The Debt Ceiling

[Heteronym]

So what do our American members think about the current problem in politics regarding the near default of the American debt? Looks like Obama and the rest of the government won't reach an agreement and a few naysayers are already declaring the end of the world economy.

For my part, I can't understand how rising the ceiling will make anything better: it's basically just a permission to grow even more indebted. How will that increase jobs and productivity?

[lawpark]

Sad to see how the Chinese lost all their savings ...

[The Atheist]

So what do our American members think about the current problem in politics regarding the near default of the American debt? Looks like Obama and the rest of the government won't reach an agreement and a few naysayers are already declaring the end of the world economy.

I'm not American, but I can explain it for you.

The naysayers are wrong. The world's financial markets are not unravelling and there is already a strong expectations that there will be a default.

I can't go into the politics behind it, but what you see is 99% posturing and grandstanding which will have little real impact.

Gold, oil and LIBOR are all showing resilience in the face of the assumed default and the chances of a Recession 2.0 because of it seems highly unlikely. Even if there is a default, it isn't as though USA isn't going to pay its bills, it will just take a little more time. USA 2011 is not Brazil 1980.


For my part, I can't understand how rising the ceiling will make anything better: it's basically just a permission to grow even more indebted. How will that increase jobs and productivity?

The ceiling itself is largely irrelevant - the real point is the strategy required to stop the debt rising. It doesn't need to go down, as inflation will make it smaller over time, but it can't go on increasing forever.

Unfortunately, the measures required to halt the deficit will probably cause job losses and exacerbate the situation for some time.

[The Atheist]

Sad to see how the Chinese lost all their savings ...

:smilielol5:

That's pretty good!

[OrphanPip]

It's really bad for Canada, since our entire economy operates under the principle of selling stuff to Americans.

[Emil Miller]

Sad to see how the Chinese lost all their savings ...

You wish. The Chinese are currently holding 7% of US bonds because they have been offloading US debt since the the USA, through its own stupidity, plunged its own and the European banking sectors into the worst US banking crisis since the 1930s. Foreign investment in China is huge and the fight to gain access to their markets gets ever fiercer. Why? Because with one fifth of the worlds population, they have the biggest home grown market in the world. I have been to China on more than one occasion and the extent of the development there is on a colossal scale.
Now to get to the nitty gritty, the potential default on US debt will be purely technical because nobody really believes the US is going bankrupt, not yet, and there are ways around the problem even if the Republicans force the issue. The real threat will come when the rating agencies decide to downgrade the US dollar's status below its AAA rating, which they may well do regardless of any setlement of the current debt crisis. That's when the proverbial will really hit the fan.

[Vonny]

I haven't read the thread yet, but... we're toast.

Our economy is shrinking, and no matter how they juggle things...

[Heteronym]

Foreign investment in China is huge and the fight to gain access to their markets gets ever fiercer. Why? Because with one fifth of the worlds population, they have the biggest home grown market in the world. I have been to China on more than one occasion and the extent of the development there is on a colossal scale.

I was under the impression companies wanted to get in China to benefit from the cheap work force without labor rights in order to produce goods to sell back in the West several times over the value of what they cost to produce.

[Delta40]

I'm just worried that Australia calls the US Big Daddy....

[Emil Miller]

I was under the impression companies wanted to get in China to benefit from the cheap work force without labor rights in order to produce goods to sell back in the West several times over the value of what they cost to produce.

Natch.

[Michael T]

Gold, oil and LIBOR are all showing resilience in the face of the assumed default

Isn't that because the smart money moved out of shares and into gold etc just because they could see this coming? Technically they are just putting their money under the matress!

America has been sweeping this problem under the carpet for years - now people want them to sweep it under the carpet again. Something has got to give!

[The Atheist]

I was under the impression companies wanted to get in China to benefit from the cheap work force without labor rights in order to produce goods to sell back in the West several times over the value of what they cost to produce.

That's almost right, but since the bosses in China make every decision relating to everyone's lives, you can only do it if they want to. You're really talking about places like Bangladesh and Pakistan nowadays.


I'm just worried that Australia calls the US Big Daddy....

Only the deluded. Militarily, sure, but Australia's economy is far more closely tied to China, which is why the Aussie $ is so enormously strong against the US.


Isn't that because the smart money moved out of shares and into gold etc just because they could see this coming? Technically they are just putting their money under the matress!

No. Gold has barely kept up with inflation and the falling US dollar.

Not to mention that there is virtually no "smart money" in gold. Soros only ever invested as a manipulator because the market's sp small it's easy to manipulate.


America has been sweeping this problem under the carpet for years - now people want them to sweep it under the carpet again. Something has got to give!

It will, but probably only to the extent of 0.5% on interest rates.

