StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



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  • Must-Read: Bruce Bartlett On The Debt Limit   24 weeks 4 days ago

    No, there's no uncertainty here. Get a Brain! Morans

  • Must-Read: Bruce Bartlett On The Debt Limit   24 weeks 4 days ago

    Isn't the fact that the current discussion about the realistic possibility of Congress allowing a default raises questions about the full faith and credit of the US government?

    In other words, at this point - why is an actual default necessary before we wonder if national leaders will honor all our debts? Clearly they are considering not to.

  • Must-Read: Bruce Bartlett On The Debt Limit   24 weeks 4 days ago

    Bartlett just wrote the best Brandeis Brief I've seen in a long time.

  • Must-Read: Bruce Bartlett On The Debt Limit   24 weeks 4 days ago

    Excellent summary - should be widely distributed. The public is hearing too much nonsense;

    Rand Paul on CNN. “If you don’t raise the debt ceiling that means you won’t have a balanced budget, it doesn’t mean you wouldn’t pay your bills.”

    Tom Coburn: "I would dispel the rumor that is going around that you hear on every newscast that if we don't raise the debt ceiling, we will default on our debt, we won't."

  • Must-Read: Bruce Bartlett On The Debt Limit   24 weeks 4 days ago

    A week ago I was convinced that there was a zero chance of this happening, but over the past few days I've become convinced that there is a 90% chance of it happening.

    The GOP is currently engaged in a full court press to make the point that breaching the debt ceiling is not the same thing as default. Putting aside the "payment prioritization" nonsense, which has no legal basis and which could not possibly be implemented in the Treasury's systems, there are some valid reasons why October 17 may not be the date.

    Keep in mind these dates:

    October 22 - The date the CBO predicts the government will actually start missing payments.

    October 24 - Treasury must roll over $24 billion in T-Bills. Technically the interest should be considered an expenditure (unlike the principal) but due to the zero coupon nature of these instruments I'm unclear on the actual govt accounting.

    October 31 - Treasury must roll over $115 billion in Treasury Notes and Bonds and make an accompanying $6 billion interest payment.

    November 1 - $55 billion in Medicare, Social Security, and military payments are due.

    My prediction: The GOP is going to refuse to raise the debt ceiling on October 17 based on the calculation that they have at least until October 22 and possibly until October 31 before an actual default takes place. The morning of October 18 they'll issue a statement to the effect of "see, we breached the debt ceiling and nothing happened", followed shortly by a litany of demands that must be met before they agree to a debt ceiling increase, along with a sudden willingness to negotiate over those demands over the following few days.

    The wildcard in this scenario, and the one that scares the crap out of me, is how the markets and the overall financial system will react in the days leading up to October 17 not to mention the days after it. This is why I'm still leaving open a 10% chance that a deal is reached at the last minute prior to the passing of October 17. A market panic could force them to abandon this plan at the eleventh hour.

  • #Cliffgate Update: Is This The Beginning Of The End For The Tea Party?   24 weeks 4 days ago

    A shutdown might bring more consequences than people think.I hope something will come up and stop this otherwise it will trigger mixed reactions from all directions.

  • First Week Of Great Shutdown of 2013 Went Exactly As Boehner Wanted   24 weeks 4 days ago

    Sorry to be a pedant, but this is kind of important. The payoff matrix for a classical Prisoner's Dilemma is 2 x 2. But here, because there is a time limit for action, Congress has three options:

    1. Pass a Clean CR.
    2. Pass an Unclean CR.
    3. Do nothing

    And the President has two options:

    1. Sign only a clean CR.
    2. Sign anything.

    Also, in the Prisoner's Dilemma, the two parties must choose blindly with respect to what the other chooses and cannot communicate; not the case here. In particular, notice that if Congress believes the President will sign anything, then they will not pass a clean bill, period. So that cell (Pass Clean/Sign anything) really doesn't exist.

    And, perhaps most importantly right now, in a real Prisoner's Dilemma, the payoffs are fixed in advance and known by both players. Amazingly, there seems to be a problem here in that at least some in Congress actually think they will get a positive payoff if they either do nothing, or pass an unclean bill that the President will not sign. Which is frankly amazing; I really did not consider this possibility at the outset. And, arguably, this is what gives Congress a real option of doing nothing.

