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The Tea Party is back in business! (1 Viewer)
- Thread starter timschochet
- Start date
Scoresman
Footballguy
Don Quixote
Footballguy
House Rules hearing postponed...
Dinsy Ejotuz
Footballguy
Scoresman
Footballguy
I wouldn't put trying to changing the Constitution past this group of certifiably insane group of Republicans.
Scoresman
Footballguy
The only Tea Party Republican I stand firm for is Sarah Palin and that only lasts until she opens her mouth and speaks.
Redwes25
Footballguy
If really worried I would suggest buying German Bunds for default risk. Of course it probably won't help.
Last time we went through this I made a killing on UST/MBS bonds. Of course, we didn't actually default...
ffldrew
Footballguy
What about the fact that there won't be any new treasury auctions? Where do banks and other users of these instruments turn?
timschochet
Footballguy
Of course. But they have no idea what to cut in order to get that balanced budget immediately, and neither does anyone else. The areas that produce the most Tea Party voters are often the ones who receive the most aid form the federal government. Can you imagine the look on their faces when they are told, "Sorry no Social Security or Medicare check for you; we had to service the debt"?
Leeroy Jenkins
Footballguy
These ####s need to stop risking our credit.
Redwes25
Footballguy
The government will still be able to roll-over debt (issue new debt to pay off maturing debt) and their will be future auctions. Think the big issue no one is thinking about is what investors reception to these new auctions will be if the country is only paying certain bills. That could be an investment folks are not interested in especially big buyers of our debt (China/Japan).
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shader
Footballguy
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Fennis
Footballguy
Fitch Places United States' 'AAA' on Rating Watch Negative
Fitch Ratings-New York/London-15 October 2013: Fitch Ratings has placed the United States of America's (U.S.) 'AAA' Long-term foreign and local currency Issuer Default Ratings (IDRs) on Rating Watch Negative (RWN). The ratings of all outstanding U.S. sovereign debt securities have also been placed on RWN, as has the U.S. Short-term foreign currency rating of 'F1+'. The Outlook on the Long-term ratings was previously Negative. The U.S. Country Ceiling has been affirmed at 'AAA'
.
Fitch expects to resolve the RWN by the end of Q114 at the latest, although timing would necessarily reflect developments and events, including the duration of any agreement to raise the debt ceiling.
KEY RATING DRIVERS
In line with Fitch's previous statements, the RWN reflects the following key rating drivers and their relative weights:
High
- The U.S. authorities have not raised the federal debt ceiling in a timely manner before the Treasury exhausts extraordinary measures. The U.S. Treasury Secretary has said that extraordinary measures will be exhausted by 17 October, leaving cash reserves of just USD30bn. Although Fitch continues to believe that the debt ceiling will be raised soon, the political brinkmanship and reduced financing flexibility could increase the risk of a U.S. default.
- Although the Treasury would still have limited capacity to make payments after 17 October it would be exposed to volatile revenue and expenditure flows. The Treasury may be unable to prioritise debt service, and it is unclear whether it even has the legal authority to do so. The U.S. risks being forced to incur widespread delays of payments to suppliers and employees, as well as social security payments to citizens - all of which would damage the perception of U.S. sovereign creditworthiness and the economy.
- The prolonged negotiations over raising the debt ceiling (following the episode in August 2011) risks undermining confidence in the role of the U.S. dollar as the preeminent global reserve currency, by casting doubt over the full faith and credit of the U.S. This "faith" is a key reason why the U.S. 'AAA' rating can tolerate a substantially higher level of public debt than other 'AAA' sovereigns.
Medium
- The repeated brinkmanship over raising the debt ceiling also dents confidence in the effectiveness of the U.S. government and political institutions, and in the coherence and credibility of economic policy. It will also have some detrimental effect on the U.S. economy.
The 'AAA' rating reflects the U.S.'s strong economic and credit fundamentals, including:
- Its highly productive, diversified and wealthy economy; extraordinary monetary and exchange rate flexibility; and the exceptional financing flexibility afforded by the global reserve currency status of the U.S. dollar and the depth and liquidity of domestic capital markets - in particular the U.S. Treasury market. The U.S. sovereign credit profile also benefits from the respect for property rights, the rule of law and a high degree of social stability.
