a Democrats ability to whip a dead horse back to life.

Sun, 10/13/2013 - 18:43 | 4051187 Everybodys All ...
Everybodys All American's picture

This nightmare is just beginning for Obama trust me.

Sun, 10/13/2013 - 18:44 | 4051195 fonzannoon
fonzannoon's picture

Can you elaborate EA? How is this going to be a nightmare for him?

Sun, 10/13/2013 - 19:04 | 4051242 Everybodys All ...
Everybodys All American's picture

The software glitches first of all indicate amateur hour and I wrote web software for years fyi. The glitches to me indicate that there are likely much much bigger problems behind the scenes in the software architecture. Kathleen Sibelius is now being asked to resign as it's now obvious the roll out was not ready. I predict most of the software will need to be rewritten.

The health insurance costs are onerous for individuals. No one is signing up because of costs and can't be compelled to sign up either no matter what the government thinks. Now they can tax you at year end but how many people are going to even be able to afford that payment. This will become a major protest.

Individuals are finding their hours being cut to under thirty while Congress, certain administration friendly corporations, and other elites are exempt from the law.

Trying to defend that is even beyond Obama. It is failing on it's own already in my estimation.

Sun, 10/13/2013 - 19:10 | 4051264 fonzannoon
fonzannoon's picture

So he leaves office with Obamacare a dud and spends the rest of his life telling everyone how the republicans blocked him from greatness?

Does he end up in a guillotine? In prison? I need a bit more for a nightmare.

Sun, 10/13/2013 - 19:16 | 4051281 malikai
malikai's picture

Our nightmare.

Sun, 10/13/2013 - 19:24 | 4051297 Everybodys All ...
Everybodys All American's picture

If and when the ACA gets fully implemented wait until your health care facilitator tells you they have to wait for the bureaucrat from the ACA to approve your open heart surgery or whatever procedure. Meanwhile you should go home and wait for their reply. I know people don't think this will happen but they are in for a big surprise because it happens now in socialist health care countries.

 

Is that guilotine worthy. I'll let you be the judge.

 

Sun, 10/13/2013 - 19:26 | 4051311 gatorengineer
gatorengineer's picture

everyone knew that going in, whats your point?

Sun, 10/13/2013 - 19:31 | 4051320 Everybodys All ...
Everybodys All American's picture

Not even close to everyone. In fact 90% will be surprised. What's your point?

Sun, 10/13/2013 - 19:50 | 4051376 brettd
brettd's picture

If they'll shut national parks over the debt ceiling...

Denying your health care for them is a no-brainer.

Fortunately, it will die quickly under the weight of its 

own stupidity.


Sun, 10/13/2013 - 23:49 | 4051876 PowerPlayer
PowerPlayer's picture

The Democrats are screwed on Obamacare.  Companies will blame every layoff, cutback, or health insurance premium increase on Obamacare and healthcare providers have already started talking about how bad Obamacare is for health service.  With a steady stream of doctors and companies telling everyone how awful Obamacare is this isn't going to be pretty for Democrats.  Democrats think that once it is implemented everyone will love it, but the 8,000 people that sign up for Obamacare aren't going to make the other 100 million voters more likely to approve of it.  This isn't like social security where everyone benefits from it.  

 

I'm self-employed with no health insurance and I have no plans to sign up for it.  I will pay the penatly and if I need medical attention I will sign up then.  This will be a nightmare for the democrats.  

 

Sun, 10/13/2013 - 18:02 | 4051077 TeamDepends
TeamDepends's picture

Shouldn't the DOW give back those 500 hopium points?

Sun, 10/13/2013 - 18:10 | 4051087 Spastica Rex
Spastica Rex's picture

Why?

edit: But I can certainly see the Dow dropping 500 and Hank Paulson style panic faces showing up all over the MS media.

Sun, 10/13/2013 - 18:10 | 4051100 TeamDepends
TeamDepends's picture

Because it would be fair (guffaws all around).

Sun, 10/13/2013 - 18:13 | 4051102 CunnyFunt
CunnyFunt's picture

Cue Chuckie Cheese's "dire implications" for 401k accounts.

Sun, 10/13/2013 - 18:08 | 4051089 smcapmachine
smcapmachine's picture

The market is down a whole 0.7%. Panic in the streets! Run for your lives!

Sun, 10/13/2013 - 19:32 | 4051323 gatorengineer
gatorengineer's picture

remember Japan is closed for Dead Ancestors day.... A real market doesnt open until europe.....  Fun wont start till then

Sun, 10/13/2013 - 18:10 | 4051093 NoDebt
NoDebt's picture

Red open, green close.

