With 23 hours left until the Asian open (or, more importantly, 19 hours until FX trading resumes) and with today's round of talks now official over after a one hour meeting in Boehner's office with congressional leaders achieved nothing, it is becoming clear that the final debt ceiling outcome will be "no change" in spending or taxing habits and a temporary hike in the debt ceiling, so that the soap opera can be repeated again every three months... and again... and again... and so forth for an "extended period of time" as "transitory solutions' become the new grand consensus. At least we now know the phrase for complete, impotent incompetence in the Hill is: "Two tiered approach" which is how Nancy Pelosi called the last minute attempt at compromise. Per The Hill: "House Minority Leader Nancy Pelosi (D-Calif.) said Saturday night that congressional leaders are considering a two-tiered approach to raising the debt ceiling and reducing the nation’s long-term budget deficit. Pelosi reiterated that she backs “a long-term extension” of the $14.3 trillion debt limit, putting her in line with the demands of President Obama and Senate Majority Leader Harry Reid (D-Nev.)." Alas this now appears to be a mirage: at best the Republicans will agree to a $200-300 billion extension to get the Treasury through for another 2 months (although at the delayed run rate, Geithner needs to issue $350 billion in debt right now just to catch up with where bond issuance should be). And then again until the general public gets so tired of this charade that they vote Obama out. Or so the republicans think. Or who the hell knows what they think. Or anyone else for that matter. It does appear however, that unless there is a definitive and consensual proposal on the table by 4 pm tomorrow when FX opens, the market will no longer be able to ignore what is happening in DC. Which brings us to the best news of the day: this whole farcical spectacle is almost over.
From The Hill:
Boehner told House Republicans earlier in the day that he wanted to present a plan by Sunday afternoon to avoid rattling the Asian markets.
Aides have said the Speaker continues to insist that the size of spending cuts exceed the size of any increase in the debt limit, meaning that lawmakers would need to agree on more than $2.4 trillion in cuts to extend federal borrowing beyond 2012.
Pelosi said the leaders are looking at a two-tiered approach, which would likely combine immediate spending cuts while creating a process for Congress to enact entitlement and tax reforms over the next several months. She hinted, however, that the revenue would come in the second “tier” of the process.
“One option is to do something in two tiers, and I don’t think we can accomplish what we need to do in deficit reduction without revenues,” Pelosi said.
Asked if the revenues would come in the second tier, she replied: “It would have to be if we are going to go into … what we need to do is to greatly reduce the deficit. But it is not over yet.”
Pelosi said congressional leaders are still working but that no further meetings were scheduled as of Saturday night.
Elsewhere, in a desperate attempt to prolong the drama, Harry Reid said that he was "deeply disappointed" in debt talks with Republicans, saying a lack of progress was bringing the United States closer to default.
From Reuters: Reid issued the statement following a meeting of congressional leaders. Reid insisted that a deficit reduction deal should also raise U.S. borrowing authority through 2012 so that the U.S. credit rating would not be downgraded.
Reid issued the statement following a meeting of congressional leaders. Reid insisted that a deficit reduction deal should also raise U.S. borrowing authority through 2012 so that the U.S. credit rating would not be downgraded.
To be honest, we have had enough with ridiculous diversions. Just pass the damn "deal" already so that we can all resume observing the global economy collapse in on itself first slowly, and then very very fast.