Free Republic

“Congress Set to End Fiscal Impasse as Boehner Concedes“ Sigh. So what was the reaction in financial markets from the surrender by Mitch McConnell (RINO-KY) and John Boehner (RINO-OH)? Particularly after the “terrifying crisis” that Democrats, the media and Gall Street professionals were screaming about? First, the 10 year US Treasury yield fell 6 basis points in the afternoon. Hardly an earth shattering change from the alleged “brink of default.” ust10psurr Second, US Credit Default Swaps are at 40, almost the same as Australia and New Zealand. Which, as far as I know, have NOT been on the brink of...

My fellow Americans, the President, the Democrats and the News Media have won a great political victory today, but the American people have lost an important battle. Republicans were elected to control the House of Representatives to stop the hemorrhaging of taxpayer monies. We have tried valiantly to rein in the spending, to stop this headlong sprint to bankruptcy that will happen to our beloved country. Those of us trying to do the responsible thing for the USA have been ridiculed, demeaned and degraded by those who pretend they wish for a 'more civilized' dialogue. We have been called terrorists,...

On the brink of a national default, the leaders of the Senate struck a deal Wednesday to reopen the federal government and extend its power to borrow money. The House appeared ready to go along — and end, at least for now, the crisis in Washington. Sen. Harry Reid, the Democratic leader, said on the Senate floor at midday that his party and Republicans had found their way to a compromise to “provide our economy with the stability it desperately needs” and avert financial disaster. His Republican counterpart, Sen. Mitch McConnell, offered his blessing: “This is far less than many...

Despite no evidence in financial markets of a default, House Speaker John Boehner (RINO-OH) will bring the Senate clean Continuing Resolution (CR) to The House floor for a vote. The endless spending and debt growth in Washington DC will continue now that the Senate has turned over the power of pursestrings to The President (once House Republicans agree). Obamacare was already a tremendous transfer of power and control to the Executive Branch, and now capitulating to President Obama gives the Executive Branch overwhelming power and control. In order to honor our career politicians in Congress and the Administration, the Washington...

Another morning, another gridlock. No deal from Obama and Congress with the default clock ticking. To paraphrase the old Wendy’s commercial, “Where’s the (default) beef?“ Credit default swaps for the US? Up slightly this morning, but still the lowest in the Americas. sovcds101613 And the US CDS “smile” remains (inverse hump in the CDS curve). uscdscurve101613 Zero Hedge has the hysterical headline that “Repo Soars To 2013 Highs On Default Fears, Bifurcated Collateral Market.” True, but compared to 2008, it is a drop in the bucket. repost101613 And the US Treasury 10 is up slightly today, not the massive default...

With the federal government on the brink of a default, a House Republican effort to end the shutdown and extend the Treasury’s borrowing authority collapsed Tuesday night as a major credit agency warned that the United States was on the verge of a costly ratings downgrade.

So I am thinking of simply leaving the job I work at now and heading to a Southern state, Texas, North Carolina, Georgia, Alabama, Northern Florida, Tennessee, etc since I figure that, since I am one of those who does not have a reliable source of family aid of any kind, that this could be my only option. I am considering finding a church that has a sort of communal living situation, a farm, ranch, factory or other such source that could use additional workers and join one of them. I am thinking of it in light of a situation...

How do you settle a rather sizeable bill for your milk delivery? If you are a cash-strapped superpower the answer is, apparently, to offer up a pair of fighter jets and a nuclear submarine as payment. The extraordinary offer was made by Russia to New Zealand in 1993, a new book reveals. After the collapse of the Soviet Union, Russia was struggling to pay the $100m it owed New Zealand for a range of imported dairy products. In a meeting with Russian officials to thrash out payment terms, Jim Bolger, then New Zealand prime minister, was "absolutely stunned" to be...

