Ãnybódy Gonna Play The Debt Ceiling Outcome?

[verrip1]

1. Short the long bond as soon as the budget hits default?

2. Buy equities like a drunken sailor if it is all spending cuts and no tax increases?

3. Buy foreign currencies if it is strong on tax increases?

4. Stay your course and ignore whatever happens?

5. Do what you think Boehner would like you to do?

6. Do what you think Obama would like you to do?

7. Stop watching and reading the news because it's too depressing?

[Virgil Showlion]

8. Get the heck out of Dodge?

[bimetalaupt]

Jul 10, 2011 19:38:15 GMT -5 Virgil Showlion said:

8. Get the heck out of Dodge?

V.S.,
The last word I heard was the law is not "CONSTITUTIONAL ".iT IS AGAINST ALL WE STAND FOR TO NOT PAY THE DEBT PER THE CONSTITUTION..
Just a thought,
Bi Metal Au Pt
BUT

White House Rules Out Constitutional Option On Debt Ceiling: Report
Geithnerdebt

Deficit , Predict The News , 14th Amendment , Debt Ceiling , Politics News , Tim Geithner , Bruce Bartlett , Debt Ceiling 14th Amendment , Debt Ceiling Constitutional Option , Debt Ceiling Option , Former Reagan Adviser , Hearing , National Debt , Prediction , Us Default , Politics

WASHINGTON -- As quickly as the so-called "constitutional option" appeared as a way to resolve the debt ceiling showdown, top White House officials have apparently closed that door.

During Thursday's talks between the president's team and congressional leadership, Treasury Secretary Tim Geithner reportedly revealed that he believed the administration did not have the constitutional authority under the 14th Amendment to simply ignore the debt ceiling and continue borrowing money.

From the very end of a New York Times report, comes the following nugget:

In addition to his warnings about the cost of a default, officials said, Mr. Geithner told the lawmakers the White House did not believe it had the authority, under the Constitution, to continue issuing debt if it reached the debt ceiling. Nobody in the room disputed Mr. Geithner's bleak assessment, the officials said.

The report comes less than 24 hours after Reuters reported that Treasury officials were discussing whether to use the option -- the first indication that the administration's lawyers were entertaining the legality of ignoring the congressionally set debt limit. It also comes as at least one Republican lawmaker, Sen. Chuck Grassley (R-Iowa), acknowledged that the constitutional option could very well be utilized.

"The 14th Amendment includes a public debt clause that insists the obligations of the government 'shall not be questioned,'" Grassley said in a conference call with local reporters.

That the White House would choose not to keep the option of ignoring the debt ceiling as an arrow in its quiver is a curious strategic move. It could have presented an emergency exit if debt negotiations with Republican leadership reached an intractable impasse. It also served as a threat to Republicans, who risked getting nothing at all if they refused to budge on issues like tax revenues. It is worth noting, though, that the revelation may have come from a Republican source at the White House meeting, rather than from Geithner or the White House.

An email to both the White House and the Treasury Department seeking comment was not immediately returned.

[usaone]

It's a shame.....Boenner/Obama almost had a HUGE market moving deal but the tea party torpedoed it.

Bummer.

Don't worry Virgil it will get done. Your anti Americanism is getting old.

[verrip1]

JFC, don't tell me that some still think the outcome will be based on reasoned discussions focusing on current law and the Constitution! Unless the impasse leads to default, there will be a late 11th hour deal that both sides will hold their noses about, but has the ability to get the needed votes. After that, each side will focus on porcine lipstick. Get over it! Rationality is irrelevant!

The only reality is that the possible outcomes are: high spending cuts/low or no taxes, equal mix of spending cuts/tax increases, low spending cuts/high taxes, or default via inaction. Each has an impact on the market.

So, will anybody here be making market moves because of the outcome?

[bimetalaupt]

Jul 10, 2011 19:38:15 GMT -5 Virgil Showlion said:

8. Get the heck out of Dodge?

V.S.,
Gone.. I live in Abilene,TX.. Not Dodge.. We are conservitive here and know the value of the $$$ so that is why were are at the loan window of the Texas Farm Bank buying land with those FIAT $$$$$.. Inflation is the only way to lower the debt.. See M3 Up 5.4%.. M2 up 5.9% and M1 up 12.9%.. Inflation will lower the debt to GDP as GDP grows 10%.. Stocks will Grow at 15% per year and all those 401b= more taxes from the Retired..

