Former CBO Director: The Fall Will Be "Very Scary", Expect A Market Crash

Tyler Durden's picture

Rudy Penner, the former director of the Congressional Budget Office and the person described by MarketNews international as "one of Washington's most respected fiscal policy experts", told MNI Wednesday in an exclusive interview that he expects a "very scary" fall 2017 due to fiscal issues, with market-disrupting battles ahead on both the debt ceiling and fiscal year 2018 spending. Penner directed the CBO under president Reagan, worked at high level posts in the White House budget office, and the Council of Economic Advisers. He is currently a fellow at the Urban Institute and sits on the board of the Committee for a Responsible Federal Budget.

"There are so many politically hard issues and so little consensus on budget and tax policy. I assume we'll somehow get through this, but not without getting frightened on a regular basis," Penner said.

"Probably the best we can hope for is muddling through the (FY 2018) budget and the debt limit and getting very limited health, tax, and infrastructure legislation. There is not going to be significant stimulus coming out of Washington in the foreseeable future," he said, echoing what many other pundits have said before. Penner said a "bipartisan negotiation is badly needed" to forge even a limited FY 2018 spending agreement. But he's not certain this will occur.

"Even a very limited spending agreement might be an impossible dream. We may just stumble into a series of short-term CRs," he said, referring to temporary spending bills to keep the government funded.

While the "record polarization" rhetoric is familiar, the clock is starting to tick ever louder: the 2018 fiscal year begins on October 1, 2017 and extends until September 30, 2018. None of the 12 annual spending bills for FY 2018 have yet been approved by Congress.

On to the debt ceiling, the one item on the calendar which Morgan Stanley (and others) have said will be the biggest hurdle for the market in the next two months.

Penner said he believes it will be "very challenging" for Congress to pass legislation this fall to increase the statutory debt ceiling. Treasury Secretary Steve Mnuchin has asked Congress to lift the debt ceiling by the end of September. Penner countered that a "plausible path" for dealing with the debt ceiling is to pass legislation in September to suspend the debt ceiling until after the November 2018 mid-term elections.

However, such legislation, he said, may have to be negotiated by an unusual coalition assembled by House Speaker Paul Ryan, a Republican, and House Minority Leader Nancy Pelosi, a Democrat. Said such an agreement, Penner said, "could put Speaker Ryan's job in peril" by conservative Republicans who oppose it. He said he believes the debt ceiling is "an incredibly stupid law that makes no logical sense."

"It terrifies the world and frightens markets every few years--but does nothing to actually control spending or cut budget deficits," he said.

Penner said he sees little Republican consensus on tax reform and expects any package that emerges to include "some quite modest tax cuts" and the closure of loopholes.

Finally, Penner touched upon the market, and said that like virtually everyone else, he remains "totally  puzzled" by the surging stock market, arguing that markets soar even as it becomes more evident that major fiscal stimulus will not be coming out of Washington this year.

"The markets don't seem to have absorbed the reality of Washington yet," he said. "I have an uneasy feeling this will all end badly--that there will be a very major market correction."

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Fester's picture

This is exciting.

 

BOOM

Tallest Skil's picture

Nothing will happen unless we make it happen. We have to artificially cause a run on the bank. All banks. It cannot and will not EVER crash again naturally. They've seen to that.

peopledontwanttruth's picture

One of the most respected men said

I assume we'll somehow get through this

Now there's confidence

I wonder who he means by WE

jmack's picture

nahhh, we have top men, like John McCain on the job.  It will go smoothly, I am certain of it.

stecha's picture

here is how they get ya. brain washing faggots.. read carefully how nsa fbi cia and many other law enforcment agencies get common people to collude with them..

 

https://www.cnbc.com/2017/08/09/6-ways-to-tell-whether-or-not-an-employe...

_SILENCER's picture

A few years from now there'll be one hell of a tangible asset sale.

Unless you get slain in the falling debris, that is.

hairball48's picture

Yeah...No debt ceiling would work just fine...