----"Plan B" and fiscal cliff vote, redux. Having hammered out a deal to shoot back to the Senate tonight -- with most Republicans reportedly on board -- House GOP leadership has been forced to delay or cancel those votes after support among conservatives collapsed in the early evening hours. The rules committee meeting, which would have formally drawn up the bill and advanced it to the full house, has been postponed indefinitely. The reason is simple. They don't have the votes: What happened? The counter-offer's broad outline, which I've been following all day, seemed to be on track. Then the...

The Washington Monument syndrome is describe the tendency of government agencies in the United States to cut the most visible or appreciated services provided by the government when faced with budget cuts. And protect massive waste (since no one would miss the massive waste if it was cut). Such as closing National Parks and Monuments. What are government agencies hiding? The fact that agencies have large concentrations of non-essential personnel. Even Time.com recognizes that most of Federal government in non-essential. The interest payments on Federal debt is a small percentage of Federal current expenditures (11.5% at the end of Q2)....

Just saw the statement from Pelosi.. that the bill the House is putting on the floor is "a decision to default" Sounds like an out and out rejection to me. The Republicans couldn't give much more!!! WTF! This reminds me of when Israel gave Yasir Arafatass EVERYTHING... and they STILL rejected it.

The media, members of Congress, and the President of the United States have gleefully disseminated misinformation about what would happen if we do not raise the debt ceiling by October 17th. The biggest blow these lies encountered was when Moody’s, one of the nation's top credit rating agencies, released a memo on October 7th stating: “We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact...The debt limit restricts government expenditures to the amount of its incoming revenues; it does not prohibit...

Class: Because of George Mason University’s screwy scheduling (no class today because Monday’s classes are now Tuesday classes because of Columbus Day), we can’t have our discussion of the impending US default. Here are two curves as of 1pm EST, the US Treasury yield curve and the US credit default swaps curve. The Treasury curve is upward sloping while the CDS curve is downward sloping. ustcdes1015E If we look at 1 month ago, we see an upward sloping CDS curve. 1moyccds And if we compare the current curves compared to President Obama’s inauguration date, we see an upward sloping CDS...

The rhetoric is really heating up. California Congresswomen Nancy Pelosi (she of “You have to pass the bill to find out what’s in it” fame) is throwing around the world “sabotage” concerning any disagreement with President Obama. uscds101513 And the 10 year Treasury yield rose 3 basis points. ust10101513 And, of course, President Obama nixed ANY deal. Huh. If Pelosi thinks this is sabotage and will lead the US to default, its odd that CDS prices are falling.

The troops will get paid on Tuesday, but the check after that could come in the form of an IOU if the nation defaults on its debt obligations, Treasury Department officials said. Default on top of the government shutdown would cancel out the hastily-crafted legislation that brought back furloughed Defense Department civilian employees and allowed for the payment of back pay, death benefits, incentive pays, re-enlistment bonuses, veterans disability benefits and survivor benefits. All would be eliminated if Congress and the White House fail to reach agreement on raising the debt ceiling to avoid default on Oct. 17, Treasury Secretary...

After a weekend of meetings, there is still no agreement on the debt ceiling or budget. debtceilgst The reaction? US credit default swaps rose this morning. But notice they are still lower than they were on October 10th. uscds101413 The US has the fastest rising CDS. Simply because the alleged default on US sovereign debt isn’t hurting any other country. sovcds101413 So, President Obama and Congress are digging in their heels on cutting spending and debt. Even though Germany is cutting back on its debt. debtdrop Germany was able to lower its debt-to-GDP ratio. Why can’t Congress and Obama agree...

Alternate Headline: "Your Move, Mr. Cruz." There is talk of a deal being worked out this afternoon, but I thought I might mention that even if a deal is worked out today or tomorrow, we are almost certainly going to find out what happens when the debt ceiling isn't raised by Thursday. Quite simply, there isn't enough time for the Senate to consider a bill before the Thursday deadline . . . unless there's unanimous consent to waive the Senate rules. Here's what has to happen before the Senate can pass a bill raising the debt ceiling. (1) The bill...