Just a thought,
Bi Metal Au Pt

[The Virginian]

It doesn't matter ! Long term good ole US Stocks are the best investment. If things go bad just buy even more stocks because they will be on sale. US companies are still rock solid!

[bimetalaupt]

Jul 10, 2011 21:10:28 GMT -5 The Virginian said:

It doesn't matter ! Long term good ole US Stocks are the best investment. If things go bad just buy even more stocks because they will be on sale. US companies are still rock solid!

Mr.V.,
Yes, But my call was the financial dealing that will make the stocks grow at 15%. . First of all these well financed firms are buying quality assets with borrowed money.. This is the driver of the next bull market.. You are correct on buy when the market is down.. Great call.. Watch the great action in fix assets of these great firms.. Also we have seen the great savings boom started for the baby boomer's..They may work until they are 70.5 years old.. Yes Stock are the best of the two investment for the long run.. This will also push the market up with shortage of stocks.

K4U!!

Just a thought,
Bi Metal Au Pt

Attachments:

[Virgil Showlion]

Don't worry Virgil it will get done. Your anti Americanism is getting old.

I was accused of pro-Americanism not even 12 hours ago in P&M.

If having precisely zero faith that the US government will get its deficit spending under control makes me "anti-American", then I suppose I stand guilty as charged.

Bruce: I only wish they'd listened to the US Constitution when it came to abandoning the gold standard.

Do you have a link for the article in #2? It didn't come with a source.

[bimetalaupt]

I think this is it...
justenrichment.com/2011/05/04/section-four-of-the-fourteenth-amendment-and-the-national-debt/
Bi Metal Au Pt VS.. Please reduce this after you have read it...
Section Four (?) of the Fourteenth Amendment and the National Debt
Posted on May 4, 2011 at 10:30 am by Amanda Rice

At The Atlantic, Garrett Epps suggests that Section Four of the Fourteenth Amendment “places both payments on the debt and payments owed to groups like Social Security recipients . . . above the vagaries of Congressional politics. These debts have to be paid, the argument would be, in full, on time, without question. If Congress won’t pay them, then the executive must.”

Section Four? Okay, I admit it, I had no idea what he was talking about. And I had yet another occasion to regret not being cool enough to carry a pocket Constitution. Nevermind, Wikipedia to the rescue! Section Four provides:

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

Man, that Fourteenth Amendment has everything. I must have written the whole thing off as an accident of the Civil War and missed the first sentence: “The validity of the public debt of the United States . . . SHALL NOT BE QUESTIONED.” In suggesting that the text might require debts to be paid “in full, on time, without question,” Epps emphasizes the strength not only of the word “shall,” but also of the word “questioned.” He has a point. It’s remarkable that the Constitution purports to proscribe certain questions, and these are undoubtedly strong words.

On the other hand, he notes, “the language could be seen as simply forbidding outright repudiation, not temporary default. Default on U.S. bonds would, in this analysis, not dispute the ‘validity’ of the debt; it would simply delay repayment.” This seems like the better reading to me. The subject of the sentence is “validity,” not “debt.” It’s the validity of the debt that can’t be questioned. I can refuse to pay or delay payment of a debt without disputing its validity.

In any event, just thought I’d pass it along.

Interesting sidenote #1: The ”shall not be questioned” language also appears in the Speech or Debate Clause.

Interesting sidenote #2: A Westlaw JLR search for “Section Four of the Fourteenth Amendment,” which also picks up variations on the text using the symbol ”§” or the numeral “4″ (thanks Westlaw!), returns only thirty-nine hits. Clearly I’m not the only one not paying too much attention to this Section.

[bimetalaupt]

Jul 11, 2011 0:52:59 GMT -5 Virgil Showlion said:

Don't worry Virgil it will get done. Your anti Americanism is getting old.

I was accused of pro-Americanism not even 12 hours ago in P&M.

If having precisely zero faith that the US government will get its deficit spending under control makes me "anti-American", then I suppose I stand guilty as charged.

Bruce: I only wish they'd listened to the US Constitution when it came to abandoning the gold standard.

Do you have a link for the article in #2? It didn't come with a source.

VS,
Do you have any idea how many $$$ rebates to the Treasury in the form of interest rebates for the rent of the paper Currency back with Little gold and lot of bonds!!! Like $ 50 Billion last year!!
USA was in fact the last major power to get off the gold standard.. We had all the gold..
Just a thought,
Bi Metal Au Pt..

Our banking family was all about conservative banking.. Banks all about value and my Father and his father belived in the Gold Standard.. It does have its limits as production of gold is a uncontrollable vector is now about 500% the production then. K4U.. Great Call.. In my opinion..
..