Sun, 10/13/2013 - 18:14 | 4051112 involuntarilybirthed
involuntarilybirthed's picture

Reid: "I'm optimistic about the prospects for a positive conclusion"

or

"we know what we want and if the repubs don't go along it's their fault again."

Sun, 10/13/2013 - 18:20 | 4051118 MichiganMilitiaMan
MichiganMilitiaMan's picture

it's come to this in America-

Two elite f*&kers, McConnell and Reid, will determine the direction of entitilements, the econony, our financial institutions, and our "democracy" over the next 4 days.  I only hope that it truly is hubris this time and we truly have passed the rubicon.

The situation is sooo dire, that no more then two f&*kers can participate in the meetings that will lead to, only the next kick the can down the road solution.  Anybody, or anyone could make that decision.

 

 

Sun, 10/13/2013 - 19:14 | 4051262 HardlyZero
HardlyZero's picture

This time the Fed is involved deeply with $2.6T in Treasuries and MBSs....so its a 3-way bi-financial triste arrair !   We will have to find out who is in charge and on top...and who is fluff(er).

Sun, 10/13/2013 - 18:23 | 4051126 Yancey Ward
Yancey Ward's picture

I hear the administration has blown through the entire billion dollars allocated to Barrycade procurement for the year.

Sun, 10/13/2013 - 18:24 | 4051131 Urban Redneck
Urban Redneck's picture

If they repeat the LIE often enough...

...the government will begin to run out of money and could fail to pay its bills for the first time in history...

Sun, 10/13/2013 - 20:01 | 4051411 brettd
brettd's picture

Maybe.

More folks are doing the simple math:

Gov. takes in 200 billion a month.

Credit card "debt" payments are 20 billion a month.

There is no possibility for default.  It's all theater.

 

Sun, 10/13/2013 - 18:27 | 4051139 JR
JR's picture

The Hill wrote yesterday: “House Republicans were furious with Senate Republicans and President Obama on Saturday for trying to cut a debt ceiling deal that leaves them out in the cold.

“Members emerged from a conference meeting saying Obama had double-crossed them by breaking off talks in order to shop for a better deal from the Senate GOP.

“They said the deal, formulated by centrist Sen. Susan Collins (R-Maine.), would never get House GOP approval.” …

http://thehill.com/homenews/house/328205-house-gop-furious-with-senate#ixzz2hdxCBgk2

Sun, 10/13/2013 - 18:42 | 4051184 Pure Evil
Pure Evil's picture

Oh yeah, those guys at the other end of the building.

Who are they again?

Sun, 10/13/2013 - 19:17 | 4051288 HardlyZero
HardlyZero's picture

There are probably 5 generations of house members that forgot how they were supposed to control the spending.

Now look at all the debt...how did that happen ?

Maybe they are thinking about how to grow a backbone.

Sun, 10/13/2013 - 19:46 | 4051310 Pure Evil
Pure Evil's picture

Well, they've already got a Bo(eh)ner, how much more do they need?

Sun, 10/13/2013 - 18:30 | 4051143 Bazza McKenzie
Bazza McKenzie's picture

Quoting Politico is like quoting Obama.  They just talk his and their book.

After all, Politico has been telling us for the last couple of weeks that the House GOP was going to cave any minute now, and yet somehow it still hasn't passed any funding for Obamacare or a new debt ceiling.

Sun, 10/13/2013 - 18:30 | 4051147 Robert of Ottawa
Robert of Ottawa's picture

Let's get this straight. The senate is at an impasse; the congresss, which authorises monies for the federal government is "isolated"? From what, precisely? Their constituional authority or tehe Spite House's media cheerleaders?

This seems very much like King Charles 1 being denied money by the Parliament. And King Barry throws a hissy-foit.

 

Sun, 10/13/2013 - 18:36 | 4051161 CunnyFunt
CunnyFunt's picture

Nice analogy, but I doubt Barry will meet the same fate as Charles Stewart.

Sun, 10/13/2013 - 18:49 | 4051189 Pure Evil
Pure Evil's picture

Never give up HOPE that a sharp blade under the downward force of gravity can bring real CHANGE to the Merxican people.

Sun, 10/13/2013 - 18:39 | 4051164 Everybodys All ...
Everybodys All American's picture

Hold firm. If the Senate plan even mentions more spending no Republicans in the House are going to vote for it and the Senate Democrats know this outcome. Therefore, it should be assumed the Democrats may want default because they think they win politically. Once again the poor will pay higher taxes, higher interest rates, and higher inflation results because of petty politics.

Sun, 10/13/2013 - 18:36 | 4051165 Atomizer
Atomizer's picture

Let bring back Plan C to terrorize the plantation peasants from leaving his master.

False Flag - Coming Soon!