Until it didn't.

hairball

SilvaDolla's picture

So...BTFD? Or nah?

Blano's picture

Dear ZH:

Your pop up ads on my phone have become insufferable. I don't need to read you THAT badly to put up with it. 

Dial it back a little please. 

SilvaDolla's picture

Agreed, I just got one that hijacked the whole screen and conveniently placed the close button off screen. It's almost impossible to read doom porn here anymore.

peopledontwanttruth's picture

I can never comment unless I find that little close button and then go back to the comment section maybe 1-2 more times.

Kassandra's picture

Switch to CM browser on your phone.
Cheeta Mobile. No ads and clean sweeps after you're done.

City_Of_Champyinz's picture

I tried this browser on my phone while on the train battling pop-up ads on ZH.  First article it blocked 12 fucking ads.  TWELVE!!  That is a little much Tylers...

CorporateCongress's picture

Or free adblocker browser 

83_vf_1100_c's picture

Firefox browser and uBlock add on is what I use. Dead simple to install. What ads? It works well on nearly everywhere on the web I frequent. A few sites have started blocking me because they detected an ad blocker. They ask to disable the adblocker before entry is allowed.  I quit visiting those sites.

buttmint's picture

...call in azzholes like Obama and his TRanny Chewie to show all how its done!

After all, these faggots racked up the national debt from $10 trillion to 19 T.

It is called "being a Negro."

earleflorida's picture

BUSH GAVE OBAMA THE MARKET CRASH!

cheney gave us 'deficits don't matter'!

bush $43 gave us iraq!!! ... and China into WTO with favored nation status 12/11/01 (90 days of mourning)

clinton gave us '911'... no moar 'Glass-Steagall' and a whopper of NAFTA

AFGAHNISTAN was all that was responsible for harboring alQaeda! *(PERHAPS pakistan to a lesser extent regarding geographic 'whack-a-mole'?)

today the deficit would be ~ less than $10 Trillion, if not for these presidents (obama doesn't get a free ride, being he perhaps would have started shit elsewhere, like in NK--- but he did tell netanyahu to fuck off!)

detached.amusement's picture

If Lincoln handt declared martial law and appointed representation for the southern states that seceded, the country would already be in 3 or more pieces.

earleflorida's picture

lincoln being a corporate lawyer and extremely pragmatic (and historian) was well aware of the British assault on america 1n 1812-15 (1812 War), and the 'civil war [1961-65]' being fresh in america's history 45 years hence was a proxy war fought by the south for great britain.

great britain fucked wilson and america bigtyme in WWI, as they tried their best in WWII with FDR!

in fact Britain gave the ussa the 'Zionist Palestine'...

there's moar, but 'FUCK the slimie`lime`EEEEs!!!

caesium's picture

Why all the down votes? As conspiracy theories go, I have read alot worse on here. (Typo that should read *1861-65?). Certainly FDR in 1941 was better prepared than Wilson in 1917. The rest of your stuff is worthy of respect (to quote Don Corleone).

Now is the time however, for the USA to break up. Only the military could manage such a development so it might get messy.

Arrow4Truth's picture

Certainly more than just another black family living in public housing.

izzee's picture

Yeh this FORMER GUY from the group that SEZ it can PreDICKT 10 Years into the /Future.

They SAW 2007-2008.

They SAW 2009- 2017....How Much money...  SnP 666 to 2480.

 

 

pcrs's picture

One thing politicians always agree upon across the isle is that they ought to spend more of other people's money

DirtySanchez's picture

Former CBO is a piece of shit political hack who should have his head busted up with the fists of furious citizens.

earleflorida's picture

does anyone remember 'M3' ?

izzee's picture

cruises at 80mph.  single barrel carb.  Zero electronics.  Points and condensor

Without Salt on the Road(rusted out).....

The Car of the Future...Post EMP

PriceLess.

http://motoburg.com/images/bmw-1602-01.jpg

indygo55's picture

I had a BMW 2002 and that's not the year. I loved that car. 