[Deleted]

We have 2 polarized groups trying to set their own agenda with little concern for the opposite side. Even if you embrace what 1 side says, the bickering reveals how absolutely pathetic each side truly understands economics.

Much like many individual Americans are woefully financially illiterate, the legislative players do not have the ability to tackle our debt problems. That’s not meant to be personal slander – only intending to say that the problems are beyond their skills, experience, and means.

Corporations are understandably chilled at what might come out of Washington. It’s 1 thing to know how you’re going to be hit on the chin – it’s possible to plan and adapt. It’s still open what the impact of Health care will have – and now debt reduction? Market action will be restrained while this mess plays out. Cash hoarding will continue.

[maui1]

a few reasons why not to raise the debt limit.

1) we have done it over and over again....100 times since 1919 (fed started in 1913, btw)- why have one if it is always increased?
2) we have to much debt, and it seems the only way to stop the continued debt increase, is to STOP it!
3) the only way to stop the debt increase is to STOP it. congress can not bind other congresses to lower debt if the future.....wee have done this a few times, and how has that worked?.
4) we don't know what our gov't payment priorities are, and this will force our gov't to tell us what they are, when they are forced to prioritize.
5) we have 220 billion in tax revenue a month as to not to default......so that is just a bunch of bullshit.

our gov't is HOOKED on credit, and you can't fix debt with more debt.........you just can't! if we increase the debt limit this time, we will have to again in 2 more years......BANK ON IT!!!!!

[maui1]

gov't does what is best for THEIR interest......not our countries.

the basic instinct of self preservation comes into play. gov't is a bureaucracy and a bureaucracy is a living thing, that follows laws of survival.

if anyone thinks differently, they need to reevaluate their thoughts

[Driftr]

Jul 11, 2011 8:11:50 GMT -5 sunrnr said:

In the good old days, people who thought for themselves, questioned the official version, etc. were labeled heretics. Consequences of being found as such were horrific.

Now they're labeled liberals, left wing nuts, socialists (or worse) and the favorite "anti-American". Consequences are much less physical, but as much damaging.

Labeling, the favorite tool of those who wish to divide this country for their own agenda.

You can be certain I'll never label someone who thinks for themself as a liberal.

[maui1]

It's a shame.....Boenner/Obama almost had a HUGE market moving deal but the tea party torpedoed it.

Bummer

usa- you are so into yourself and making money, that you are willing to sacrifice the future for today's stock market gain.

what is good for the country is always good for everyone in the country. what is good for the individual may not be good for the country.

seems a simple choice for me.........but not for others.

[Driftr]

In response to OP, no, I will not be playing anything on the debt ceiling outcome. I will leave what I have invested where it is, and I will continue to accumulate cash via dividends until this has all played out (maybe I'm a #4?). If I were going to play though, I'd play a 2x ETF long on one of the metals (probably silver) in anticipation of an increase to the debt ceiling with no real reductions in current .gov spending.

[maui1]

In response to OP

i won't tell

[busymom]

I don't have any faith that the players currently in power will come to agreement before the deadline. "The good of the nation" doesn't appear to be one of their top priorities.

One only has to look at the state of Minnesota. They officially "shut down" on July 1st. It's already July 11th, and they appear no closer to an agreement than when they started talking. Politicians appear to be all about themselves these days.

I'm planning as if there is going to be no change in the debt ceiling by August 2nd.

[maui1]

busy- question? is minnesota still functioning as a state?

meaning.......that it has survived the 'end of the world' scenario that timmy wants us all to believe would happen if we don't increase the national debt limit.

[dudleydoright]

Jul 11, 2011 9:05:38 GMT -5 @maui1 said:

busy- question? is minnesota still functioning as a state?

meaning.......that it has survived the 'end of the world' scenario that timmy wants us all to believe would happen if we don't increase the national debt limit.

I do not believe that the US Government officials (both Executive and Congressional) are making decisions based on what is "objectively" in the best interest of the country as a whole. They are taking positions based on their own self interest (read "continuing political career").
And I really can not believe that anyone thinks that the US defaulting on its debt obligations is in anyway constructive or beneficial to anyone. That would be the first giant step toward the USA becoming a 2nd class country.

[busymom]

Maui: LOL!

