The only way to keep the status quo from imploding is to banish common-sense.
With A Final 285-144 Vote, Mission "Raise The Debt Ceiling" Is Accomplished: See You All Again In FebruarySubmitted by Tyler Durden on 10/16/2013 21:19 -0500
And so, in the proverbial 11th hour, or technically 10th hour and 10th minute before the midnight of the X-Date, the House gets the necessary 216 votes to pass the Senate bill to raise the debt ceiling, and in a final 285-144 tally, in which 87 Republicans voted yea to 144 GOP noes as all 198 Democrats vote yea, has agreed to restore funding. Next up: the BLS random number generator starts cranking again and informing everyone in just how sorry a state the economy finds itself, which of course is bullish for stocks because it means that the taper is indefinitely delayed, potentially until June 2014. Also next up, as the emergency Treasury measures are netted out against the new debt limit, it means that once the new Daily Treasury Statement hits, the total US Federal debt will be just at, or over $17 trillion. Rejoice.
Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell will soon announce an agreement to reopen the government and avert default on U.S. debt, Politico reports, according to several sources familiar with the talks. Here is what that "stunning reversal for the speaker" deal looks like. In short: the can has been kicked for three months, to early February.
Curious why algos suddenly are buying because other algos are buying because other algos are buying, pushing the S&P higher by 10 point in virtually no time? Simple. It appears at least one vacuum tube decided to scan the news archive, and fell upon the Politico story from 7 AM Eastern which said that the Republicans and Democrats had met in a secret meeting.
David Stockman, author of The Great Deformation, summarizes the last quarter century thus: What has been growing is the wealth of the rich, the remit of the state, the girth of Wall Street, the debt burden of the people, the prosperity of the beltway and the sway of the three great branches of government - that is, the warfare state, the welfare state and the central bank...
What is flailing is the vast expanse of the Main Street economy where the great majority have experienced stagnant living standards, rising job insecurity, failure to accumulate material savings, rapidly approach old age and the certainty of a Hobbesian future where, inexorably, taxes will rise and social benefits will be cut...
He calls this condition "Sundown in America".
Nancy Pelosi tried hard this evening (in the post WH meeting presser) to position the Democrats in order to disavow the inevitable but now Bloomberg is reporting that:
*HOUSE REPUBLICAN PLAN WOULD LINK SHUTDOWN, DEBT-LIMIT FIGHTS
House Republican leaders plan to bring up a measure to raise the U.S. debt-limit as soon as next week as part of a new attempt to force President Barack Obama to negotiate on the budget by merging the disputes over ending the government shutdown and raising the debt ceiling into one fiscal fight. This is not what most sell-side strategists expected as a base-case; in fact it is close to a worst-case for many - especially given Obama's apparent unwillingness to negotiate.
Would Obama push his pals off a cliff to get a deal?
Here are six things to ponder this weekend:
1. Inflation Debate Continues
2. The Obamacare Nightmare
3. The Disconnect Between "Main Street" and "Wall Street"
4. Payroll Number Become Even More Manipulated
5. Congress Living The High Life At The Taxpayers Expense
6. What If The "Fear Trade" Bubbles Up?
If you want to live the high life, you don't have to become a rap star, a professional athlete or a Wall Street banker. All it really takes is winning an election. Right now, more than half of all the members of Congress are millionaires, and most of them leave "public service" far wealthier than when they entered it. Since most of them have so much money, you would think that they would be willing to do a little "belt-tightening" for the sake of the American people. After all, things are supposedly "extremely tight" in Washington D.C. right now. In fact, just the other day Nancy Pelosi insisted that there were "no more cuts to make" to the federal budget. But even as they claim that things are so tough right now, our politicians continue to live the high life at the expense of U.S. taxpayers.
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The U.S. House is now in one hour of debate and then will vote on a temporary funding bill to keep the federal government running after September 30. The continuing resolution would fund the federal government at current sequester levels of $986.3 billion through December 15 and defund the Affordable Care Act. As CSPAN notes, following Speaker Boehner's proposal (to vote on this CR and whether to raise the debt ceiling next next week), Minority leader Nancy Pelosi issued a statement claiming that the House GOP was "prepared to shut down the government" to block President Obama's signature health law. At a press briefing on Thursday, Senate Majority Leader Harry Reid (D-NV) told reporters, "Any House bill that defunds Obamacare is dead." Let the fireworks begin...
As President Obama continues to push for a plan of limited military intervention in Syria, a new poll of Americans has found that though the nation remains wary over the prospect of becoming involved in another Middle Eastern war, the vast majority of U.S. citizens strongly approve of sending Congress to Syria. "There’s no doubt in my mind that sending Congress to Syria - or, at the very least, sending the major congressional leaders in both parties - is the correct course of action," one respondent noted, adding "sooner rather than later, too, this war isn’t going to last forever."
War-weary 'real' Americans appear to have the ear of their representatives (for once). Message such as "you don't stop a war by getting involved and shooting more," and "once you start launching missiles, anything can happen," appear to have moved both the staunchest tea-party Republican and the most anti-war Democrats to shun the position of Boehner and Pelosi. As Bloomberg reports, only about 20 members (or 5%) of the House is publicly supporting a military strike. Against this, 68 lawmakers (an uncomfrtable alliance of Dems and Reps) are actively opposed to a strike. 350 House members are 'undecided', with 217 required to make or break the vote. With 60 votes required in the Senate, Obama can currently only count on 20 'confirmed' yesses. Obama's problem arises from the fact that whipping the members in line is tough with a number of different strains of thought resisting Obama's urgings.
As we asked (rhetorically, of course) over 3 months ago, why has the little nation of Qatar spent 3 billion dollars to support the rebels in Syria? Could it be because Qatar is the largest exporter of liquid natural gas in the world and Assad won't let them build a natural gas pipeline through Syria? Of course. Qatar wants to install a puppet regime in Syria that will allow them to build a pipeline which will enable them to sell lots and lots of natural gas to Europe. If the U.S. is successful in getting rid of the Assad regime, it will be good for either the Saudis or Qatar (and possibly for both), and it will be really bad for Russia. This is a strategic geopolitical conflict about natural resources, religion and money, and it really has nothing to do with chemical weapons at all...
Today's morning summary is a carbon copy of yesterday's. Some things happened, China continues to make up data to fit its current policy outlook, things in Europe continue to go bump in the night ever louder as we approach the German election despite reflexive diffusion indices - this time Service PMIs - desperately signalling a surge in confidence, Italy has just reminded everyone it is a big political basket case as Berlusconi is said to consider withdrawing his support for the Letta government and calling for elections this year, and so on, but it is still all about Syria. Last night the Senate Foreign Relations Committee has agreed on a resolution on using military force against Syria. The resolution would limit the duration of any US military action in Syria to 60 days, with a 30-day extension possible if Obama determines it is necessary to meet the goals of the resolution. In other words, a "surgical strike" lasting a minimum of 90 days, and then with indefinite additional extensions tacked on. Yet judging by the modest drop in crude and gold, the market may need more than just fighting words at this point to push to th next level of risk aversion.