House Speaker John Boehner “may need a shutdown just to get it out of their system,” said a top GOP leadership adviser. “We might need to do that for member-management purposes — so they have an endgame and can show their constituents they’re fighting.”Zero Hedge
More Than Half Of Republicans Prepared To Let US Default
Submitted by Tyler Durden
Odds on a default and government shutdown are mounting.
11 comments:
Has anyone seen this? It's from Sam Seder
A piece from CNBC saying that somehow income inequality is good
https://www.youtube.com/watch?v=PviLALVHGBw
Maybe we can put this into metaphorical terms that the ZH psychos can understand:
http://www.youtube.com/watch?v=Gb1uDc_qa-4
Get it now?
Now I'm getting really scared, too, Matt. These damn Tea Party morons actually are ready to send this economy into the abyss.
This is much worse than not understanding monetary economics.
This is a big middle finger to everyone expecting a government check (and that's who elected these idiots).
They seem to think this would be nothing worse than paying your credit card bill a few days late.
They have no concept whatsoever of the effect of halting $25 billion/week of $NFA injections.
Matt -- It might be interesting to check earnings of the S&P 500 that are starting to come out. I have heard of a few disappointments and lowered expectations. Since the flow of new $NFA has slowed over the past few months (it has slowed, hasn't it?), then corporations would be having a tougher time growing their profits. There might be a correlation of some sort between the changes in earnings and the changes in $NFA flows. I remember you and paul talking about profits being provided by $NFA.
Bruce Bartlett (held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul.) on the coin - Coins, Bills and the National Debt
Quote:
But whether or not creating a $1 trillion coin to avoid defaulting on the debt was reasonable, in accounting terms it would have been no big deal — simply a larger scale of what the Treasury and the Fed do every day.
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With the idea now off the table, we may never be able to assess how the coin would have played out. But most likely it would have been business as usual between the Treasury and the Fed.
John,
Right, Paul asserts (and I agree) there is logically nowhere else the balances can come from....
The system posted surpluses in September and December...
Deficits in October and November...
So far this month, they are running a 47B deficit in 8 days or about 6B per day which is on track for a 120B deficit which should be supportive if this trend can continue.... but it looks like they have been able to do this deficit spending by spending down the cash account from 93B to 44B or so....
Latest DTS:
https://www.fms.treas.gov/fmsweb/viewDTSFiles?dir=w&fname=13011100.pdf
Looks like to sustain this flow they are now going to have to start to tap the "extraordinary measures" as it doesnt look like they can run the cash account much lower and still have enough in there to handle large redemption days....
rsp,
Hey Clonal:
Check this out from Bartlett:
"This accounting raises some interesting issues of which even economists are generally unaware. For example, although it is part of the federal government, the Fed is treated as a private bank for the purposes of calculating the gross domestic product. The data can be found in Table 6.16D of the national income and product accounts. They show that in 2011, the Fed generated a profit of $75.9 billion – 18.6 percent of all the profits generated by the financial sector of the United States economy and 5.6 percent of the total profits of all domestic industries."
How about THAT!!!
rsp
Astounding! So the Fed is a private bank after all, as far as the bean counters are concerned.
Matt -- Do you have the link to the Treasury table of Tsys ownership by country and agency? It's a text file, I think, and I've seen it here. Thought I bookmarked it, but can't find it. Thanx.
John,
As we suspected:
http://finance.yahoo.com/news/us-taps-pension-fund-avoid-211937220.html
They are now tapping the retirement funds...
They ran the cash account down about as low as they can and still have enough for heavy redemption days and now they are having to spend the balances that are coming in from redemptions in the retirement accounts..
They are a bit at the mercy of the redemption schedules for these bonds in the pension funds.. I hope they have looked at them...
AND tax revenues to an extent...
So we have to see how much these retirement fund security redemptions add up to...
This is probably a key turning point/milestone in this process.... the system is switching over into another operating mode... (unstable)
Question becomes: will this mode produce enough $NFA to avoid the start of some form of liquidation.... we'll see...
Mike has TTM $NFA injection at about 90B per month average so this is probably a good estimate for current system demands...
Based on a 20 day month that is about 4.5B per day... so if I were Geithner, I'd be telling my people to do whatever it takes to inject about 4.5B per day MINIMUM... if it gets much below that flow for any sig time, 10 dogs after 8 bone starts in earnest...
if it starts to go there may not be a bottom until we get a substantial fiscal injection of $NFA... which politically does not seem very forthcoming...
The key thing now is if those retirement fund UST redemptions are occuring at at least a 4.5B/day rate that they can work with... if they are above that rate then at least it is mathematically possible to maintain minimum $NFA flows for a while...
Here is the other link:
http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt
Official reserves at the bottom...
rsp,
Thanks very much, Matt.
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