Debt limit mood darkens as GOP muddles own message

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By DAVID ROGERS | 7/12/11 8:00 PM EDT

Washington’s political mood darkened dramatically Tuesday, as the debt ceiling crisis showed signs of spinning out of control and Republicans began looking for an escape path from the default showdown they helped create.

...

Republicans are no longer making any attempt to hide what’s become a deep-seated distrust of the president, but, even more striking, GOP leaders continue to work at cross-purposes with one another — even at the table in front of Obama himself.

Senate Minority Leader Mitch McConnell (R-Ky.) set the day’s tone early with a blast aimed at the president but implicitly undercutting House Majority Leader Eric Cantor’s efforts to craft a $2 trillion deficit-reduction package with the administration. This followed Cantor’s role in pulling back Speaker John Boehner (R-Ohio) from pursuing a still larger, $4 trillion, 10-year deal with Obama. And McConnell in turn got his own thumping from House Republicans who quickly dissed his suggested backup plan that would allow the debt ceiling to increase this month, subject only to a resolution of disapproval from Congress.

...

“We’re certainly not going to send a signal to the markets and to the American people that default is an option,” McConnell told reporters. “What we’re not going to be a party to in the Senate, I’m pretty confident, is default.”

The two-hour White House session, while described as constructive, offered no promise of any quick breakthrough. The coolness between Boehner and his perceived rival Cantor is palpable, and Obama sometimes seems to use this to his advantage.

For example, the president and Cantor clashed again Tuesday, this time over the availability of paperwork on the administration’s savings proposals. Obama told Cantor, officials said, that he had shared information with the speaker and felt that was sharing with the House GOP. Boehner sat silently, just as he did Monday when the aggressive Cantor clashed with the president and Reid.

“Boehner has expressive body language,” said one Democratic official familiar with the talks. “He doesn’t always say anything.”

McConnell’s fallback, which he presented at the White House meeting, may prove just a clever feint. But it is a classic for him because it would allow Republicans to shift all of the political blame for the debt increase onto Obama and his fellow Democrats — and guarantee multiple votes leading up to the 2012 elections.

http://www.politico.com/news/stories/0711/58843.html

[I AM NOT THAT GUY 5,715]

Boy, you and the DFH really are depressing lately.

BTW: You going to let the old people win again? The joke is not lost on me. "The Greatest Generation." #######? The "Greatest Scam Ever Told" is more like it.

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Boy, you and the DFH really are depressing lately.

BTW: You going to let the old people win again? The joke is not lost on me. "The Greatest Generation." #######? The "Greatest Scam Ever Told" is more like it.

The greatest generation is rapidly dying. They're not the problem, you boomers are.

[Obama 2012 1,714]

It's funny really.

All of this talk is silly.

It's actually really simple.

Find things to cut: SS/Disability/Medicare, Military Spending, etc... and then you're set.

There is no reason to raise the debt ceiling any higher. Imagine being plum broke, credit cards maxed out and then applying for MORE credit as an individual. A bank would laugh you out of their building if you tried to do that in most cases.

It's time and it's been time for a LONG time for the Government to work like your normal every day household. If you don't have the money, you don't buy it. If you lose some money, cut back in areas that you can to make things work.

It's time for responsible government.

There are 535 people in Washington who have our fate in their hands. Unfortunately for us, they're all idiots.

[I AM NOT THAT GUY 5,715]

The greatest generation is rapidly dying. They're not the problem, you boomers are.

Ain't we now. I will think about you every month when part of your paycheck gets deposited in my bank account.

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Ain't we now. I will think about you every month when part of your paycheck gets deposited in my bank account.

I hate you, FICA.

[Ban Hammer 12,829]

[one...two...tree 2,762]

[scandal 951]

I was at this seminar yesterday. The panelists all talked about the usual HFT topics: colocation, the impact of Dodd-Frank on high frequency, the impact of the May 6 Flash-crash on regulation and markets, circuit breakers, exchange acquisitions (NYSE Euronext + Deutsche Borse), HFT in asset classes other than equities and futures (particularly FX), and HFT in new markets (particularly Asia, BRIC) etc. etc.

For 90 minutes, nobody talked about what the impact of a debt default in 3 weeks would be on trading and liquidity. It's just not something anyone believes has any chance of happening or actually affecting the markets.

