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The Five Scenarios Of A Debt Ceiling Breach
With the possibility of a US government default growing day by day (1Y USA CDS rose 12bps today to 72bps) amid impasse after impasse in DC, Bloomberg's Mike McKee looks at the five possible scenarios should the debt ceiling be breached (however unlikely and ridiculous some may appear).
From prioritization of payments to across-the-board cuts, 14th amendment interventions and delaying payments, McKee explains the process and implications of each. There are no good options left but we can't help but get the sense the Republicans might just be playing a longer-game here to take us beyond the Democrats' "red-line" of October 17th to highlight their fear-mongering (remember the shut-down devastation?) and potentially regain some election capital (in this increasingly twisted game of picking the worst of two evils).
As McKee also notes, it seems a growing number expect us to cross the red line and for the "market" to save the day... i.e. we see a major market crash on the 18th which finally sparks DC to action...
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There is only one scenario that matters.
The Bernank keeps printing money and hands it over to the primary dealers, who use it to manipulate the markets.
You just know these assholes are going to kick the can ...It's all Bullshit!!!
It's all bullish fixed it for you...
"As McKee also notes"
Bloomturd's Liesman
even has a similar pedigree
It is amazing what a bunch of dumb fucks the Americans are these days. How it is possible that people with IQs over 80 can live in the same world as you and I and still insist that there is any difference between Republicrats and Demlicans is beyond me. Believing in the Red Team Blue Team meme today shows the same critical thinking ability of a pro wrestling fan that insists that it's real.
http://www.singledudetravel.com/2013/10/just-in-american-are-such-retard...
AmeriKa is love with Sports Fan metaphor.
Well, only one party created the modern american welfare state. FED and income tax (Wilson,1913), social security (FDR), medicare, medicaid and foodstamps (LBJ), and of course, Obamacare! Perhaps, a person with discrimination and analytical skills would indeed place the blame on the party voting for all these uncontitutional functions of government as well as the one trying to eliminate constitution rights such as the 2d amendment. Interesingly, the Gaussian IQ curve is still Gaussian in shape and its mean still 100. Just as large a portion of the current population is below that mean as has always existed. The dependents have just developed an entitlemental mentality, just as planned by the blue party when they created all the listed welfare programs that are currently the source of our insolvency.
Its pretty simple, you can't solve a debt problem by taking on more debt. Only one party is opposing an increase in that debt level. Let's hope the tea party can accomplish their goals. Certainly, leaving the debt ceiling in place is better than a balanced budget amendment as it immediately accomplishes that goal.
The Tea Party will be given all the rope they can possibly use.
That's an awesome caricature, but it certainly isn't just amerhika with that problem.
http://www.singledudetravel.com/wp-content/uploads/2011/06/march-of-tyra...
The worse people will win. Always have, always win.
''As McKee also notes, it seems a growing number expect us to cross the red line and for the "market" to save the day... i.e. we see a major market crash on the 18th which finally sparks DC to action...''
what is considered a 'Market crash'' these days?
i think that the dow falling 40 pts maybe considered a fucking crash with this shit market.
im confused as ever.
This is like a story on the five scenarios for what the world would be like if pigs started flying. Yes it is possible, but very unlikely. The banks = the government. The banks want the debt ceiling raised.
The only way the US will default is if on the eve of a vote on some bit of scheduled legislative theater there is a massive snow storm, all DC is snowed in, all the power goes out, everyone either dies or else eats everyone else.
And the US goes into default at least until DC is dug out.
But that's it. Nothing else could make the US default. It would be an accident, and act of God, but not an act of Congress.
Pelosi does remind me of a monitor lizard, so your "eats everyone else" scenario is actually plausible.
exactly the whole concept of voluntary default (someone discovered religion all of sudden) is ridiculous since some fed official can print as much as he/she wants.
HOWEVER, thats not the POINT. the main issue which matters is what is the plan is? yes, agreed default is ridiculous but it is just a way to the goal ... the goal is what matters, they dont care if it sounds ridiculous ... where they want to go, what is the final destination thats what matters ... and they are making this journey of shutdown, default, EBT, internet shutdown experiment all loaded ...
F6 Tornaders.
And as it swoops through National Mall taking out both Congress and the White House (and Supreme Court too obviously) I wouldn't mind if it swept southeast and took out some EBT card holders too.
Unless they want a default and a crash. No one seems to be considering that possibility...
I believe it is true and have said here many times over the last weeks. I believe more than a few of the largest banks are beyond pretending now and they all need the chaos to print even more.
Reset Jubilee --> Marx/Engels "creative destruction" --> no debt and restart.
It could all be 'blamed' on the debt.
Exactly. I have seen a lot of evidence that several large false flags have been thwarted over the last few years. A good false flag was needed to kick off marshal law and all they have left now is shutting down the banks and SNAP cards to cause anarchy so that they can save us with marshal law, gun confiscation, one world currency, etc etc.
I think this is their backup plan but it has to go down soon because Obama is their boy to preside over the destruction of America's sovereignty.