In the film “West Side Story,” Puerto Ricans sing “America” and pronounce that “Puerto Rico Is In American Now.” If they redid “West Side Story,” they would have to sing “Detroit Is In Puerto Rico Now.” Puerto Rico has a negative outlook from ratings agencies and is rated Baa3 by Moody’s. prcwdes Puerto Rican municipal bonds are collapsing in price. Puerto-Rico-commonwealth-2033 While the Puerto Rican municipal bond 20 year yield has popped to over 10%. PR-20-year-yield Puerto Rico credit default swaps have increased recently (note the “Batman ears”). prdcs At least Puerto Rico isn’t in the Argentina area of CDS...

After a weekend of meetings, there is still no agreement on the debt ceiling or budget. debtceilgst The reaction? US credit default swaps rose this morning. But notice they are still lower than they were on October 10th. uscds101413 The US has the fastest rising CDS. Simply because the alleged default on US sovereign debt isn’t hurting any other country. sovcds101413 So, President Obama and Congress are digging in their heels on cutting spending or debt. Even though Germany is cutting back on its debt. debtdrop Two different philosophies: austerity to balance sovereign budgets (Europe) or spending like there is...

One thing I haven't seen discussed or brought up is the fact that any shutdown, slim down or even default is repairable and only a temporary problem. But the creeping (well, it's past creeping now) socialism being brought about by Obama's executive orders, his unimpeded co-op of enumerate Congressional powers, his decisions to not enforce laws he doesn't like -- those are irreparable. Government rarely (peacefully) goes backwards. Taxes never go down and agency power is always expanding behind the backs of their congressional oversight. So bring on the shutdown, slimdown or default. Those can be fixed. Use those as...

Treasury Secretary Jack Lew slammed Republican arguments that failure to raise the debt ceiling doesn’t guarantee default as based on “faulty logic.” This is despite the fact that Moody’s, the internationally respected financial rating service, supports the GOP case. “They say that maxing out our borrowing just means that we will have to cut spending somewhere, that we could continue to service our debt while we make cuts elsewhere,” Lew recounted. “What they are forgetting is that the decision on whether to default or cut other spending is in our hands, not theirs.” Calling the failure to raise the debt...

House GOP members are meeting at Capitol. The meeting is about how to increase the debt limit for the USA. If Democrats and Republicans cannot reach an agreement, the USA is head for … default! 2012-movie-431x300 (1) It is true that the US is at (or actually a little past) its statutory debt limit. debtceilgst But what do credit default swaps, the price for insurance against sovereign default, tell us? First, the 5y CDS did rise after the specter of default reared its head. But fell towards the end of the week as rumors surfaced that President Obama was willing...

“There is precedent for a government shutdown,” Lloyd Blankfein, the chief executive officer of Goldman Sachs, remarked last week. “There’s no precedent for default.” How wrong he is.

The rhetoric in Washington DC and the media is … silly. Here is a chart of Federal government receipts and Federal government expenditure on interest for Treasury debt. fedrecifedint Does that look like the US can’t afford to pay its debt? Of course not. The problems is the voracious spending in DC which no one seemingly wants to stop. Now, if I plot Federal government current receipts against Federal government current expenditures, we see a different picture: its the spending that’s the problem. govtrevexp You can see in the picture that the much vaunted reduction in the deficit was a...

U.S. Treasury Secretary Jacob J. Lew warned Congress that “uncertainty” over the debt limit is starting to stress financial markets and trying to time an increase to the last minute “could be very dangerous.” Lew was speaking in testimony prepared for a hearing before the Senate Finance Committee today. debtceilgst But not the growth rate in debt or entitlements? Obamacare and other entitlements will lead to even more explosive debt growth in the US. debtprojection7 The US and much of the world has already been experiencing explosive debt in both the public and private sectors. See this link for a...