[The Atheist]

You wish. The Chinese are currently holding 7% of US bonds because they have been offloading US debt since the the USA, through its own stupidity, plunged its own and the European banking sectors into the worst US banking crisis since the 1930s.

Sorry, but you're wrong, wrong and wronger.

There is ample evidence of the real position which shows that:

A China holds over 25% of US sovereign debt (http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt)

B It has increased its holdings from 21% to 25% in the past year. (same chart)

C You cannot blame USA for Euro banks investing in worthless sub-prime mortgages - they only have themselves and their greed to blame. Plenty of countries and banks avoided getting caught up in it.

[Michael T]

No. Gold has barely kept up with inflation and the falling US dollar.

Not to mention that there is virtually no "smart money" in gold. Soros only ever invested as a manipulator because the market's sp small it's easy to manipulate.


This...

"Concerns about financial stability in the United States and Europe are helping to push gold prices to new heights.

The price of gold rose above $1,600 an ounce for the first time in New York trading on Monday. While the price fluctuated in Tuesday’s trading, some economists say even higher prices are possible.

Investors traditionally buy gold during times of crisis because it has a history of maintaining its worth when other investments or commodities drop in value. That mentality spurred an increase in gold prices during the global recession, and analysts say the same type of thinking is behind the recent price increases.

Some investors have been losing faith in other investments, notably government bonds, that have traditionally been considered safe.

Those fears have been driven in part by the political standoff over the United States government debt limit. If the president and lawmakers fail to raise the limit by August 2, Washington will start defaulting on some of its obligations and investors could lose money.

Investors say concerns about the ongoing debt crisis in Greece and other European countries are making gold a more attractive investment.

Financial advisors say worries about inflation have also helped drive gold prices higher."

[Alexander III]

Sorry, but you're wrong, wrong and wronger.

There is ample evidence of the real position which shows that:

A China holds over 25% of US sovereign debt (http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt)

B It has increased its holdings from 21% to 25% in the past year. (same chart)

C You cannot blame USA for Euro banks investing in worthless sub-prime mortgages - they only have themselves and their greed to blame. Plenty of countries and banks avoided getting caught up in it.

In regards to China I completley agree with you - also the chinese would **** themselves if America really did default. As China is rightly perceived as an economic powerhouse, but it can only be a powerhouse because of Europe and America (mostly America). The majority of chinese trade is exports of basic commodities to America and Europe. Their major asset for now is not the specialization of their skill or a high technology (that is still where America dominates), China dominates due to its ability to produce massive amounts of simple goods at cheap prices. But the majority of china's trade is in direct link with that of the US, if the U.S suffers so will China. But it will be worst for China, as unlike America their economy has arrived into a position were it is no longer in their hands and mostly dependent upon how others are able to handle their economic issues.

Also Atheist, I have to disagree with your gold statements. Since 2007, Gold has had a huge jump in price, many thousands making fortunes off of it in these last years. Right now however people are not putting their money in gold, because of the huge uncertainty over weather there shall be a default.

From what I have understood from my father (wall street type man)

If America does default, there will be a second wall street crash such as that of 2008 or 1929, only unlike those two times, the Government will not have the economic strength to initiate a quick recovery, so we enter into another global depression (though it could be easily argued that this rather than other is merely the continuation of the 2008 depression. I say global because if the USA takes a hit the rest of the world goes down with it.)

If America does raise the ceiling, the stock market will remain relatively stable, though still extremely volatile.

Now in essence, the problem of congress and the senate is conflicting interests. For 90% of the American population, if the country defaults, they will suffer heavily. For the wealthy 10% a default means an ability to move money and make huge gains and start moving the market again.

Now dont get angry at the desire of the 10%, because it is not solely a question of personal interest.

For example if a family in poor rural India ( Father, Mother, 3 children) suffers trough a famine, what do you do, do you give the food to the father or the children? The poor in america are like the children, they Need to be protected, but they contribute virtually nothing to the economy. The rich are like the father, doesn't need protection but he is the breadwinner for the country.

If we feed the children and the father starves, then everyone dies as the family has no breadwinner. But also it is tough starving the children.

That is the problem the congress and senate are facing, and it is I decision which I don't envy making, as no matter what they do, the people of america are gonna take a blow.

[Heteronym]

That's almost right, but since the bosses in China make every decision relating to everyone's lives, you can only do it if they want to. You're really talking about places like Bangladesh and Pakistan nowadays.

But as far as I understand it, these countries, and China, can't be profitable consumer markets. Companies can't go there to sell cars and ipads to these people because they earn so little they can barely subsist from day to day. I know in China there's a small power elite, known as the Princelings, that can of course live in grand style, but I think they'd have to really buy a lot of stuff to make it worth the time of the companies.

[OrphanPip]

Now dont get angry at the desire of the 10%, because it is not solely a question of personal interest.