MN is still funtional (imagine that!), but there's plenty of things you can't do right now. All non-essential state workers are unemployed (and not being paid), & certain services are shut down (for example, your teenage kid can't get their driver's license, all state parks are closed, etc.--you get the idea). What's probably going to drive people crazy first, is that you can't get your liquor license renewed right now. (That won't mess up my life much.) Oh, and if you know anyone traveling in MN, all the rest areas are closed. If you need a bathroom, you'd better plan ahead! On the positive side, there are fewer annoying things, like inspections going on....

[smackdown]

"The last word I heard was the law is not "CONSTITUTIONAL ".iT IS AGAINST ALL WE STAND FOR TO NOT PAY THE DEBT PER THE CONSTITUTION."

Hardly a viable premise. Sorry, but "conservitives" (your spelling) stole American jobs that produced American revenues that sustain AMERICA. The Constitution is meaningless with all this divisiveness. It's also INCREDIBLE for you to write about taking MORE funds out of a tapped system via the Farm Bank; creating MORE debt without purpose (buying Texas desert as a hedge is mighty low on the list of needful things). Texans... your ego overshadows your Common Sense.

The Debt Ceiling won't get raised. The financial sector and bloodsuckers will shrivel up and We the People will look to begin a NEW currency after the 3rd while hauling in money grubbers for orange jumpsuit fittings.

"We have 2 polarized groups trying to set their own agenda with little concern for the opposite side. Even if you embrace what 1 side says, the bickering reveals how absolutely pathetic each side truly understands economics.

Much like many individual Americans are woefully financially illiterate, the legislative players do not have the ability to tackle our debt problems. That’s not meant to be personal slander – only intending to say that the problems are beyond their skills, experience, and means."

Absolutely true and well put.

"It doesn't matter! Long term good ole US Stocks are the best investment."

The majority of US corporations are now platforms reliant on foreign components, run by hired-in execs picked by collusive Boards with identical "agenda" as the political extremes. I wouldn't own a stock right now if you gave it to me... owning it would include me as a participant in the biggest criminal plot any society in History has ever known.

BEST ALTERNATIVE to being dragged down by the mistaken belief that you can squeak by an obvious terminal end--- is to have skills and regularly employ them. We'll be starting from scratch before you know it, so know something useful. Financial button-pressing or paper-pushing aren't high on that list.

[Driftr]

Jul 15, 2011 19:44:37 GMT -5 @dudleydoright said:

And I really can not believe that anyone thinks that the US defaulting on its debt obligations is in anyway constructive or beneficial to anyone. That would be the first giant step toward the USA becoming a 2nd class country.

All the more reason to leave the debt ceiling where it is and pay the interest on the existing debt first out of the current tax receipts. You're aware we have plenty f receipts to make those interest payments right?

[smackdown]

"All the more reason to leave the debt ceiling where it is and pay the interest on the existing debt first out of the current tax receipts."

LOVE IT. The second move would be to derail the financial sector controls, get everyone back to work and start ramping up revenue generation to get us out of the debt crisis. Isn't that what any Common Sense-based household would do in a similar position?

[verrip1]

As long as some politicians and their supporters think we have a government revenue problem instead of realizing we have a government spending problem, things will continue to be screwed up.

Catch 22: while in difficult economic times like this, both increasing revenues and decreasing spending over the short term will slow, not speed up, GDP growth.

[Small Biz Owner]

If the debt ceiling is raised it only stands to reason that silver and gold will reach even higher highs due to further currency dilution. $2,000.00 /oz gold & $50.00 /oz silver in the near future.

[silverbullet]

I saw a blog message from a seemingly intelligent and knowlegable analyst until he made a statement to the effect that the massive amount of money created in QE1, QE2 isn't really important. After the economy improves the govt can just burn some of the tax dollars they take in each year. WTH!?! Maybe I'm missing something but it seems to me that even in the good years before the recession we were borrowing money just to get by. How is the govt going to be able to burn money when they have to borrow more or simply print it out of thin air just to get by?

[Small Biz Owner]

I saw a blog message from a seemingly intelligent and knowlegable analyst until he made a statement to the effect that the massive amount of money created in QE1, QE2 isn't really important.

That is one analyst who is out of touch with reality.

[verrip1]

Jul 18, 2011 11:07:06 GMT -5 Small Biz Owner said:

If the debt ceiling is raised it only stands to reason that silver and gold will reach even higher highs due to further currency dilution. $2,000.00 /oz gold & $50.00 /oz silver in the near future.

The debt limit has been in place since 1939. Gold has not had a meteoric rise every time the limit was raised, therefore your 'theory' is not consistent with the facts.

However, it does fall right in line with some of the hysteria and angst surrounding the economy these days.

Sigh.