<p>One of the nation’s top credit-rating agencies says that the U.S. Treasury Department is likely to continue paying interest on the government’s debt even if Congress fails to lift the limit on borrowing next week, preserving the nation’s sterling AAA credit rating.</p>

The International Monetary Fund Oct. 8 lowered its global growth forecast for this year to 2.9 percent and to 3.6 percent in 2014, from 3.1 percent and 3.8 percent it had in July. The U.S. economy is “at the center of events,” the fund said. The damage to the world’s largest economy from a longer federal government shutdown “could be quite harmful” while “the failure to promptly raise the debt ceiling, leading to a U.S. selective default, could seriously damage the global economy,” the IMF warned in its new “World Economic Outlook”. Bear in mind that the IMF has had...

It is fascinating to watch the game of chicken being played in Washington D.C. Both sides on the budget war have drawn lines in the sand. President Obama and Senate Majority Leader Reid refuse to negotiate and have shut down the Federal government (sort of). House Republicans demand that Obamacare carveouts to political friends, Congress, etc. be ended or everyone be given a waiver from Obamacare. Regardless of which side of the fence you line up on, here are the facts. In 2014, $2.16 trillion of Federal government debt matures or rolls over. Now, THAT is a big Twinkie! usdebtdist...

While the world's largest hedge fund, the Fed, may not care about the performance of its "bad bank" assets, and thus is largely ambivalent if the US Treasury defaults on the $2 trillion in US paper held by Ben Bernanke, others don't have the luxury of merely printing away any incurred MTM losses. Such as America's largest foreign creditor China, which at last check held at least $1.277 trillion in US Treasurys, which after realizing with a substantial delay that the US Congress is not precisely a "rational actor" and its bonds may be materially impaired in the case of...

As many observers have noted, the dysfunction in Washington is on the verge of becoming a full-blown crisis. A handful of extremists in one political party have become so convinced of their own brilliance and rectitude — and so frustrated by their inability to persuade the rest of the country of it — that they are threatening to cause the United States of America to default if their demands aren't meant. This is extortion, plain and simple. And the Obama Administration is right not to give into it. If it becomes legitimate for a small group of politicians on either...

In the old days, if you wanted to see master propagandists at work, you looked to Moscow, where none honed the craft as crassly as the boys in the Kremlin. The Soviets were so excellent at manipulation and disinformation, at agitation and propaganda (read: agitprop), that they had a government department that specialized in the work. Entire elements of the arm of the state were employed in the ignoble task.Here at home, Communist Party USA wasn’t too shabby either. [SNIP]...This tactic is precisely what Barack Obama and his allies are doing right now. Obama’s exploitation of the government shutdown (never...

It’s impossible to default on the debt——years down the road, maybe Average monthly interest costs are $18 billion….. we take in on average $225 billion. By law, the president must pay interest first before anything else. In addition to interest we must roll over the $550 billion of maturing debt each month. Newly issued bonds replace maturing bonds with no net change in total debt outstanding. If the Chinese and other investors won’t purchase them, Federal Reserve Chairman Bernanke will just buy them for the Fed’s account. When confronted with money problems, adults make decisions and set priorities. We pay...

After the housing crash of 2008, millions of US borrowers were suddenly plunged into a negative equity position of their homes where the amount they owed to lenders exceeded the value of the property. The problem was so bad that it has motivated cities to consider eminent domain to seize the underwater debt of borrowers (as in Richmond and San Bernardino California). Here is a recent map of negative equity from Zillow. zillowmapofnegeq These borrowers have nothing on Uncle Sam. Uncle Sam now owes $17 trillion to bondholders. GFDEBTN_Max_630_378 (3) Currently, Uncle Sam has public debt equal to 100.46% of...

Before I went on The Willis Report on Fox Business to discuss the latest FHA bailout, reporter Rich Edson discussed the pending government shutdown. That is, The House passed a continuing resolution without Obamacare funding, the Senate put Obamacare back in the continuing resolution, and now the ball in the House’s court with only days to go …. to government shutdown! Zero Hedge has a nice summary of the negatives associated with a government shutdown. Suffice it to say, it is all about the crippling Obamacare legislation. Regardless of the government shutdown or not, labor force participation rate will continue...

