Main Event Dramatic Preview: Boehner Says "Not Confident Congress Can Reach Budget Deal"

Tyler Durden's picture

To all who miss the highly volatile days of August 2011, when as a result of the congressional deadlock on the debt ceiling, and the S&P downgrade of the US, the DJIA swung by 400 points every day for 4 days in a row just to get Congress to come to the "compromise" exposed in painful detail by Bob Woodward a few days ago, fear not: they are coming back, and with a vengeance. Because while last year only the debt ceiling was under discussion, now we get the double whammy of the debt ceiling and the Fiscal cliff. And just so the suspense meter is pushed off the charts early, and the performance gets maximum billing for theatrics if not execution, House Speaker John Boehner has just said he's not confident Congress can reach a budget deal and avoid a downgrading of the U.S. debt rating. Let us paraphrase: there will be no deal until the 11th hour, 59th minute, 59th second, and 999th millisecond, at which point the market will plunge and get Congress to do what it always does: Wall Street's bidding, which now and always, is a smooth and seamless continuation of the status quo.

From Bloomberg:

Moody's Investors Service said Tuesday that it would likely cut its "Aaa" rating on U.S. government debt, probably by one notch, if budget negotiations fail.


Boehner was asked at a Capitol Hill news conference how confident he was that such a step could be avoided. He said he wasn't confident at all.


The Ohio Republican stressed that the House has passed legislation to avoid the automatic, across-the-board cuts of $1.2 trillion from defense and domestic programs that kick in Jan. 2. He said the Senate needs to act and President Barack Obama needs to show some leadership.


Any real negotiations are not expected until after the November elections.

Of course, this time around there is a very high possibility that Congress may actually disappoint, as it knows very well that should no compromise be reached, it can just punt to Bernanke, who as of tomorrow will be in charge of fiscal policy as well should he enact more monetary easing, in effect taking away the burden of keeping the S&P high, unemployment be damned, entirely from the hands of lawmakers.

Finally, since the GOP already conceded in the last debt ceiling fiasco, this time around, especially in the aftermath of a presidential election that will likely see the GOP candidate lose, the probability of a repeat of last summer is low to quite low.

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GolfHatesMe's picture

KTFC until there is nothing left to kick

TheSilverJournal's picture

There's just about nothing left. Pretty soon, the Fed will be matching ECB's explicit "unlimited" plan.

camaro68ss's picture

Starting tomorrow and into the next few months its going to be a wild ride!


get your silver on sale now BITCHEZ!!!

machineh's picture

In other news, the S&P 500 is one point away from breaking out to a fresh 4-year high. 8-O

Boilermaker's picture

Exactly the point.  This is about using the joysticks to get what you want.  I has nothing to do with the actual events in play.

goldfish1's picture

They don't have the balls.

People might just pay them a visit.

Catch 22 is a bitch, eh boner?

smlbizman's picture

i think they will be quite content to let it blow and blame the other....the same sheep will also blame the other...and life will go on....just with more fire and brimstone than normal...

Bicycle Repairman's picture

"Any real negotiations are not expected until after the November elections."

And anything before the elections is just a convenient stance.

Element's picture

Anyone who can do basic math always knew last year's debt-ceiling, or rather the mutually agreed spending and taxing deal, was about a profoundly cynical attempt to sneak the issue past the next November 2012 election.  Boner knew this, and he allowed it to occur, in that way.  we just aren't supposed to notice, or to forget about it or something.  So what's that tell you about the nature of all this? 

But for sure, bitter tears of moral indignation will flow uncontrollably down his bronzed cheeks, come December, as he remonstrates on what's become of his home town, or something or other, and what a fearsome responsibility now weighs upon him to do his civic duty, and how he feels he can and must work with the prez-elect, to once and for all fix all the issues plaguing the nation, and to get this country back to work (rah-rah!! yeah baby! pass the tissues!).

Gonna be quite a show.

I'm just hoping Romney is able to act all deeply perplexed and is able to take the art of faking-sincerity to a whole new level.  I personally think he can.  Hope this doesn't mess up inauguration preparations too much though.  And it would be really sweet if Israel bombarded Gaza from about new-years-day and keep it up for a few weeks, and kill a few hundred innocent families, but called it off the day before he's inaugurated.  That way everyone would know where they stood, and would provide a sense of continuity of Govt.  And then some Euro gits could award him a thoroughly undeserved sham of a peace-prize, as he does a tour of the brown-people and lets them know that as a Mormon, the church's official 'revelation' is that, yes, they are actually human too.

Then they can all get back to enabling the military-industrial complex's fascist targeting of all of sub-humanity for general extermination, and to making squintillions of derbanke's in off-shored kickbacks.


Oh regional Indian's picture

I think the question to ask is...


Cui Boehner?

Who will be shafted by Boehner?



