"Raise the Debt Ceiling" - Pimco

[CrusaderFrank]

Well...actually, the Hooverites also wanted to cut federal spending in a downward spiral and look where that got the US.

You're confused again, Dear. In 1920, Harding cut spending and, in the same time since Obama took office, unemployment dropped from 12% to under 4%.

Can you imagine that? Unemployment would now be under 5%

Do you really believe that? Do you believe that if Obama had done exactly what Harding did, the results would have been precisely the same?

But Ravi is completely wrong. Hoover increased Federal taxes and spending over 50% over four years.

Well Obama would have had to repeal all of FDR economy strangling Labor laws, but yes, had Obama done a Harding we'd have under 5% unemployment and 4% annual growth

 

[CrusaderFrank]

Well...actually, the Hooverites also wanted to cut federal spending in a downward spiral and look where that got the US.

You're confused again, Dear. In 1920, Harding cut spending and, in the same time since Obama took office, unemployment dropped from 12% to under 4%.

Can you imagine that? Unemployment would now be under 5%

I think you might be mistaken. There was a recession 1920-1921

The recession of 1920–21 was characterized by extreme deflation — the largest one-year percentage decline in around 140 years of data.[2] The Department of Commerce estimates 18% deflation, Balke and Gordon estimate 13% deflation, and Romer estimates 14.8% deflation. The drop in wholesale prices was even more severe, falling by 36.8%, the most severe drop since the American Revolutionary War. This is worse than any year during the Great Depression (adding all the years of the Great Depression together, however, yields more severe deflation). The deflation of 1920–21 was extreme in absolute terms, and also unusually extreme given the relatively small decline in gross domestic product.[2]

Unemployment rose sharply during the recession. Romer estimates a rise to 8.7% from 5.2% and an older estimate from Stanley Lebergott says unemployment rose from 5.2% to 11.7%. Both agree that unemployment quickly fell after the recession, and by 1923 had returned to a level consistent with full employment.[8]

Depression of 1920

While I am quite sure that you will make fun of my using the wiki, I am also supplying the link to their source.

http://minneapolisfed.org/Research/events/1985_10-24/Romer_UnemploymentData.pdf

Sighs...I won't make fun of your source. Harding was sworn in 1921. Big Big Big mistake on my part

 

[Flopper]

The head of the world's largest bond fund is telling the politicians to raise the debt limit unconditionally.

To raise or not to raise the debt ceiling; that is the question: Whether ’tis nobler to suffer the slump and arrows of default today or in some distant future. Oh, bards of Washington, give us your answer.

This Shakespearean financial dilemma hangs in the balance between now and a somewhat theoretical Aug, 2, but I can tell you what an unbiased investment manager thinks: Don’t mess with the debt ceiling. Raise it unencumbered if necessary. I say unbiased because my credentials have become very public over the past several months. Pimco owns very few Treasury securities, and its clients would theoretically benefit if yields rose on an under-owned asset class that was technically in default. But default would still be a huge negative for the U.S. and global financial markets, introducing fear and unnecessary volatility into the economy and global trade. The market situation might resemble what happened after Lehman Brothers collapsed in 2008. ...

The answer to our modern-day Hamlet’s question then, is that there should be no question at all. The debt ceiling must be raised and not be held hostage by budget negotiations. Don’t mess with the debt ceiling, Washington. Bond and currency vigilantes will make you pay.

Warning to Washington: Don’t mess with the debt ceiling - The Washington Post

Today, ratings agency Standard & Poor's has warned there is a one-in-two chance it could cut the United States' prized triple-A rating if a deal on raising the government's debt ceiling is not agreed soon.

All the cards are starting to fall into place for a downgrade. The pressure's on. It's just a question of time before some brokerage firms start warning their clients.

I wonder who will blink first.