You know me too, Frank -- we met at McStain's campaign shindig at the University Club in Washington DC in the summer of 2008. I recall that you and Governor Ridge both refused to take a stand on all the frauds in the mortgage market -- the very frauds that just a couple of months later led to the failure of Lehman, the market crash in general and the ensuing disaster. It figures that you're now the President and chief executive of the American Bankers Association [ABA]. It must be really, really awesome to have your candidate suspend his campaign...

Before I went on The Willis Report on Fox Business to discuss the latest FHA bailout, reporter Rich Edson discussed the pending government shutdown. That is, The House passed a continuing resolution without Obamacare funding, the Senate put Obamacare back in the continuing resolution, and now the ball in the House’s court with only days to go …. to government shutdown! House Republican leaders are proposing to attach a one-year delay of Obamacare provisions and a repeal of the medical-device tax to a short-term spending bill and send it to the Senate, said Representatives Michael McCaul and Kevin Brady of...

<p>WASHINGTON — The Treasury will only have $30 billion of cash on hand by mid-October, putting the United States on the precipice of an unprecedented default, the department said on Wednesday.</p> <p>The warning puts additional pressure on a hamstrung Congress, which is already struggling to prevent the federal government from shutting down over a budget impasse on Oct. 1.</p>

President Barack Obama will appeal to business leaders on Wednesday to urge Congress to approve an increase in the U.S. debt limit and avoid a default that is possible as early as mid-October. Obama is to address the Business Roundtable as part of a renewed push to focus on domestic budget and economic issues after a month dominated by foreign policy. The U.S. Treasury is expected to exhaust measures to avoid exceeding the $16.7 trillion debt limit as soon as mid-October. If the cap is not raised, the United States will not be able to pay all of its bills...

The toll-road authority of Orange County, Calif., is nearing the biggest municipal default since Detroit's record bankruptcy ... The Foothill-Eastern Transportation Corridor Agency... risks default on $2.4 billion in debt, according to a consultant to the Debt and Investment Advisory Commission of California Treasurer Bill Lockyer.

If I invoke the phrase “Greek debt crisis,” do your eyelids start to grow heavy? Do you somehow find it difficult to summon up a fresh wave of outrage if someone mentions that when Barack Obama’s National Commission on Fiscal Responsibility and Reform (better known as the Democratic Tax-Hike Justification Front) convened for its second monthly meeting last week, Congress was already 41 days past its April 15 deadline for passing a budget resolution — scared to death to admit, in an election year and the third year of the Second Great Depression, just how much new debt and spending...

The U.S. Justice Department has subpoenaed documents from what was Wall Street’s largest mortgage due-diligence firm as it ratchets up an investigation into bank actions in the years before the financial crisis. The Justice Department delivered a subpoena to Clayton Holdings LLC last month for an extensive number of documents related to the firm’s work on residential mortgage-backed securities deals. Information sought includes due diligence reports, internal communications related to reviews of pools of loans and correspondence with clients, according to a copy of the subpoena filed as an exhibit in federal court. Let’s take the case of the FHA....

I bet you were going to say Phoenix, Las Vegas, Riverside or Tampa had the highest HAMP re-default rates. But it’s Danville, Illinois. According to the Quarterly Report to Congress (dated July 24, 2013) of the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), The leading metropolitan areas with the highest redefault rates on modified mortgages were highest is Danville IL at 50% re-default rate, Sumter SC at 44% and Rocky Mount NC at 40%. redfULYS See the SIGTARP report here: July_24_2013_Report_to_Congress Here is a table of Sand State (AZ, NV, CA, FL) re-default rates....