Squid Vicious's picture

Or... just KFC until there is nothing left on the SNAP card

Ruffcut's picture

I wish boner would stick his boner where it belongs. In Bwarney's mouth.

asteroids's picture

Isn't it obvious to everyone that the FED and other CB policies of the past few decades have led to polarized governments all over the world that are dangerously unstable? The very same is happening to the USA. Hmmm. Iceland got it right and put the bankers in their place. Now look at them.

azzhatter's picture

best thing that could happen to US- fiscal cliff

johnQpublic's picture

Boehner "not confident congress can tie own shoelaces"

HelluvaEngineer's picture

Once again, we realize the Boehner is flaccid.

FreedomGuy's picture

Agreed. He talks a good game on TV but that is it. He also has the wrong ideas about how to proceed. When he became Speaker two years ago he talked about returning the budget to 2008 levels. That is the wrong way to proceed. Unless you actually quit asking government to do stuff, e.g. cut departments and responsibilities you will never balance anything.

So, he is flaccid and impotent.

Cognitive Dissonance's picture

Now that's just too many ways to count. :)

Squid Vicious's picture

yeah but i bet he has a killer end of summer/lots of time on the links tan....chicks dig that

Shizzmoney's picture

Our Congress is a den of thieves and ideological cock blockers.

They'll kick the can down the road though.  Nothing really to see, here.

LongBalls's picture

Thanks for the update ZH. But in reality who cares anymore? Anyone who has been paying attention knows it matters not what these goons do or don't do. This monetary system has run it's course. We are on the cusp of the new. BTD my pretties.

TheSilverJournal's picture

This is the end, my friend, this is the end!!

LongSoupLine's picture

well, there's a shocker...a crook saying more of the same crooks won't be able to conduct some honest work.

malikai's picture

I prefer they do not agree. The only thing thost puppet parties ever agree on is fucking us.

Mr Lennon Hendrix's picture

The price action of the economy may have changed forever, but the status quo has not. We all know people live paycheck to paycheck, but although it is true that wages have not approaved nominally, and have decreased in real terms, there is a more important point to address: people are not looking at establishing themselves financially; people are not protecting their wealth.

The buy/spend everything you have now meme is intact. People live pay check to paycheck when they have to, yes, but even those that earn what could save them a retirement blow it all to have the cool car, the poshe sound system, the new outfit, the new iWhatever. They spend their last dime of the month or even go into debt.

The interesting part of this is that wealth creation has changed and changed dramatically. The bank bailout showed the government is here to keep the status quo in place at all costs. The government is not here to help anyone person, just the corporate power structure.

This is well known. Everyone knows it. Yet people continue to ride the consumer wave at all cost. And this is the reason why nothing has changed.

The system will not change on its own. The government is a puppet for the system. The system wants to maintain the status quo. The status quo is that the corporations run the power structure.

So here are the people of the system - kidnapped by the system, yet not willing to change. But it could change. If people took it upon themselves to at least maintain their wealth, or grow their wealth - instead of buying the next iTool - then the system would change, and it would change so that the people were in control of themselves; people would control society not the corporations.

How to do this? Well obviously buying stocks puts wealth into corporations directly. But saving dollars perpetuates the the government side of the power structure. ANother thing to consider is both only lay claim to wealth, neither actually preserve it. Both (the same is also true for owning corporate/government bonds) are merely IOUs.

The only way to preserve wealth in a simple form is owning precious metal bullion. Everything else has a counter party risk. Owning land may get close, but the government knows where that land is and as we have seen lately people can get their house and land taken for no reason. Land is an easy target. It could be prosperious and yield a bounty, but it is an easy target. The ruling class, be they Kings or governments will always be able to rule a landowner (unless all landowners rise up, which will only happen every few thousand years).

So until people take back the bullion - which defines money, has acted as money for thousands of years, and has no counter party risk - there will be no change. We will be at the behest of the corporate power structure.

CrashisOptimistic's picture

As has been mentioned before, there is overwhelming counter party risk for gold.

When gold transactions are taxed at 70%, you will never EVER know whether or not your counterparty is a revenue agent.  Transactions will freeze, there will be no published prices, and the shiny metal remains shiny and holds paper down on your desk.

You guys who think governments will tolerate a threat to their system just haven't thought this through.  Look at what they did.  They outright STOLE money from Greek bondholders in February.  You think they would balk raising some much needed tax revenue by declaring gold transactions to have a special category of 40 or 50 or 60 or 70%?  

They would not hesitate even one microsecond.  They will not confiscate.  They will not "tamper with your freedom".  They will just tax transactions.  And that will be that.

Quinvarius's picture

That is why you own gold.  No counter party risk.  They can't find it.  Your nonsense blathering about confiscation and taxing of gold is just that...nonsense blathering.  The government can just as easily come to your house and murder you.  So I guess you better not make any dinner tonight, huh?  The government could hit you with a drone strike and you could be dead by 6pm.  Why eat? 

You know what is not going to work?  Not perserving your wealth with gold, silver, and other portable assets.

CrashisOptimistic's picture

I said no confiscation.  You tossed it in to reassure yourself.