At the end of the panel Dan Torre of ICAP/EBS (who is a great guy, btw) was asked if FX could gap "to a penny" the way certain stocks such as Accenture did in the Flash Crash. His answer was no, based on the fact that there is natural demand based flow in FX, that the liquidity in the big G10 pairs, particularly EURUSD and USDJPY is so deep and from so many natural liquidity providers that it was inconceivable for a disorderly market to emerge in such instruments. He noted that in Sept 2008 when Lehman and AIG collapsed, spot FX stayed liquid. On May 6 2010 when equities and S&P futures dissolved in the flash crash, spot FX stayed liquid. In March 2011 when the Japanese earthquake struck and markets held their breadth, USDJPY spot stayed liquid. Based on that precedent, he felt it inconceivable for liquidity to ever disappear, and saw no need for per-instrument circuit breaker rules in FX as we now have them in US equity markets.

After the panel, over cocktails, I talked to Dan. I told him I agreed with his assessment, but asked him what he thought would happen to the spot EURUSD market on Aug 3 in the wake of an official default on US Treasuries and a downgrade of US debt to automatic defaulted status. Would we see a gap in FX, and a sudden panic vanishing of liquidity in this deepest of markets?

Dan thought, then laughed, then answered. He said that in such an event his concern would not be about the FX markets or circuit breakers or orderly trading. His concerns would be far more basic. I.e. - and this is a quote "that's the time to round up your family, get your guns, and bolt the door."

Dan is a smart guy and knows the markets, particularly spot FX. Make no mistake about it.

A US default will be unprecedented and catastrophic and make Sept 2008, May 6 2010, and the Japan earthquake collectively look like puddles compared to the typhoon scale storm we're inviting upon ourselves.

[Mr. Big Dog 10,747]

[Bad_Daddy 2,209]

They need to stop the talk about cutting Soc. Sec. and end two bs wars. Why isn't anyone complaining about those wars? Do they think their free or something?

[Mr. Big Dog 10,747]

They need to stop the talk about cutting Soc. Sec. and end two bs wars. Why isn't anyone complaining about those wars? Do they think their free or something?

These wars will be part of any deficit reduction package. Some of them smoke and mirror items. CBO has them in the baseline indefinitely so any drawdown will reflect as "savings". That's a trillion dollars over a decade right there. Of course, it ain't real savings but it's gonna look great on paper.

I agree, though, that SS should be stabilized rather than cut. What I mean by that is raise the retirement age - we're all living longer these days and the system wasn't designed for that kind of longevity. No need to pay people 15 years of retirement benefits on average. And we need to revisit the whole disability thingy - there are way too many "disabled" people that are caught working while collecting.

[Bad_Daddy 2,209]

These wars will be part of any deficit reduction package. Some of them smoke and mirror items. CBO has them in the baseline indefinitely so any drawdown will reflect as "savings". That's a trillion dollars over a decade right there. Of course, it ain't real savings but it's gonna look great on paper.

I agree, though, that SS should be stabilized rather than cut. What I mean by that is raise the retirement age - we're all living longer these days and the system wasn't designed for that kind of longevity. No need to pay people 15 years of retirement benefits on average. And we need to revisit the whole disability thingy - there are way too many "disabled" people that are caught working while collecting.

Draw down my #######. Just get out. Screw the bs draw down talks, and just get out. When Nixon had his war funds cut off we were out of Nam lickety fcking split.

Better yet, why are we still there? To fight terror?

[Mr. Big Dog 10,747]

Draw down my #######. Just get out. Screw the bs draw down talks, and just get out. When Nixon had his war funds cut off we were out of Nam lickety fcking split.

Better yet, why are we still there? To fight terror?

I'm with you on that one. Just get the ** out of them shitholes. Whatever would happen there tomorrow will happen if we pull out next year or the year after that or the year after that and so on. Our being there is not going to turn those shitholes into anything but shitholes no matter how long we remain there. Whatever we build, somebody will blow up. So let's not build it in the first place. Build something here instead. I agree. Have the boys pack tonight and depart tomorrow morning. Done.

Edited July 14, 2011 by Mr. Big Dog

[I AM NOT THAT GUY 5,715]

Draw down my #######. Just get out. Screw the bs draw down talks, and just get out. When Nixon had his war funds cut off we were out of Nam lickety fcking split.

Better yet, why are we still there? To fight terror?

I am with you there. No need for troops anyplace but right here to protect us from the Canadians, the Mexicans, and a few minor countries in the Gulf of Mexico. The Navy could better spend it's resources sinking Japanese fishing boats poaching our fisheries, and the Air Force should be folded back into the Army. No new boats, planes, or weapon systems until the rest of the world catches up. That would save what, about 17% of the annual Federal expenditures?