- Fitch continues to judge that the U.S. economy (and hence tax base) remains more dynamic and resilient to shocks than its high-grade rating peers. Fiscal and macroeconomic risks emanating from the financial sector are generally low and diminishing and becoming supportive of, rather than a drag on, economic growth. Fitch forecasts economic growth to pick up from 1.6% in 2013 to 2.6% in in 2014 and to average 3% over 2015-17, before reverting to its assumed long-run trend growth rate of 2.25%. The projected recovery is supported by easing headwinds from private sector debt deleveraging, a pick-up in the housing market and a gradual decline in unemployment.
- The 'AAA' rating also reflects the halving of the federal budget deficit since 2010, which is now approaching a level consistent with debt stabilisation. The Budget Control Act passed in August 2011 implied significant fiscal consolidation and Congress and the Administration have adhered to the automatic spending cuts - the sequester - specified under the Act in the absence of agreement on an alternative and equivalent set of deficit-reduction measures. In addition, the passage of the American Taxpayer Relief Act on 1 January 2013, which implied a tax increase of more than USD600bn, has also contributed to the deficit reduction effort.
- Fitch's medium-term fiscal projections imply federal and general government (which includes states and local governments) gross debt stabilising next year and over the remainder of the decade at around 72% and 104% of GDP, respectively. This is below the 80% and 110% thresholds that Fitch previously identified as being inconsistent with the U.S. retaining its 'AAA' status.
- Nevertheless, public debt stabilisation at such elevated levels still render the US economy and public finances vulnerable to adverse shocks and in the absence of additional spending reform and revenue measures, deficits and debt will begin to rise again at the end of the decade. The U.S. is the most heavily indebted 'AAA' rated sovereign, with a gross debt ratio equivalent to double that of the 'AAA' median.
RATING SENSITIVITIES
The RWN reflects the following risk factors that may individually or collectively result in a downgrade of the ratings:
- Failure by the government to honour interest and/or principal payments on the due date of U.S. Treasury securities would lead Fitch to downgrade the U.S. sovereign IDR to 'Restricted Default' (RD) until the default event was cured. We would also downgrade the rating of the affected issue(s) to 'B+' from 'AAA', the highest rating for securities in default in expectation of full or near-full recovery. Debt securities approaching maturity or those with approaching coupon payments would be vulnerable to a downgrade. The Country Ceiling would likely remain 'AAA'.
In the event of a deal to raise the debt ceiling and to resolve the government shutdown, which Fitch expects, the outcome of a subsequent review of the ratings would take into account the manner and duration of the agreement and the perceived risk of a similar episode occurring in the future. It would also reflect Fitch's assessment of the following main factors:
- The impact of the debt ceiling brinkmanship and government shutdown on our assessment of the effectiveness of government and political institutions, the coherence and credibility of economic policy, the potential long-term impact on the U.S. sovereign's cost of funding and cost of capital for the economy as a whole, and the implications for long-term growth.
- Our assessment of the prospects for further deficit-reduction measures in future years necessary to contain government deficits in the face of long-term spending pressures and place public debt on a downward path over the medium to long term.
KEY ASSUMPTIONS
Fitch continues to believe that an agreement will be reached to end the current political impasse and raise the U.S. debt ceiling. Even if the debt limit is not raised before or shortly after 17 October, we assume there is sufficient political will and capacity to ensure that Treasury securities will continue to be honoured in full and on time.
Fitch's federal debt projections reflect its economic and fiscal policy assumptions and were detailed in the Special Report, 'U.S. Medium-Term Fiscal Projections - An Update' (dated 28 June 2013; see link below). Subsequent to that analysis, the Bureau of Economic Analysis revised the level of GDP up by around 3.4% due to revisions in the way GDP is calculated, including reclassifying spending on R&D and intellectual property as investment. This has had the statistical effect of lowering debt/GDP ratios, but has not significantly affected the trajectory of debt dynamics or its sensitivity to shocks. Since the June review, Fitch has revised down its forecasts for GDP growth for 2013 to 1.6% from 1.9% and for 2014 to 2.6% from 2.8%.