    And it is the nothing option that really worries me, since it definitely increases the odds that we will default because the president cannot even decide to sign something if there is nothing to sign. (The Do Nothing/Sign Anything cell does not really exist, either.)

    I still believe that unbearable pressure will be placed on just enough congressmen to make the right thing happen here, but it will much closer than it needs to be. That said, the analysis does clarify what the two parties should do. The president should cast signing anything but a clean CR as completely not an option. In that case, so long as the Speaker is willing to bring it to a vote, I think enough in Congress know the true payoff matrix to make the best choice.

  • First Week Of Great Shutdown of 2013 Went Exactly As Boehner Wanted   24 weeks 5 days ago

    "Boehner, President Obama and Senate Majority Leader Harry Reid (D-NV) have all now amply demonstrated to their respective constituencies that they are indeed the hard asses they wanted them to be."

    The Democrats aren't being hard asses. They're just (finally) revving up a tit-for-tat strategy, which is roughly speaking a pretty good one for iterated prisoner's dilemmas.

  • First Week Of Great Shutdown of 2013 Went Exactly As Boehner Wanted   24 weeks 5 days ago

    We're talking about a 6-10 week deal. And there's talk now of an even shorter term deal (1-2 weeks) in order to re-open the government so that negotiations on the "longer term" (6-10 week) deal can take place. Either way, we're right back to where we are now before the holidays, and the people demanding concessions now will be demanding new ones then.

  • First Week Of Great Shutdown of 2013 Went Exactly As Boehner Wanted   24 weeks 5 days ago

    That should be "Give us what we want or we'll kill OUR economy". It's not like they live in another country or something.

  • First Week Of Great Shutdown of 2013 Went Exactly As Boehner Wanted   24 weeks 5 days ago

    But what can Obama deal? This isn't quite a Prisoner's Dilemma because it will be repeated again and again unless Obama takes (and sticks to) a hard line now. When the House says "Give us what we want or we'll kill your economy" eventually you have to see if they'll really shoot the hostage.

  • #Cliffgate Update: Is This The Beginning Of The End For The Tea Party?   24 weeks 5 days ago

    A shutdown might bring more consequences than people think.I hope something will come up and stop this otherwise it will trigger mixed reactions from all directions.

  • #Cliffgate Update: The Ultimate Irony Of The Shutdown Is...   24 weeks 5 days ago

    Remember that the Democratic-controlled Senate hasn't passed a budget since 2009 before all the acrimony and finger-pointing that the GOP-controlled house hasn't appointed conferees on the fiscal 2014 budget resolution. There is plenty of bureaucratic and procedural blame to go around.

  • #Cliffgate Update: 1 In 4 Chance Debt Ceiling Won't Be Raised In Time   24 weeks 5 days ago

    about a default, it's that there's this whacky notion that's popular in Tea Party land that a failure to raise the debt ceiling does not equate to a default. According to this narrative, so long as the federal government continued to make interest payments (and there will be plenty of tax receipts to do that) there is technically no default. Nevermind that there is no statute nor legal precedent that authorizes the executive branch to prioritize certain authorized appropriations over others. In their view, it's just obvious that the government should prioritize debt service (followed by social security payments followed by military expenditures followed by everything else the GOP wants) and the only reason for a default would be Obama and those pesky Dems CHOOSING not to make the interest payments so that they could instead spend the money on welfare and food stamps.

    As I said earlier in this thread, I think that in the next few days the business leaders and others who are funding the GOP will start making phone calls telling them to stand down on this one. I'm just not 100% certain that the Ted Cruzes of the world will answer.

  • Yesterday's Most Important Shutdown-Ending Event Didn't Happen In Washington   24 weeks 5 days ago

    Sorry, but the teabaggers don't really care about anybody but their own voice. I don't think that a few jobs in alabama are going to matter.

  • #Cliffgate Update: 1 In 4 Chance Debt Ceiling Won't Be Raised In Time   24 weeks 6 days ago

    If I've learned one thing since the GOP took the House in 2010, is that where republicans are concerned, things are always way worse than you think. I think even the normally pessimistic Stan Collender is off-base here just because he underestimates how little the tea party cares about a default. In fact they welcome it. In my humble opinion, I'd say chances of the debt ceiling being lifted are more like 1 in 4 rather than the other way around.