I'm skeptical the banks can get 18 House Republicans to vote for a Senate bill. I think we go past October 17 on this.
Off Topic, but important new info from Snowden while we debate whether our fake government is going to raise the debt ceiling. Important to remember they are not working for us. They are afraid of us and intend to enslave us. http://www.washingtonpost.com/world/national-security/nsa-collects-milli...
At least the fake debate about the debt ceiling (which will be raised) is evidence that the politicians are still trying to convince the masses that they do something other than entrench against the People. I guess that's worth something.
We might as well admit that they know our sins better than our confessors right down to the smallest unpaid parking ticket, missed credit card payment and politically repugnant belief. Things that are legal today may not always be so, and laws can be made retroactive. They will be coming for each of us in our turn. Think of the great purges in the Soviet Union during the '30s.
LMFAO on the 18th the world will be so fucking scared of the market drop and US default that everyone will flock to US treasurys
Exactly. Everyone fled to safety in treasuries after they got downgraded in 2011.
Just another day in the new normal.
Not to worry, the Republicraps will cave and give Obumma and Reid everything they want and probably even more.
No default, no spending cuts, increased QE, no more "illegal" immigration, no more nothing - except higher taxes for what's left of the working class.
Gold back to $800. It's the American way you know.
I'd like to see gold go back to $400...as long as I could lay hands on physical at that price, it would be like Christmas.
1. And only 1. Force breach as planned. Top down bottom up inside out
roll crimson tide...
Roll Tide!
How about this for contrarian? The market would probably rise even faster on a default as the Fed steps in as it always does to do the job of Congress, this time paying interest on the debt and/or maturity value on maturing bills, as well and monetizing as fast as needed to keep the system juiced. It will give the markets an opportunity to ramp ever higher as always.
If Bernanke and Yellen can justify buying up $40 billion of mortgages every month to juice housing prices, they will find a way to bail out the Congress that created them.
In the near future, we will also find out that the Fed already informed members of Congress and Goldman of this plan last week, which has led to the relentless rally of the past few days as the world was front run once again. Of course, this is legal, though it will be investigated before being swept under the rug.
It is important to pretend to investigate. Can't have a wizard behind the curtain unless you tend to the curtain.
You had me until you said investigated. NFW. Last person to fuck with a giant squid was captain Nemo you see where it got him...
Yet again propaganda to scare the sheeple.
i won't be holding my breath for a real market crash. this is all just orchestrated bullshit. any crash will be orchestrated as well.
just for laughs at this point, dow futures are currently up 36 pts, s&p futures up 5 pts.
why dont these ''investors'' ever want to take profits, lol.
its funny how the msm continues to say 'investors'' , i guess if algorithms are considered investors, than ya, but otherwise they just continue to state false information.
There is a sixth scenario: The criminal, murderous and treasonous US government finally collapses under its own corrupt weight. Then the criminals that made up the government and their bankster masters are besieged by sheeple armed with AR and/or AK "pitchforks." The criminals and banksters are promptly put to the guillotine and the Constitutional republic restored as founded and with sound money.
"The kings are dead, long live the Constitution."
That is the best possible scenario.
Isn't the 14th Amendent a de facto balanced budget amendment?
In other words, while the gov't must pay its obligations, it can't constitutionally incur more obligations than its revenue allows.
I assume you are referring to the portion of the 14th Amendment which states, in part, the following: "The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void." [emphasis added]
I don't see how this authorizes additional borrowing.
But, this statement would appear to require that the government not fail to find funding for these obligations; otherwise, aren't they being questioned?
To me, the more they borrow, the less they can afford to fund them, and thus, the more they will be questioned as on-going abilities which can be funded.
http://www.usgovernmentspending.com/spending_chart_1890_2012USp_15s1li01...
'And, I guess you totally forgot about this little goodie from the 14th Amendment: "The Congress shall have power to enforce, by appropriate legislation, the provisions of this article."
What about the President?
What about the Senate?
But . . . But . . . But . . . Obama said . . .
'Sorry, I got mixed up.
That's not what you said. I read something to the contrary in the "newspaper" today.
Nevermind.
If I'm not mistaken, you agree with me.
Or, alternatively, I agree with you.
The 14th Amendment doesn't allow additional borrowing;
it limits additional borrowing.
But, apparently, it's not up to whatever the President and the Senate demand, it appears.
Imagine that.
EXACTLY.
The House still calls the shots on taxation, i.e. revenue.
('Is supposed to. Correct?)
I thought for sure I read, from the Investors Business Daily, Op-Eds, a majority of the debt-limit-increases in US history have been "non-clean", and 60% of the "non-clean" debt-limit increases were demanded by the Democrats. The Republicans appear to have demanded 16% of the "non-clean" debt limit increases. The remaining ones were when the House was not clearly controlled by only one party.
Now that I am looking for it, I can't find the op-ed.
Typical. Maybe I need to check if I can adequately smell peanut butter with my left nostril only. (Did you read about that regarding early Alzheimer indicators?)