Fitch's medium-term fiscal projections incorporate assumptions regarding the medium-term growth potential of the US economy and do not incorporate potential upside benefits from shale gas or downside risks emanating from the eurozone and elsewhere. They draw heavily upon Congressional Budget Office (CBO) projections, including CBO assumptions and judgements regarding the take up of various benefits as well as the rate of growth of health care spending.
Financial sector risks are currently judged to be low as reflected by Fitch's stable outlook for the U.S. banking sector.
Fitch Ratings-New York/London-15 October 2013: Fitch Ratings has placed the United States of America's (U.S.) 'AAA' Long-term foreign and local currency Issuer Default Ratings (IDRs) on Rating Watch Negative (RWN). The ratings of all outstanding U.S. sovereign debt securities have also been placed on RWN, as has the U.S. Short-term foreign currency rating of 'F1+'. The Outlook on the Long-term ratings was previously Negative. The U.S. Country Ceiling has been affirmed at 'AAA'
.
Fitch expects to resolve the RWN by the end of Q114 at the latest, although timing would necessarily reflect developments and events, including the duration of any agreement to raise the debt ceiling.
KEY RATING DRIVERS
In line with Fitch's previous statements, the RWN reflects the following key rating drivers and their relative weights:
High
- The U.S. authorities have not raised the federal debt ceiling in a timely manner before the Treasury exhausts extraordinary measures. The U.S. Treasury Secretary has said that extraordinary measures will be exhausted by 17 October, leaving cash reserves of just USD30bn. Although Fitch continues to believe that the debt ceiling will be raised soon, the political brinkmanship and reduced financing flexibility could increase the risk of a U.S. default.
- Although the Treasury would still have limited capacity to make payments after 17 October it would be exposed to volatile revenue and expenditure flows. The Treasury may be unable to prioritise debt service, and it is unclear whether it even has the legal authority to do so. The U.S. risks being forced to incur widespread delays of payments to suppliers and employees, as well as social security payments to citizens - all of which would damage the perception of U.S. sovereign creditworthiness and the economy.
- The prolonged negotiations over raising the debt ceiling (following the episode in August 2011) risks undermining confidence in the role of the U.S. dollar as the preeminent global reserve currency, by casting doubt over the full faith and credit of the U.S. This "faith" is a key reason why the U.S. 'AAA' rating can tolerate a substantially higher level of public debt than other 'AAA' sovereigns.
Medium
- The repeated brinkmanship over raising the debt ceiling also dents confidence in the effectiveness of the U.S. government and political institutions, and in the coherence and credibility of economic policy. It will also have some detrimental effect on the U.S. economy.
The 'AAA' rating reflects the U.S.'s strong economic and credit fundamentals, including:
- Its highly productive, diversified and wealthy economy; extraordinary monetary and exchange rate flexibility; and the exceptional financing flexibility afforded by the global reserve currency status of the U.S. dollar and the depth and liquidity of domestic capital markets - in particular the U.S. Treasury market. The U.S. sovereign credit profile also benefits from the respect for property rights, the rule of law and a high degree of social stability.
- Fitch continues to judge that the U.S. economy (and hence tax base) remains more dynamic and resilient to shocks than its high-grade rating peers. Fiscal and macroeconomic risks emanating from the financial sector are generally low and diminishing and becoming supportive of, rather than a drag on, economic growth. Fitch forecasts economic growth to pick up from 1.6% in 2013 to 2.6% in in 2014 and to average 3% over 2015-17, before reverting to its assumed long-run trend growth rate of 2.25%. The projected recovery is supported by easing headwinds from private sector debt deleveraging, a pick-up in the housing market and a gradual decline in unemployment.
- The 'AAA' rating also reflects the halving of the federal budget deficit since 2010, which is now approaching a level consistent with debt stabilisation. The Budget Control Act passed in August 2011 implied significant fiscal consolidation and Congress and the Administration have adhered to the automatic spending cuts - the sequester - specified under the Act in the absence of agreement on an alternative and equivalent set of deficit-reduction measures. In addition, the passage of the American Taxpayer Relief Act on 1 January 2013, which implied a tax increase of more than USD600bn, has also contributed to the deficit reduction effort.
