Post Tagged with: "debt ceiling"

US politicians looking to avoid confrontation as debt ceiling looms

US politicians looking to avoid confrontation as debt ceiling looms

By Marc Chandler The US debt ceiling looms. The House Republicans are still formulating their strategy. Treasury Secretary Lew has said his ability to maneuver will be exhausted by February 27. While this sounds like ample time to avoid a delayed payment or default, the problem is that Congress is recesses this Wednesday and will not return for a full […]

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US on track for only 1.6% real GDP growth in 2013

US on track for only 1.6% real GDP growth in 2013

The US is now on track to reach only 1.6% real GDP growth for 2013 – in spite of the extraordinary amount of central bank stimulus. The sad part about this weakness is that to some extent it has been self-inflicted. Policy uncertainty, including “taper”-related fears and the recent dysfunction in Washington have continued to impede growth in the United States.

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Fink: Government shutdown will result in lower equities and lower rates

Fink: Government shutdown will result in lower equities and lower rates

Below are the video and some excerpts from a recent interview BlackRock CEO Larry Fink did with Bloomberg Television. The interview here is mostly about the effect of the government shutdown and debt ceiling crisis on the economy and financial markets and on this score Fink said there was a negative impact.

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Attention Shifts from US Fiscal Policy to Monetary, Pushes Dollar Lower

Attention Shifts from US Fiscal Policy to Monetary, Pushes Dollar Lower

A last minute deal was struck that re-opens the US federal government and removes the immediate threat of default, but rather than turn the attention from the US, the focus has shifted from fiscal policy to monetary policy. In particular, the Beige Book yesterday underscored the economic uncertainty sparked by the government shutdown. This coupled with the recent string of private sector data, such as the ADP jobs estimate, ISM, auto sales, some regional Fed surveys and consumer confidence point to some loss of economic momentum. In turn, more investors recognize that the Fed is unlikely to begin any tapering this year.

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Dollar Little Changed; No Default Tomorrow even without Agreement

Dollar Little Changed; No Default Tomorrow even without Agreement

There is much about the US fiscal melodrama that is a farce. Unlike other debt crises, this one is totally self-inflicted. It is a crisis of choice not necessity. The misconstructions have been repeated so many times that they have taken on a life of their own. October 17 most certainly does not represent the deadline on a US default.

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First signs that US shutdown is impacting consumer spending

First signs that US shutdown is impacting consumer spending

While data is difficult to come by, there are signs that the sharp drop in consumer confidence since the federal government shutdown (see post) is translating into weaker consumer spending.

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In the event of a missed payment, the US has three days to cure

In the event of a missed payment, the US has three days to cure

US CDS is based on treasuries (linked to a specific security – the co-called “reference obligation”), which according to the official offering document (see offering circular here), do not have a “grace period”. Under such circumstances sovereign CDS documents dictate that the grace period is three days before an event of default is declared.

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Becalmed Markets Conceal Rising Anxiety

Becalmed Markets Conceal Rising Anxiety

The US dollar is narrowly mixed against major and emerging market currencies. Comments by House Speaker Boehner that he will form a majority bloc to avoid a default by the Federal government is being understood two ways.

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On the US government shutdown

On the US government shutdown

It isn’t yet clear how long the US government shutdown will last or what impact the shutdown will have. Nor is it clear that the US will escape a debt default down the road. Therefore, at this time all that reigns is uncertainty.

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The US debt ceiling debacle will begin all over again this Fall

The US debt ceiling debacle will begin all over again this Fall

Yet again, the U.S. debt ceiling is going to become a political football that could threaten the U.S. and global economy. While I don’t think the U.S. will default on its debt these recurring manufactured crises make the U.S. extremely vulnerable to policy error and could precipitate a global crisis.

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Having raised taxes and the debt ceiling, US Republicans have another test on public debt

Having raised taxes and the debt ceiling, US Republicans have another test on public debt

As I have been predicting since the beginning of the year, I believe the Republicans will be able to force through some form of austerity before the budget battles in Washington are over this quarter. As the year began, we saw the fiscal cliff showdown end in a Republican defeat with taxes being raised. WHile the payroll tax hike was the biggest drag on growth, these tax increases were not likely enough in total to throw the US into recession.

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Republicans to focus on sequester as debt ceiling to be raised

Republicans to focus on sequester as debt ceiling to be raised

Although the House GOP leadership has been divided on how to deal with the upcoming fiscal contests, they have apparently decided to raise the debt ceiling and focus on the sequester as I have predicted.

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