S&P warns of downgrade if no debt deal reached | Reuters

 

[thereisnospoon]

The only thing standing in the way is the democrats refusal to drop the tax increase.
They are the obstructionists.
No tax increase and it's a done deal.
BTW, the US Senate is in violation of federal law. The Upper Chamber has not submitted a budget in over 800 days. By law the Senate is to submit a budget each year,

 

[Flopper]

The only thing standing in the way is the democrats refusal to drop the tax increase.
They are the obstructionists.
No tax increase and it's a done deal.
BTW, the US Senate is in violation of federal law. The Upper Chamber has not submitted a budget in over 800 days. By law the Senate is to submit a budget each year,

Keep mind it is the Republicans that established conditions for approval of raising the debt ceiling, not the Democrats. If this plan blows up in the Republican's face and we loose our credit rating or the government defaults we will end up paying much higher interest on the debt and likely another recession. If that happens American voters aren't going to be sympathetic to the Republican's failed efforts at cutting spending.

 

[kiwiman127]

Cut and balance the budget or default.

I don't give a shit what these fools have to say.

So, the economy crashes and burns to depths that make the Great Depression look like a Sunday School picnic and you don't give a shit because your ideology says so. How brilliant.

 

[kiwiman127]

The only thing standing in the way is the democrats refusal to drop the tax increase.
They are the obstructionists.
No tax increase and it's a done deal.
BTW, the US Senate is in violation of federal law. The Upper Chamber has not submitted a budget in over 800 days. By law the Senate is to submit a budget each year,

Keep mind it is the Republicans that established conditions for approval of raising the debt ceiling, not the Democrats. If this plan blows up in the Republican's face and we loose our credit rating or the government defaults we will end up paying much higher interest on the debt and likely another recession. If that happens American voters aren't going to be sympathetic to the Republican's failed efforts at cutting spending.

Commercial interest rates will blow up and considering the current state of the economy, the US economy will blow up. This will bring much higher inflation, probably hyper-inflation, which would lead to massive business failures. I wonder how many of our posters will still have jobs when the dust settles. 10% unemployment will look great at that point.

 

[rdean]

Republican's masters have spoken.

 

[Flopper]

The only thing standing in the way is the democrats refusal to drop the tax increase.
They are the obstructionists.
No tax increase and it's a done deal.
BTW, the US Senate is in violation of federal law. The Upper Chamber has not submitted a budget in over 800 days. By law the Senate is to submit a budget each year,

Keep mind it is the Republicans that established conditions for approval of raising the debt ceiling, not the Democrats. If this plan blows up in the Republican's face and we loose our credit rating or the government defaults we will end up paying much higher interest on the debt and likely another recession. If that happens American voters aren't going to be sympathetic to the Republican's failed efforts at cutting spending.

Commercial interest rates will blow up and considering the current state of the economy, the US economy will blow up. This will bring much higher inflation, probably hyper-inflation, which would lead to massive business failures. I wonder how many of our posters will still have jobs when the dust settles. 10% unemployment will look great at that point.

I don't know if I would go that far, but there will be political and economic consequences if we lose our AAA bond rating and there will very serious consequences if there is a default.

 

[oldsalt]

You're confused again, Dear. In 1920, Harding cut spending and, in the same time since Obama took office, unemployment dropped from 12% to under 4%.

Can you imagine that? Unemployment would now be under 5%

Do you really believe that? Do you believe that if Obama had done exactly what Harding did, the results would have been precisely the same?

But Ravi is completely wrong. Hoover increased Federal taxes and spending over 50% over four years.

Well Obama would have had to repeal all of FDR economy strangling Labor laws, but yes, had Obama done a Harding we'd have under 5% unemployment and 4% annual growth

What complete bullshit.

 

[oldsalt]

Cut and balance the budget or default.

I don't give a shit what these fools have to say.

So, the economy crashes and burns to depths that make the Great Depression look like a Sunday School picnic and you don't give a shit because your ideology says so. How brilliant.

I know, right? Somewhere, a village is missing an idiot.

 

[auditor0007]

Like I said in another thread. This debt ceiling thing is not the forum for an ideological battle. It's paramount in this already depressed economy that stability rule the day. But after the debt ceiling matter is resolved... it should set the stage for a debt reduction plan that involves cuts and revenue increases(IMO). But it shouldn't be a hostage situation like it is now.

My Prediction... The ceiling will get raised unconditionally. Both sides know the seriousness of this. The people that don't think it matters are wrong. Americans are scared of the situation... Businesses are scared, Wall Street(an entity I despise) is also scared. If all those entities are scared of the situation... that means that it is a situation that could have global repercussions. As our economy goes, so does the rest of the world's.