 

/LOL

Sun, 10/13/2013 - 18:49 | 4051205 Pure Evil
Pure Evil's picture

Nothin' like a lethal wedgie to grab everyone's attention.

Sun, 10/13/2013 - 18:45 | 4051193 Chicken_Little
Chicken_Little's picture

Wolf! Wolf!

Sun, 10/13/2013 - 20:05 | 4051414 brettd
brettd's picture

Love the handle....

Sun, 10/13/2013 - 18:54 | 4051225 Absinthe Minded
Absinthe Minded's picture

God am I getting sick of this fuckin sideshow. Does anybody else wanna just burn it all to the fuckin ground? The fact that I know some NSA slimeball will read this at some point and decide whether I'm a threat or not makes me want to puke. The greatest nation ever to reign on the planet is now just a shell of itself thanks to a chickenshit president that will sell us out to make sure the 47%ers will keep voting his lazy ass in. We are so fucked, Ecuador here I come.

Sun, 10/13/2013 - 19:14 | 4051275 Atomizer
Atomizer's picture

Beware of TAME airline flight from Quito to Cuenca or returning to Quito. It’s a thrill ride.

Sun, 10/13/2013 - 19:33 | 4051326 Absinthe Minded
Absinthe Minded's picture

Thanks for the heads up. Time is running out.

Sun, 10/13/2013 - 19:47 | 4051337 Pure Evil
Pure Evil's picture

To Absinthe Minded:

When regimes become this insane with absolute power ... paranoia reigns supreme.

Just because they haven't gotten around to you yet doesn't mean they don't perceive you as an enemy of the state.

Even if you were on the (B)ody (O)der A-Team when they take a dislike to you you're more than likely going to find your body dumped in Fort Marcy Park with a small caliber hole drilled into the back of your head.

The only person that matters is the Big O and we ain't talkin' Oprah.   

Sun, 10/13/2013 - 19:23 | 4051304 HardlyZero
HardlyZero's picture

Lets see...before any raising of hte debt ceiling, the Dems want to remove the sequesters, and the Repubs want to keep the sequesters.  That is item 1.

This seems like an insurmountable barrier, one they can both 'blame' as the 'reason' the crisis.

They have an 'out' and they will do that until it does not work anymore...by then "Rome will be burning" and all hell gonna break loose.

They will all be running around and it will be busy.

Sun, 10/13/2013 - 19:30 | 4051319 gatorengineer
gatorengineer's picture

I have a scoop!!!!!!!!!!!!!!!!!!!

 

I know exactly what the deal looks like.

1)  Medical device tax gets put back a year.

2)  Spending restored to pre-sequester levels

3)  1Trillion increase (this last point is still a little fuzzy), democrats want 1.5T....

 

Done.....

 

 

Sun, 10/13/2013 - 19:39 | 4051344 Pure Evil
Pure Evil's picture

I think Boner just got a boehner!

Schwing!!!

Sun, 10/13/2013 - 19:40 | 4051346 hairball48
hairball48's picture

As of this moment, the sheep don't have a clue what the true, real cost of Obama care will be for them....but

They're gonna find out soon.

Break out the popcorn

Sun, 10/13/2013 - 20:19 | 4051442 gatorengineer
gatorengineer's picture

obamacare for his base is free.  either they are exempt unions. government employees.  or on public assisstance.  doesn't bother them any.....

Sun, 10/13/2013 - 20:53 | 4051523 Everybodys All ...
Everybodys All American's picture

Wait until some of these people and or their loved one's are denied care because they do not fit the actuarial requirements of the ACA. It will happen just as sure as the sun comes up tomorrow.

Sun, 10/13/2013 - 21:43 | 4051649 The Persistent ...
The Persistent Vegetable's picture

Not too worry. It will be "solved" and the repubs will continue to get their corporate welfare and their military spending and the dems will get their social programs.

Nothing ever changes.

Mon, 10/14/2013 - 06:37 | 4052135 overmedicatedun...
overmedicatedundersexed's picture

when the big money (ins co's, banks, and the ira and 401k's they control), decide the FED and .gov have lost control the run to the door will be stopped by glitches and server error, the NSA will provide routing errors, SEC will halt trading..market will close until the big money gets in line for orderly trading..or that's what yellin and her masters at GS and international banks think. they could be wrong, but can we bet they don't just shut it down?

Mon, 10/14/2013 - 07:37 | 4052193 Gunga
Gunga's picture

Keep the feral government shutdown. That's a cleaner solution than the rest of us seceding.

Mon, 10/14/2013 - 12:41 | 4052872 Serfs_Up
Serfs_Up's picture

Yeah only 83% to go to achieve the Hope and Change of most ZH ers... (:

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