Moody’s Investors Service late on Monday said that it considers Cyprus to have defaulted after the debt-stricken island country swapped some local bonds for longer-term bonds. The ratings agency, which does not use a “default” or “selective default” rating, said it will revisit Cyprus’s rating to assess the impact of the exchange on the sustainability of the nation’s debt burden. Other factors, including the likelihood that Cyprus will comply with the rest of the measures spelled out in its bailout agreement with the International Monetary Fund, the European Central Bank and the European Union, will be taken into consideration as...

And so the next casualty of the inevitable municipal collapse appears, which is, as expected, that one-time symbol of all that was right with a (once upon a time) manufacturing America, having since been replaced with the anti-symbol of all that is broken: Detroit. DETROIT BEGINS MORATORIUM ON ALL DEBT SERVICE PAYMENTS FOR UNSECURED FUNDED DEBT DETROIT TO DEFAULT ON CERTIFICATES OF PARTICIPATION DUE TODAY And, true to from in the New Normal America, where the "fairness doctrine" rules supreme under Big Brother's watchful eye, the premise of the upcoming glorious recovery is a well-known one: "the shared-sacrifice." To wit:...

Former Federal Reserve Chairman Alan Greenspan said that the USA will not default because we can print money. Assuming someone accepts it, that is. The Federal government continues to splurge on spending and running up the Federal debt to dizzing heights in the process. The US does have a printing press, but is it enough? The US has a probability of defaulting on its debt of 2.59%. Or a medium risk of default. That compares with a 93.12% of default for Greece and 52.01% for Spain, all in the high risk category. The USA is in the medium risk category...

Former Federal Reserve Chairman Alan Greenspan said that the USA will not default because we can print money. Assuming someone accepts it, that is. The Federal government continues to splurge on spending and running up the Federal debt to dizzing heights in the process. The US does have a printing press, but is it enough? The US has a probability of defaulting on its debt of 2.59%. Or a medium risk of default. That compares with a 93.12% of default for Greece and 52.01% for Spain, all in the high risk category. The USA is in the medium risk category...

In an interview with ABC’s George Stephanopoulos on “Good Morning America,” President Obama asserted that “there is no debt crisis in this country” and says he sees “no reason to bargain with Republicans over the budget.” “The amusing little analogies Republicans are making about households having to make cuts when times are tough simply don’t apply to the federal government,” Obama declared. “I’ll grant that debt can be a problem for households having to cope with limited resources. But how is this relevant to the government?” “Let’s assume we were going to pay back what we borrowed,” the President said....

The “Zero Hour” Scenario By Addison Wiggin 03/08/13 “Possession is nine-tenths of the law” —from a Scottish expression It’s a Sunday night. October 2013. Parents are making sure the kids’ homework is done. Football fans are settling in for the night’s NFL matchup. Reigning champs, Baltimore, are about to lose. And all hell is breaking loose in the precious metals markets. Moments before electronic trading opened at 6 p.m. EDT, Commodity Exchange Inc. — the Comex — announced it would settle a large gold contract in cash and not gold. To be blunt about it, the Comex has defaulted on...

A recently issued report by the Government Accountability Office says that the federal government is on a financially unsustainable course. The debt is so large that the anticipated annual interest payments are expected to exceed the economy’s rate of growth. The government would have to run annual budget surpluses just to maintain its current debt to GDP ratio. Despite all the publicity being given to the so called draconian cuts envisioned by the sequester, there are no actual cuts to spending. At best, only the rate of growth in spending would be slowed, but not by enough to generate a...

House Republicans on Wednesday are hoping to present a united front and jump-start the next several months’ worth of budget negotiations by approving a short-term debt-limit extension with near-unanimous GOP support. Members will vote on a “limited suspension” of the federal debt limit through May 19, which would temporarily allow the Treasury Department to issue new debt to cover obligations incurred during that period, along with a measure that would withhold Senators’ pay if they fail to pass a budget. “All we’re saying is: If the president and the Senate, if this country needs to incur more debt — Senate,...