  • #Cliffgate Update: 1 In 4 Chance Debt Ceiling Won't Be Raised In Time   25 weeks 6 hours ago

    The House has the votes to pass both the debt ceiling increase and a clean CR. The bills only need to be brought to the floor of the House. One person, Speaker Boehner is all that stands between default and a vote. The Tea Party lacks the support to keep these from passing.

    If Boehner cares at all about his legacy, he will not lead the nation into default.

    Better than 50% chance it goes down like this:
    Boehner will go to the brink with the Tea Party and find out that the administration will not cave. He needs to ask, now what? The Tea Party will have no answers and no strategy. They will be forced to cave or Boehner will be forced to over rule them and let the debt ceiling be raised by the Democrats. It is possible that we might see the debt ceiling raised and the shutdown continue.

    The Tea Party position is clear. They demand that the threat of default be used to get their way. Only after it becomes clear that the threat will not work will they be forced to cave or sane representatives will outvote them.

  • #Cliffgate Update: 1 In 4 Chance Debt Ceiling Won't Be Raised In Time   25 weeks 7 hours ago

    First, note that the Democrats have filed a discharge petition on a bill in the Rules Committee, and those only take seven days to ripen.

    Second, I am guessing that any bill you tried to get into committee that was a clean raise could be (and was) reported out negatively (or positively) before 30 days just to make sure you couldn't use it as the basis for your discharge petition.

    Third, any attempt to resurrect via discharge petition any bill that was not the exact one you wanted (unless it were in the Rules Committee) would force you to get through the Rules Committee to make it the bill you wanted, and...good luck with that.

    There are reasons why the mechanism has not been used successfully since the days of McCain-Feingold.

  • This Shutdown Is Different From Most Others   25 weeks 9 hours ago

    So if the shutdown is only a shutdown because of AG memos, can the curent AG nullify the memos so the lapse in appropriations doesn't actually cause a shutdown?

  • #Cliffgate Update: 1 In 4 Chance Debt Ceiling Won't Be Raised In Time   25 weeks 16 hours ago

    It seems that no House Democrats has filed a bill in time that would allow a discharge petition to fund the government? They need the twenty Republicans to sign on, but they also need the bill to linger for 30 days in committee, before they can bring it before the whole House. They don't have osuch a bill in the pipeline now and are grasping for straws like an old Republican bill from March that would fund government but also would cut spending by 1% every 90 days without budget. Why has the Democratic House leadership been apparently asleep?

    Have they at least filed a bill by now to raise the debt ceiling without any strings atached?

  • #Cliffgate Update: 1 In 4 Chance Debt Ceiling Won't Be Raised In Time   25 weeks 1 day ago

    I was skeptical but your well reasoned, data-rich arguments won me over!

    Seriously, can you even give a credible narrative as to why and how this happens? Anything?

  • #Cliffgate Update: 1 In 4 Chance Debt Ceiling Won't Be Raised In Time   25 weeks 1 day ago

    If we default, a Dem Congress in 2014 will not happen. Both parties will be finished and a third party(ies) will win the vast majority of seats open in 2014.

  • #Cliffgate Update: 1 In 4 Chance Debt Ceiling Won't Be Raised In Time   25 weeks 2 days ago

    I agree. While the shutdown is an inconvenience for many and a genuine hardship for some, it's still the preseason. I'm sure hoping that within the next 7-10 days Boehner, McConnell, et al will come forward and get something resolved on the debt ceiling. As the pressure ratchets up, that will be politically easier to do.

    Don't expect the TP to give up easily though, this is kinda their last hurrah and I suspect some know it.

    If we default and things get bad, I'd guess we'll have a Dem Congress come '14. I doubt Boehner wants that.

  • Yesterday's Most Important Shutdown-Ending Event Didn't Happen In Washington   25 weeks 2 days ago

    Maybe Rinse Priebus will offer to pay to keep that open.

  • #Cliffgate Update: 1 In 4 Chance Debt Ceiling Won't Be Raised In Time   25 weeks 2 days ago

    There's clearly an element within the TP that is hoping they can hold out for another two weeks so they can combine the CR and debt ceiling and double their leverage.

    I think the difference will be that as we approach Oct 17, the pressure from Wall Street bankers, Fortune 500 CEOs, the Chamber of Commerce, the people who, let's not kid ourselves, are funding the GOP, to stand down on the debt ceiling will become enormous.



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