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Budget talks: This is getting nasty

Discussion in 'Sports and News' started by printdust, Jul 13, 2011.

Page 70 of 214
  1. The Big Ragu

    The Big Ragu Moderator Staff Member

    BofA states the obvious.

    Even at AA+ the rest of the world will still buy our debt and our yields remain low, if nothing else changes.

    The ratings agencies are feeling their oats right now. They want to prove that they have credibility after being a punching bag, so they are taking on the U.S. (and the European Bank, which blinked). But it's a joke.

    They are not announcing anything anybody doesn't already know and they will have nominal, if any, effect on people's willingness to buy U.S. bonds. S&P's rating doesn't change anything. The U.S. is still no different than it was 6 months ago or a year ago, and our ability to meet our obligations is still perfectly safe. Even if we keep adding to our debt, we still have some time before the day of reckoning.

    This is how silly S&P is at this point. France is sitting there with a AAA, when their debt as a percentage of GDP is close to ours, but their banks are also overexposed to the debt of a handful of countries that CAN'T meet their obligations, and they are part of a regional economic union that is being weighed down by a debt burden greater than ours, on a relative basis. And of course, yields on French bonds are higher than on ours, because the whole world knows we are safer.

    I believe the U.S. is going to eventually end up at AA+, as S&P flexes its muscle, but if the U.S. is sitting at AA+ and France is at AAA (and they are not on S&P watch), it will be particularly hysterical, and even if their ratings suggests that French debt is safer than U.S. debt, I will bet right now that if nothing else changes, the yields on a 10-year French note will still be 50 basis points higher than they are on a U.S. 10-year note, the way they are now. And S&P's ratings will be ignored.

    S&P is meaningless, really. It has the power to cause a one-day stir, but it's a laughingstock and is relatively meaningless in terms of its potential to have long-term impact.

    Investors will still feel safer buying U.S. debt than they will buying the debt of 95 percent of the rest of the world.

    We are fucking our country up. But it's an "are," not a "have" yet.
     
    The Big Ragu, Jul 26, 2011
    #829
  2. Armchair_QB

    Armchair_QB Well-Known Member

    Say default happens. Does that become the point where the "Throw the Bums Out" mantra becomes reality and we see rafts of incumbents - regardless of party - tossed out come election time?

    Granted, it's a long way off.
     
    Armchair_QB, Jul 26, 2011
    #830
  3. YankeeFan

    YankeeFan Well-Known Member

    I think Doctorquant made this point a few pages back.

    Does anyone really think people are going to dump our bonds or not buy them in the next auction?

    It's a much bigger deal if the credit agencies fuck with a corporation's rating.
     
    YankeeFan, Jul 26, 2011
    #831
  4. suburbia

    suburbia Active Member

    I'll believe it when I see it.

    For one thing, at least 75-80% of House seats are totally safe thanks to gerrymandering, senior Reps having the clout to secure earmarks for their district and controlling the money sources in their constituency, etc. John Boehner could lose his Speakership, but he represents a R+14 district, so he is not going to get booted from Congress. Ditto others like Nancy Pelosi, Charlie Rangel, Don Young, Charlie Dingell, etc. One of the reasons why last year's wave in the House was so momentous was because it's rare that even that many House seats are seriously contested.

    While it's not that bad in the Senate, there are still more safe seats than contested ones. Many states are either safely Republican or safely Democratic. And seniority has even more perks in the Senate, perks that Senators use to deliver goodies to their constituents to help secure re-election.
     
    suburbia, Jul 26, 2011
    #832
  5. Alma

    Alma Well-Known Member

    Boehner, really, was nothing short of an utter dis
    It wasn't for Boehner, the man. It was for Boehner, his plan. It got 19 percent support.

    He was nothing short of awful last night. His glares and scolding dad tone were right out of "I just don't have time for this" Gore playbook. It probably cost his plan 10 percent support.

    In a sense, last night may turn out to be a real boon for Romney. He can at least converse with a television camera and an audience.
     
    Alma, Jul 26, 2011
    #833
  6. CarltonBanks

    CarltonBanks New Member

    Boehner was just fine last night. He pointed out that his side has already passed a plan, and that the President was not telling the complete truth. Obama looked terribly weak...he was talking about tax increases as well as cuts when Reid and the Senate Dems have already conceded that they are not going to get tax increases. It was almost like Obama had woken up from a 48-hour nap and gave a speech...he completely ignored what had happened in the two days running up to his address. Plus, how can he propose to save money by going after Medicare "waste, fraud and abuse" when he used that exact strategy to force through Obamacare? I thought that "waste, fraud and abuse" was already taken into account with Obamacare. Last night the President gave a very weak speech and looked completely out of the loop. Boehner was not bad. He did what he had to do.
     
    CarltonBanks, Jul 26, 2011
    #834
  7. Magic In The Night

    Magic In The Night Active Member

    Please post some of my posts where I said I "abhor" Republicans. Also, how is living where I want, using money I earned and paid plenty of taxes on, a screw everyone else mentality? Sounds pretty Libertarian to me.
     
    Magic In The Night, Jul 26, 2011
    #835
  8. dixiehack

    dixiehack Well-Known Member

    Chicago Board of Exchange came out today and said that the T-Bills traders use to insure their accounts will be discounted at a greater rate to account for increased risk. Would love to hear Ragu's take.
     
    dixiehack, Jul 26, 2011
    #836
  9. dreunc1542

    dreunc1542 Active Member

    It's not by itself. But when you include the fact that you're hoping the debt ceiling doesn't get raised to try and score political points against Tea Partiers, it certainly comes across as you saying, "Who cares if it hurts millions of people, I can just leave the country and the Tea Partiers will look bad! Win-win."
     
    dreunc1542, Jul 26, 2011
    #837
  10. YankeeFan

    YankeeFan Well-Known Member

    When Democrats attack.
     
    YankeeFan, Jul 26, 2011
    #838
  11. DanOregon

    DanOregon Well-Known Member

    "A vote is expected on Wednesday, but (Boehner) plan ran into major trouble Tuesday when the Congressional Budget Office said it failed to reduce spending and deficits as much as advertised. A spokesman for Boehner said aides are looking at rewriting the plan, and it was unclear if the changes would prevent a Wednesday vote."

    http://www.cnn.com/2011/POLITICS/07/26/debt.talks/index.html

    And then there is this:

    http://www.huffingtonpost.com/2011/07/26/tea-party-coalition-debt-boehner_n_910271.html
     
    DanOregon, Jul 26, 2011
    #839
  12. The Big Ragu

    The Big Ragu Moderator Staff Member

    They raised the haircut hedgers take when they post T-Bills to hedge with CME futures contracts. I believe they do that occasionally, even when something like this isn't looming, and what it tends to do is raise prices for consumers, by creating more cost that companies then conceivably pass along through their products.

    If you are Kimberly Clark, for example, and you post T-Bills to buy futures contracts to hedge costs for part of your business, your T-Bills now buy you less. Since it now will in effect cost them more to trade, it will probably get tacked onto the cost of their products. Multiply that by all companies that trade in CME contracts and it could mean yet more price inflation.

    I honestly don't know how significant it is, though, because the CME is the only one I am aware of that increased their haircut because of any worries. None of the independent clearing firms have done anything, and I think the OCC, which clears stock options, came out and said there is no need, because it can handle any volatility that might occur. I also saw when that story broke that some of the other exchanges, such as ICE and NYSE's Euronext already discounted treasuries used for collateral by a lot more than the CME in the first place, so maybe this is a bit of a case of the CME playing some catch up?
     
    The Big Ragu, Jul 26, 2011
    #840
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