Let's get through this.., let's not take the chance of fucking things up even worse than they are. Our nation is more important than politics.

The biggest problem the Republicans are having with this is that most of the Tea Party wing of the Republicans is willing to default no matter what the cost. The Rhinos who know that we cannot afford a default are in a bad spot, because to raise the debt ceiling, they are going to have to cave to the Dems which will likely cause a big split in the Republican Party and may jeopardize their chances at any gains in next year's election.

The problem is that the Tea Party is so ideological they would allow this economy to completely tank to get what they want. Unfortunately, most of them aren't very intelligent.

 

[grunt11b]

Well, that's it then. Business owners are also saying the same thing.

The Republicans are going to be outcasts if they piss off their funders.

Like we give a shit about the funders, the funders can kiss our fucken ass. Our country and our liberties are more important than a bunch of nimrods who helped get this country into the shape it's in right now.
2012 will be a wake up call to the funders, you can bet your ass on that.

 

[grunt11b]

I still dont understand why a balanced budget amendment is such a bad idea, but then again, I dont understand communism and the like as much as the current crop of leaders in washington do right now.

 

[Steelplate]

Like I said in another thread. This debt ceiling thing is not the forum for an ideological battle. It's paramount in this already depressed economy that stability rule the day. But after the debt ceiling matter is resolved... it should set the stage for a debt reduction plan that involves cuts and revenue increases(IMO). But it shouldn't be a hostage situation like it is now.

My Prediction... The ceiling will get raised unconditionally. Both sides know the seriousness of this. The people that don't think it matters are wrong. Americans are scared of the situation... Businesses are scared, Wall Street(an entity I despise) is also scared. If all those entities are scared of the situation... that means that it is a situation that could have global repercussions. As our economy goes, so does the rest of the world's.

Let's get through this.., let's not take the chance of fucking things up even worse than they are. Our nation is more important than politics.

The biggest problem the Republicans are having with this is that most of the Tea Party wing of the Republicans is willing to default no matter what the cost. The Rhinos who know that we cannot afford a default are in a bad spot, because to raise the debt ceiling, they are going to have to cave to the Dems which will likely cause a big split in the Republican Party and may jeopardize their chances at any gains in next year's election.

The problem is that the Tea Party is so ideological they would allow this economy to completely tank to get what they want. Unfortunately, most of them aren't very intelligent.

You are correct. I personally feel that the Majority of Americans are with the Dems and Realistic Republicans on this issue. The bad thing is... in ultra Conservative districts, it might hurt the chances for a Real Republican to retain/acquire a seat in the House and put more Shiites into power. Which would suck for all of us, so I think the Real Republicans have to walk a narrow line. As far as straight line votes go... the Tea Party is insignificant, but future ramifications are serious and they know it.

I think it's time that a line in the sand gets drawn within the Republican Party. The Tea Party folk are not Republicans. They just run on the Republican ticket. It's time for the party to disassociate with them and let them stand on their own two feet. If the Republicans would have done this from the very beginning, we probably wouldn't be in this mess. But instead of calling them out, they embraced them for votes and seats... now we have gridlock at every turn. It was a bad strategy.

 

[Steelplate]

I still dont understand why a balanced budget amendment is such a bad idea, but then again, I dont understand communism and the like as much as the current crop of leaders in washington do right now.

Ok... if you're going to ask a serious question, don't load it with that Communist/ism bullshit. There's not a Communist in Washington... the closest thing we have to a Communist is Bernie Sanders(I) from Vermont, I believe. He is a Democratic Socialist. But even he doesn't approach the "Communist" level. Those stupid assumptions are the reason we are in the mess we are in.

OK... to answer your question. I really have no problem with a balanced budget amendment. But do you realize what is involved in adding an amendment to the Constitution and how long it takes? Those that are calling for an amendment as a demand over the Debt limit hostage situation either know it's just bluster, or are truly ignorant of the process.