Taxation is the obvious way to attack a threat to their system.  You will never know if your counterparty is a revenue agent, and perhaps far more compelling You Won't Know A Price.  Trading will stop with that level of taxation and there will be no point in having published prices then.  

Global coordination of taxation renders it all silly, while simultaneously raising revenue for . . . the less fortunate.

 You can own all you want.  You preserve all the beauty value you want.  Just don't sell it or you must pay your taxes and stop being a tax cheat.  

Mr Lennon Hendrix's picture

So we begin to use gold as the medium of exchange, which would mean fiat has lost unsermountable value which would render the governments bankrupt, yet the governments have enoughpower to hire boogeyman agents to hide in the shadows waiting for people to trade with gold so they can tax them?

Sure boss, because that story makes sense.

Besides the medium of exchange is not taxed, the sale of the good is.  Gold is money and will always be used as money.  It is used by the UST as a loan to the Fed.  It is used by the Fed to balance its books (as a reserve).  If each gold transaction were taxed the Fed would be taxing what?  The currency itself?

That would create such a dissenence in the monetary system that people would just shoot IRS agents when they saw them.

CrashisOptimistic's picture

The Fed has no power to levy taxes.  Congress does.

And in the same way barter is taxed today (a doctor and dentist cannot trade services without income tax to both), any attempt to trade a barter good like gold for some other goods would be taxed at the monetary value of the goods in question, and since gold was used, the tax would be 70%.

Sorry, you are powerless before Treasury departments.

JLee2027's picture

Powerless? Not at all. No one can make you do anything, despite what the law might say. Let them pass the laws, now let them enforce it. There won't be room even if they triple the size of every prison.

LMAOLORI's picture



Right on about the Fed they can't tax people spend way too much time assigning them blame when the blame lies with Congress and the big spenders of both parties!

Here It Comes (Moody's)

Mr Lennon Hendrix's picture

The Treasury does not issue the gold supply.  The have nothing to do with it.

And once again the currency is not taxed.  The good or service is.

Panafrican Funktron Robot's picture

Why would the tax be 70%, specifically?  

CrashisOptimistic's picture

70% was metaphorical.

The point is gold will never be significant because any indication that it is a threat to the system will be met with the tax bazooka.  Any transaction, sale, barter, whatever, will be taxed in a crushing way.

Most of the power of this will be the eradication of published price.  

The world is measured in dollars and that's not going to change.

odatruf's picture

Crash - I don't think people are getting your main point: that if people are circumventing the system in such a manner and on such as scale as to jeopardize the status quo, action - including extreme action - will be taken.

shovelhead's picture

Crash's main point is pointless.

Real example.

Weed. Federal prohibition nation-wide yet it is the largest cash crop in most states where it is grown.

How's that war on weed working out?

People don't give a shit what gubmint don't allow

They grow that weed any ol' how.

And they ain't filling out tax forms either except in med MJ states where the state get a cut of the action.

Estimates range from 30-100 billion yr.


I don't think trading gold and silver will be much of a problem. If people want it, they get it, no matter who says what.




JLee2027's picture

If they try to tax Gold I just see the black market expanding. People have grown sick and tired of the Government screwing the people. Tax revenues are sliding, inflation is rising, handouts are exploding and they can't keep up. Despite their best efforts, The Kraken is slowing dying.

the 300000000th percent's picture

THAT is why i pay straight cash at coin shops homie. Tax THAT. And as far as being taxed on the other side, like if and when i decide to go out of physical and back to some other thing. Well, i prefer to do a private party to private party transaction with NO TAX. 

CrashisOptimistic's picture

You just have to know your private party isn't an informant, or an agent.  Maybe carry some documents having him swear he is not and hope that holds up in court.

Of course, the government funds the courts and if the courts want to operate, they likely won't be allowing your evidence in.

Pay your taxes.

Crisismode's picture

If the government someday decides to place a punitive tax on PM sales transactions,


well, I can see an increase in "tourist" border crossings into Canada and Mexico pretty damn quick.

CrashisOptimistic's picture

Well, that's obvious.  That's why the tax decree will be globally coordinated.

cxl9's picture

Good luck with that. The Mexican government can barely collect taxes from its citizens now. I doubt they'll have much interest in or success as a tax collection proxy for the United States. In my area of Mexico, most transactions are cash-based, and the thousands of small businesses operate almost exclusively on cash. There are also abundant formal and informal places to exchange gold/silver/dollars/pesos. Attempting to apply regulation to these sectors of the economy will be like trying to herd cats, only less productive.

You overestimate the power of the U.S. government. In its death throes, it will go for the low-hanging fruit (pensions, IRAs) long before it tries very hard to root out small private gold holders. Anyway, clever and motivated individuals can always find ways to avoid confiscatory taxes. When this sucker goes down, just walk your gold across the border and exchange it. End of problem.


JLee2027's picture

Just like the Greeks...they only pay the tax when the tax collectors shows up. Otherwise it's the middle finger.