- Fitch's medium-term fiscal projections imply federal and general government (which includes states and local governments) gross debt stabilising next year and over the remainder of the decade at around 72% and 104% of GDP, respectively. This is below the 80% and 110% thresholds that Fitch previously identified as being inconsistent with the U.S. retaining its 'AAA' status.
- Nevertheless, public debt stabilisation at such elevated levels still render the US economy and public finances vulnerable to adverse shocks and in the absence of additional spending reform and revenue measures, deficits and debt will begin to rise again at the end of the decade. The U.S. is the most heavily indebted 'AAA' rated sovereign, with a gross debt ratio equivalent to double that of the 'AAA' median.
RATING SENSITIVITIES
The RWN reflects the following risk factors that may individually or collectively result in a downgrade of the ratings:
- Failure by the government to honour interest and/or principal payments on the due date of U.S. Treasury securities would lead Fitch to downgrade the U.S. sovereign IDR to 'Restricted Default' (RD) until the default event was cured. We would also downgrade the rating of the affected issue(s) to 'B+' from 'AAA', the highest rating for securities in default in expectation of full or near-full recovery. Debt securities approaching maturity or those with approaching coupon payments would be vulnerable to a downgrade. The Country Ceiling would likely remain 'AAA'.
In the event of a deal to raise the debt ceiling and to resolve the government shutdown, which Fitch expects, the outcome of a subsequent review of the ratings would take into account the manner and duration of the agreement and the perceived risk of a similar episode occurring in the future. It would also reflect Fitch's assessment of the following main factors:
- The impact of the debt ceiling brinkmanship and government shutdown on our assessment of the effectiveness of government and political institutions, the coherence and credibility of economic policy, the potential long-term impact on the U.S. sovereign's cost of funding and cost of capital for the economy as a whole, and the implications for long-term growth.
- Our assessment of the prospects for further deficit-reduction measures in future years necessary to contain government deficits in the face of long-term spending pressures and place public debt on a downward path over the medium to long term.
KEY ASSUMPTIONS
Fitch continues to believe that an agreement will be reached to end the current political impasse and raise the U.S. debt ceiling. Even if the debt limit is not raised before or shortly after 17 October, we assume there is sufficient political will and capacity to ensure that Treasury securities will continue to be honoured in full and on time.
Fitch's federal debt projections reflect its economic and fiscal policy assumptions and were detailed in the Special Report, 'U.S. Medium-Term Fiscal Projections - An Update' (dated 28 June 2013; see link below). Subsequent to that analysis, the Bureau of Economic Analysis revised the level of GDP up by around 3.4% due to revisions in the way GDP is calculated, including reclassifying spending on R&D and intellectual property as investment. This has had the statistical effect of lowering debt/GDP ratios, but has not significantly affected the trajectory of debt dynamics or its sensitivity to shocks. Since the June review, Fitch has revised down its forecasts for GDP growth for 2013 to 1.6% from 1.9% and for 2014 to 2.6% from 2.8%.
Fitch's medium-term fiscal projections incorporate assumptions regarding the medium-term growth potential of the US economy and do not incorporate potential upside benefits from shale gas or downside risks emanating from the eurozone and elsewhere. They draw heavily upon Congressional Budget Office (CBO) projections, including CBO assumptions and judgements regarding the take up of various benefits as well as the rate of growth of health care spending.
Financial sector risks are currently judged to be low as reflected by Fitch's stable outlook for the U.S. banking sector.
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Mr Two Cents
Footballguy
The most scary thing about you is you have a family and are actually raising a child. I weep for young America. Of course he/she could also realize what a windbag you are with absolutley no convictions.
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BigSteelThrill
Footballguy
Conservatives, they live in an entirely different reality.
http://www.youtube.com/watch?v=79z1gWeU20c
http://www.youtube.com/watch?v=79z1gWeU20c
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Dr Oadi
Footballguy
The House passes a budget? Different reality indeed!Conservatives, they live in an entirely different reality.
http://www.youtube.com/watch?v=79z1gWeU20c
Mr Two Cents
Footballguy
I voted for Ted Cruz for a reason, I would be majorily dissappointed if he turned into a RINO. Shut the ####er down.