Not only does an amendment have to pass the US House and Senate.... it has to go to every state in the Union and pass their individual house and senates, be signed into law by every governor, and go to the Supreme Court for a ruling.

Once again.... get the ceiling raised and stabilize the country... THEN fight the ideological battle.

 

[thereisnospoon]

I still dont understand why a balanced budget amendment is such a bad idea, but then again, I dont understand communism and the like as much as the current crop of leaders in washington do right now.

Ok... if you're going to ask a serious question, don't load it with that Communist/ism bullshit. There's not a Communist in Washington... the closest thing we have to a Communist is Bernie Sanders(I) from Vermont, I believe. He is a Democratic Socialist. But even he doesn't approach the "Communist" level. Those stupid assumptions are the reason we are in the mess we are in.

OK... to answer your question. I really have no problem with a balanced budget amendment. But do you realize what is involved in adding an amendment to the Constitution and how long it takes? Those that are calling for an amendment as a demand over the Debt limit hostage situation either know it's just bluster, or are truly ignorant of the process.

Not only does an amendment have to pass the US House and Senate.... it has to go to every state in the Union and pass their individual house and senates, be signed into law by every governor, and go to the Supreme Court for a ruling.

Once again.... get the ceiling raised and stabilize the country... THEN fight the ideological battle.

There is no logic in having a debt ceiling if the government constantly needs to raise it.
A balanced budget amendment is an exercise in futility. Why? Because there are people who will protest by stating "but what about...?"
Instead of a Constitutional approach to fiscal responsibility, limits on spending can be accomplished through legislation.
Next step is term limits. The need or rather the existence of professional politicians should be finished. These people who become entrenched in Washington have become a separate society. A return to the "citizen legislature" is a must.

 

[Trajan]

I still dont understand why a balanced budget amendment is such a bad idea, but then again, I dont understand communism and the like as much as the current crop of leaders in washington do right now.

Ok... if you're going to ask a serious question, don't load it with that Communist/ism bullshit. There's not a Communist in Washington... the closest thing we have to a Communist is Bernie Sanders(I) from Vermont, I believe. He is a Democratic Socialist. But even he doesn't approach the "Communist" level. Those stupid assumptions are the reason we are in the mess we are in.

OK... to answer your question. I really have no problem with a balanced budget amendment. But do you realize what is involved in adding an amendment to the Constitution and how long it takes? Those that are calling for an amendment as a demand over the Debt limit hostage situation either know it's just bluster, or are truly ignorant of the process.

Not only does an amendment have to pass the US House and Senate.... it has to go to every state in the Union and pass their individual house and senates, be signed into law by every governor, and go to the Supreme Court for a ruling.

Once again.... get the ceiling raised and stabilize the country... THEN fight the ideological battle.

There is no logic in having a debt ceiling if the government constantly needs to raise it.
A balanced budget amendment is an exercise in futility. Why? Because there are people who will protest by stating "but what about...?"
Instead of a Constitutional approach to fiscal responsibility, limits on spending can be accomplished through legislation.
Next step is term limits. The need or rather the existence of professional politicians should be finished. These people who become entrenched in Washington have become a separate society. A return to the "citizen legislature" is a must.

I have to disagree the only way to rein in the spenders now AND the future is put a 2/3's voting threshold tax raise and spending cap in an amendment, or else we will be right back here next time the musical chairs at congress are changed.

we have to starve the beast.

 

[saveliberty]

Guess if I was going to sit on a pile of devalued bonds at work, I'd be saying the same thing. Just a totally laughable source for objective views on the debt ceiling. Since you can only PAY for the debt with printing more money, has this genius figured out how to stop the dollar from being devalued further or preventing inflation? Pick your poison. Stop runaway government spending is on the top of my list.

 

[Toro]

Guess if I was going to sit on a pile of devalued bonds at work, I'd be saying the same thing. Just a totally laughable source for objective views on the debt ceiling. Since you can only PAY for the debt with printing more money, has this genius figured out how to stop the dollar from being devalued further or preventing inflation? Pick your poison. Stop runaway government spending is on the top of my list.

In the article he says that he owns few US government bonds and would benefit relatively if US Treasury bonds did poorly. That's true. He very publicly sold off his US bonds a few months ago.