(Although, I am not totally convinced that this prohibits borrowing beyond what the Congress deems to be "not questioned.")
As long as Congress authorizes BS stuff "by law," it will increase its obligations and, hence, the debt.
But a lot of stuff it authorizes are annual appropriations and so the law is only an annual obligation.
Why do we have 800,000 "non-essential" government employees?
You make some good points. I guess it is up to us to vote them out if they can't do what they are supposed to.
'Sorry, I messed up. 'Meant to say that I'm not convinced that this prohibits borrowing EXCEPT beyond what the Congress deems to be "not questioned."
Option #6 as stated by Rand Paul...just cut back on spending...DUH!
What did I miss; I could only count four. ??
Was there a link I should have been able to click?
What was the fifth option?
[Or, was it impass and default?]
More Kabuki theatre by the one-party system of elephant & jackass sock puppets with the bankster cartel's hands in both.
The dumbed-down, clueless, apathetic, complascent, dependent sheeple cannot be helped, much less saved from themselves. Even my partners (CPAs) and successful clients & business associates have a "don't worry, be happy" "go along to get along" "cumbaya" attitude.
It is a mathematical inevitability that this will end very badly. Protect your @$$(ets) and prepare for tyranny and currency/economic collapse. Plan A, urban survival, and Plan B, woods 'n water, ain't going to work. Plan C, excape from the zombie apocalypse in the United State_, is looking like the only viable option.
This farce is like the WWF, except not as sarcastically intelligent.
All we need to make it complete is Harry Reid hitting Boehner with a folding chair.
Any takers on Saturday's EBT blackout being a test run for a default scenario? My guess is EBT cards wouldn't make the "payment prioritization" cut.
Just TPTB's way of catching a tiny glimpse & extrapolating its potential.
Yes. That's why they did it during the middle of the month. Not end of the month
I agree, totally. Also the republicans and some democrats would want to have this go past the 17th and here's why. The republicans right now are over a barrel and they are being made to look bad. But allow the time table to go past the 17th and everything is up in the air, there isn't anyone over the barrel anymore. It will have the Whitehouse over the barrel because everything will be in chaos or about too and the republicans will be able to do what they are good at doing. And that is prodding and stirring the people saying that it's the Whitehouse fault your not getting this or that, it's the Whitehouse fault that they paid the foreign investors over your EBT or SS etc..
You may say that this isn't possibly but it is, they where able to make the Tea party when Obama got elected and made him continue to back down over things. All they have to do now is to obfuscate and throw grenades so to speak into the media and public consiousness. At the very least both will be blamed, at the best it will be the Whitehouse. After October 17th, it will shift from the Whitehouse having the advantage to the republicans.
If you're a republican strategist, you push for prioritization of payments. Democrats will shit themselves blaming you, but you say "in the end, they fucked you."
Whatever. No one cares. You saw what happened at Walmart this weekend. AND that's not even the first of the month. People who are really desperate are there in the last evening of the month... Sort of like when the Feds go broke.
And that's the thing. That's why you basically almost have to hope it goes feral, and then the Tea Party basically gets what it wanted out of this (a military-led purge of the unwashed/unfit), and probably a new Constitution to boot.
Problem with the scenario: They may prioritize the "Obama gonna pay my mortgage!" crowd over some of the other stuff. ESPECIALLY after last weekend.
Will Cramer have the balls to help force this crash also?
The politicans know nothing . They know nothing
The politicians know nothing.....they know their scripts, and follow them to the tee.
If there is to be a crash, Cramer will tell you to buy.
Dear DC: Your fellow politicians gave the power to the banking cartel circa 1913. You've paid billions upon billions in interest. Don't you wish you'd kept your constitutional power to print, minus the middleman? Ahhh, free clarity from a constituant! What could you do about it?
Let me make this clear:
I do believe we cross X-Date.
The question, then, comes down to what happens then...
We've already seen a 6-12 hour outage basically sparking low-level looting, at least in some locations.
I think Obama wants a real default because that is the only way to completely destroy his opposition. He knows the 14th amendment gimmik would not work because no investor in his right mind would buy illegally issued bonds. The House would have standing to take it to court and the bonds would be ruled worthless. The trillion dollar coin would not work now because they would have had to start the process 6 months ago (at least) to meet all requirements of the Administrative Procedures Act. They could do a $1T coin next time though if they publish proposed specifications of a Trillion Dollar Coin in the Federal Register soon, and go through all the required public comment periods before issuing final regulations.
Yawn. There will be no default. Wall Street has let its bought-and-sold DC ass-ponies have their couple of weeks fun and is now pulling the reins. The calls have been made, the fix is in. It's all just been color and movement to keep the masses distracted and confused.
Real money and power will now re-assert control. Same as it ever was.
dup
Endless war spends more than everything else combined.If you list what qualifies for a miltary base around the globe,you'll easily find the number well over 900.That's why you need Income Tax,to support endless war.