Dr Oadi
Footballguy
Want to see the market back at 6k don't ya?
eurotrashman
Footballguy
BigSteelThrill
Footballguy
Mr Two Cents
Footballguy
MSNBC LMAO.Conservatives, they live in an entirely different reality.
http://www.youtube.com/watch?v=79z1gWeU20c
Mr Two Cents
Footballguy
Dr Oadi
Footballguy
Apparently the Teabaggers want them to live in a third world Nation in 2013/2014.
Fennis
Footballguy
badmojo1006
Footballguy
Mr Two Cents
Footballguy
To BST, MSNBC is far-right.MSNBC LMAO.Conservatives, they live in an entirely different reality.
http://www.youtube.com/watch?v=79z1gWeU20c
Dr. Gobbler
Footballguy
Let me get this straight, Tea Party wants to balance a budget but won't touch the sacred cow of Defence spending. They want all the poor people to suffer because, in their minds, these people are all minorities anyway. Even though food stamps and such are a small portion of the budget. Their bright idea is to F with our credit rating and bring the markets down which will only affect mostly rich white people. Is this about right?
timschochet
Footballguy
timschochet
Footballguy
timschochet
Footballguy
Breaking news from Politico:
First, after Heritage came out against the deal, Boehner pulled it. He doesn't have the votes; there will be no vote tonight:
http://www.politico.com/story/2013/10/government-shutdown-debt-ceiling-default-update-98317.html?hp=t2_s
Second, that frees up the Senate, where McConnell and Reid are close to a deal:
http://www.politico.com/story/2013/10/senate-update-debt-ceiling-government-shutdown-98368.html?hp=t1_s
First, after Heritage came out against the deal, Boehner pulled it. He doesn't have the votes; there will be no vote tonight:
http://www.politico.com/story/2013/10/government-shutdown-debt-ceiling-default-update-98317.html?hp=t2_s
Second, that frees up the Senate, where McConnell and Reid are close to a deal:
http://www.politico.com/story/2013/10/senate-update-debt-ceiling-government-shutdown-98368.html?hp=t1_s
I like how you didn't consider the new spending of ACA to actually be new spending due to the associated tax increases. Something that you rejected when I brought up the Obama tax cuts here. So really, that doesn't explain how none of this is new spending. We could just call Obamacare the 1.7 trillion itself. There's no question it's going to cost that unless we actually get it changed or repealed before it happens. It's projected to cost 1.3 trillion or so through 2023 by itself and should hit 1.7 by 2025.
These negotiations have happened in the past with the understanding that most of these programs are untouchable despite them and the resulting budget issues continually being labeled as problems during election periods. A certain portion of the base doesn't consider Washington's non answers to be acceptable solutions anymore and aren't willing to accept it. That's why we had the sequester and why we have a standoff today.
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John Maddens Lunchbox
Footballguy
I wish the US had a system like in Australia where the Prime Minister can dissolve BOTH houses with a double dissolution.
BOTH the FULL house and the FULL senate would be put to a special election.
Where there is so much disfunction between the houses, the President should be given the power to blow it all up, let the people decide and start from scratch.
Australia has had 6 double dissolution elections, none within the last 25 years, but there were 4 in the preceeding 15 years when there was a lot of chaos.
BOTH the FULL house and the FULL senate would be put to a special election.
Where there is so much disfunction between the houses, the President should be given the power to blow it all up, let the people decide and start from scratch.
Australia has had 6 double dissolution elections, none within the last 25 years, but there were 4 in the preceeding 15 years when there was a lot of chaos.
rolyaTy
You're Heinous
This would need to be accompanied by some kind of shuffling of the districts for those kicked out.
timschochet
Footballguy
So what this comes down to is that, sometime tomorrow or Thursday, John Boehner is going to be forced to make the decision that he's been trying to avoid for several weeks now- he needs to defy the conservatives in his party and allow the Senate deal up for a vote.
If you're a Washington business as usual type, I suppose. But the real answer is to shut it down.
Fennis
Footballguy
rolyaTy
You're Heinous
I think if that's what it comes down to, he'll do it. Why cling to a leadership position over a group of people who can't even agree under such conditions. Do the right thing, bow out with the approval of 80% of sensible americans, and let the loonies run amok.
Mr. Pickles
Footballguy
Gobbler still hasn't paid? My god, you've buried the lead in here.
snogger
Footballguy