Pernicious Gold Phallusy's picture

Finally, a prediction from a fully apolitical financial star with an amazing history of accuracy.

macdavy's picture

Clear Buy signal here

order66's picture

"the debt ceiling is "an incredibly stupid law that makes no logical sense."

Overspending and jacking up the national debt to over 100% of GDP makes perfect logical sense though.

Fucking morons.

pizdowitz's picture

It is only because the FED is in hellicopter mode, that US can enjoy the highest living standards on the planet. Ever.

 

 

 

Mr. Magoo's picture

If not this fall we will still have next spring or summer or maybe even next fall if not maybe the one after that

pizdowitz's picture

Why is it that the retirees are always doom-and-gloom jack-assess?

Retired CBO... retired Green Beret, retired MKUltra.... All wrapped in their Depends, divorced from reality...

How about some re-tired 16 wheeler on a beer run from Texarkana?

Enjoy life. You ai'nt coming back here, no matter what, you hear?

comicon's picture

When the crash finally hits most people won't be able to trade it.  Traders wholisten to zero hedge are already broke from shorting the market in the big up move. From what I have seen on the hedge only the traders who follow Shepwave signals are actually making any money.

pizdowitz's picture

Shep? might be now, I did not check. I was not all peachy however when it started way back in the 80s. It was actually ridiculed, and for a reason. It erred, because it is a technical tool, not AI. I might be wrong though.

My advice is this: don't fight the FED. Ever. Never listen to doom-and-gloom. Ever. The market players are always long, because the non-linear crash events happen only sporadically, and there is always time to get out, if you have made a ton of money on the way up. IF you doubled-down in 2009 you would be sitting now much higher now then in 2008.

ZH is not an investment advisor. It is here to make money on ad clicks. Exclusively. Did you install the ADBlocker on your bropwser. Alos look ibnt Slimjet - it spoof Googles, so dthat is does not what you clicked. But... On of the ZH'ers actually calls for indiscriminate clicking on ads to starve Google by increasing the cost to advertisers.  Might work, if enough pitch in.

Enjoy life.

Rick Cerone's picture

Herr Penner, Argentina has an excellent hospital for new faces.

comicon's picture

Hahahahaha

When the crash finally hits most people won't be able to trade it.  Traders wholisten to zero hedge are already broke from shorting the market in the big up move. From what I have seen on the hedge only the traders who follow Shepwave signals are actually making any money.

Falconsixone's picture

Director of the Congressional Budget Office helping to bury America. Now he's scared. Oh poor thing.

Go hang off a bridge pennhead.

 

Librarian's picture

So go long in the Fall.

I'd prefer to get my investment advice from Jim Cramer, but I'm always on the lookout for a good substitute play.

Has ishares come out with the Cramer triple inverse fund yet?

Storm-Clouds's picture

Debt-Ceiling?

We don't need no stinking debt-ceiling!

We got nukes!

We killing strangers! Cause we don't want to kill the ones pulling the strings....

Storm-Clouds's picture

Say it again....

Debt-Ceiling?

We don't need no stinking debt-ceiling!

We got nukes!

We killing strangers! Cause we don't want to kill the ones pulling the strings....

JailBanksters's picture

I've been expecting a crash every year since 2010 !, and every year it keeps rolling over into a bigger crash.

And here we have Bullwinkle saying, "This time for sure !", if not then 2018

 

Arrow4Truth's picture

Oh, but won't it be such fun to watch when it does come tumbling down. The steeper the dive, the better the show. I've stocked-up on popcorn.

Racer's picture

As long as banksters have access to free money why should there not be a "permanently high plateau"

They will do 'what ever it takes' to con and scheme and steal

Vlad the Inhaler's picture

That's funny, another former budget director name of David Stockman said the same thing this past spring, and it was just another big nothingburger, in fact the market is way up since then as per usual.

red1chief's picture

I'm tired of hearing doom porn over this debt ceiling crap. Always a non-issue.

rex-lacrymarum's picture

Debt ceiling? Muhuahahahahahaha!!! Seriously?