Monday, October 14, 2013

Last Call For A Deal Maybe?

Looks like Harry and Mitch have banged out the terms of the GOP surrender.

Senate Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY) have finally hammered out what seems to be a viable deal both to fund the government and raise the nation’s debt limit, opening up the potential to end the government shutdown and pull the country back from the brink of default. 
The plan will only work if House Speaker John Boehner (R-OH) agrees to take it to the House floor for a vote; there, an estimated 30-50 Republicans would surely vote against it, but it would garner enough bipartisan support to pass.
Details of the plan are still emerging, but Politico reports that it will likely include funding the government through January 15, and raising the debt limit through February 7th. It would keep in place the the automatic spending cuts known as sequestration, but would give government agencies flexibility in how they cut funding. 
January 15, 2014 is also the date when sequestration will bring more austerity to government programs in the form of an additional $21 billion in cuts. 
The deal also apparently sets up further budget negotiations (which in all likelihood would mean more cuts), to be figured out by a bipartisan group made up of both Senators and Representatives. Their proposal would need to be completed by December 13th.

So, the question then becomes "Can Orange Julius sell this in the House?" which is a very viable and unknown concern due to his near zero influence in the GOP right now, and given the fact that the Tea Party will certainly make some sort of move to oust him again if he does try to sell it.

It's still possible of course that Ted Cruz or another Republican senator or three could simply use the byzantine rules of the Senate and try to kill the deal there, too.  What Harry Reid would do in response to that is also unknown, but we're down to 48 hours and some change now left.

Running Out Of Patience

China isn't the only country sick of American governance by hostage situation. The rest of the world believes the situation we're in to be a global embarrassment (yet again) only this time around they're facing a US debt default brought on by Republican petulance, which would hurt the entire world economy.  Our neighbors want us to resolve this nonsense permanently.

Leaders at World Bank and International Monetary Fund meetings on Sunday pleaded, warned and cajoled: the United States must raise its debt ceiling and reopen its government or risk “massive disruption the world over,” as Christine Lagarde, the fund’s managing director, put it.

The fiscal problems of the United States overshadowed the official agendas for the meetings, with representatives from dozens of countries — including two of Washington’s most important economic partners, Saudi Arabia and China — publicly expressing worries about what was happening on Capitol Hill and in the White House. 

The leaders came to Washington to talk about the international recovery, Ms. Lagarde said in an interview on the NBC News program “Meet the Press.” “Then they found out that the debt ceiling was the issue,” she added. “They found out that the government had shut down and that there was no remedy in sight.” 

“So it really completely transformed the meeting in the last few days,” Ms. Lagarde said. 

And something better happen sooner rather than later, because even the chance of a US default is likely to damage the global economy.

Many leaders at the World Bank and I.M.F. meetings said they believed the impasse would be resolved before Thursday, when the government would be at severe risk of not having enough money to pay all its bills on any given day going forward. 

But they pressed Treasury Secretary Jacob J. Lew and the Federal Reserve chairman, Ben S. Bernanke — who were both at the I.M.F. meeting — on the issue, predicting that even a near-default would lead to higher borrowing costs and a slowdown of the global economy

“This cannot happen, and this shall not happen,” Baudouin Prot, chairman of the French bank BNP Paribas, said at a meeting of the Institute of International Finance also being held in Washington. “The consequences of this would be absolutely disastrous.” 

Mr. Lew acknowledged the threat. “Our work begins at home,” he said. “We recognize that the United States is the anchor of the international financial system. With the deepest and most liquid financial markets, when risk rises, the flight to safety and to quality brings investors to U.S. markets. But the United States cannot take this hard-earned reputation for granted.” 

Participants at the meetings remained on edge, given the gravity of the threat. Ms. Lagarde said “that lack of certainty, that lack of trust in the U.S. signature” would disrupt the world economy

Wolfgang Schäuble, the German finance minister, issued his own urgent appeal. “The fiscal standoff has to be resolved without delay,” he said in a statement released by the I.M.F. 

In other words, we don't have until Thursday.  We could see damage even as early as today if it becomes clear idiot Republicans will let the country burn just to hurt President Obama.

And that should be painfully clear to all of us by now.  the entire world could pay for the Tea Party's Obama Derangement Syndrome, and they're going to come calling to collect.

No Roses, Very Little Sunshine

Just a gentle reminder, dear readers, of the global economic scenario should we reach Friday with no debt ceiling deal.

Three of the world's most powerful bankers warned of terrible consequences if the United States defaults on its debt, with Deutsche Bank chief executive Anshu Jain claiming default would be "utterly catastrophic." 
"This would be a very rapidly spreading, fatal disease," Jain said on Saturday at a conference hosted by the Institute of International Finance in Washington. 
"I have no recommendations for this audience...about putting band aids on a gaping wound," he said.

Jain, JPMorgan Chase chief executive Jamie Dimon and Baudouin Prot, chairman of BNP Paribas, said a default would have dramatic consequences on the value of U.S. debt and the dollar, and likely would plunge the world into another recession.

Wall Street is scared, people.  The Masters of the Universe are now in panic preparation mode.  If the rest of the world has decided that America is an insane ungovernable mess due to the GOP, they will take action to save themselves, and leave us holding the anvil in the middle of the deep end.

Here's my current theory:  the GOP is going to default at this point and is waiting for President Obama to use the 14th Amendment to suspend the debt ceiling on executive order, setting up what the GOP hopes is a Constitutional crisis and grounds for impeachment, or a SCOTUS slapdown of the President, or both. Suddenly you'll have Republican after Republican warning of "tyrant Obama" and things will rapidly devolve, and they may very well get violent, if not deadly.  Suddenly the GOP shutdown is no longer the issue, but a "lawless President who must be removed from office."

This is what the GOP is hoping for.  President Obama is smarter than this, and we'll see how he handles these clowns.


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