For example if a family in poor rural India ( Father, Mother, 3 children) suffers trough a famine, what do you do, do you give the food to the father or the children? The poor in america are like the children, they Need to be protected, but they contribute virtually nothing to the economy. The rich are like the father, doesn't need protection but he is the breadwinner for the country.


This is patronizing nonsense, because the low and middle income earners account for by far the majority of consumer spending in the West, they are the economy.

Not to mention that they perform the labour that creates the wealth.

Who is the largest private employer in the USA? Wal-Mart. Who is shopping at Wal-Mart? The rich and famous? I don't think so.

[Emil Miller]

Sorry, but you're wrong, wrong and wronger.

There is ample evidence of the real position which shows that:

A China holds over 25% of US sovereign debt (http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt)

B It has increased its holdings from 21% to 25% in the past year. (same chart)

C You cannot blame USA for Euro banks investing in worthless sub-prime mortgages - they only have themselves and their greed to blame. Plenty of countries and banks avoided getting caught up in it.

This is what Le Figaro, the main business daily in France dated 29.7.11 has to say in an article on the new US ambassador to China who is Chinese in origin:

Although the american congress is struggling to reach agreement on raising the debt platform, which would permit them to avoid a default on the 2nd August, China looks askance at this indebted nation of which it is the major creditor with 7% of US treasury bonds in its possession.

My translation.

[Emil Miller]

Further to the above here is something that is more than a little germane to this thread:


http://www.ritholtz.com/blog/2011/01/is-china-really-funding-the-us-debt/

[Alexander III]

This is patronizing nonsense, because the low and middle income earners account for by far the majority of consumer spending in the West, they are the economy.

Not to mention that they perform the labour that creates the wealth.

Who is the largest private employer in the USA? Wal-Mart. Who is shopping at Wal-Mart? The rich and famous? I don't think so.

Yes, but I wasn't talking about that type of economics - consumer spending is done mostly by the middle class, but then again there is an abundance of people for consumer spending there has never been a lack of it. What is lacking is heavy money to create new jobs. That is why the rich are like the father, their money is necessary for the sole fact that it is they who create jobs. Right now a major problem in the states is the high unemployment. The spending of lower and middle classes does invigorate the economy but the major creation of jobs lies in the investment and and moving of money of the financial elite. If they don't have incentive to take out their money from the mattress and shoot it into the economy unemployment will continue to rise.

[Emil Miller]

But as far as I understand it, these countries, and China, can't be profitable consumer markets. Companies can't go there to sell cars and ipads to these people because they earn so little they can barely subsist from day to day. I know in China there's a small power elite, known as the Princelings, that can of course live in grand style, but I think they'd have to really buy a lot of stuff to make it worth the time of the companies.

Read this from Wikpedia:

China currently has the most cell phone users in the world with over 800 million users in July 2010. It also has the largest number of internet and broadband users in the world.] At the end of 2010 internet users became 457 million or grew by 19 percent over the previous year, although there are government censors for pornographic and political issues and at the end of March 2011 touch 477 million. Based on China Internet Network Information Center (CNNIC), China's average internet speed is 100.9 kbit/s or less than a half of the global average at 212.5 kbit/s.
China Telecom and China Unicom are two mammoth broadband service providers, accounted for 20% of global broadband subscribers, whereas the ten largest broadband service providers are 39% of the world's broadband customers. China Telecom with more than 55 million broadband subscribers and China Unicom with more than 40 million whereas the third rank is NTT with only less than 18 million. The gaps between the top two operator and the world's remaining broadband service providers will continue to grow rapidly, whereas the other top ten broadband ISPs operate in mature markets, with high levels of broadband penetration and rapidly slowing subscriber growth.

[lawpark]

If US is going broke, maybe IMF can come in and install some austerity measures, that way all creditors to the US might get paid and be happy.

[qimissung]

Atheist was correct when he said it was all posturing and grandstanding-THAT is 100% correct in my opinion, and I just wish some politicians would stand up to certain other politicians. Sigh.

[The Atheist]

"Concerns about financial stability in the United States and Europe are helping to push gold prices to new heights."

This is utter nonsense, and exactly on the same lines as news organisations that report ghost sightings. The most interesting thing is how the canard that "gold is a flight to quality" come up. When it's someone promoting gold, I can understand, but it is appallingly outdated.

As I stated, you can prove it by checking the price of gold against other countries, and those with strong dollars against USA - i.e. almost every other currency on the planet (except for the $C, sorry Pip!) - gold has stayed level, and in some cases, actually gone down.

Talk of "record highs" is also nonsense once one allows for inflation.

There are certainly a number of ill-informed minor punters who will be sucked into the hype and buy gold thinking it's smart money, but it is demonstrably wrong.

Investors do not traditionally go to gold, they used to go to gold.

In about 1950.

(Just for your own satisfaction, check out the value of all the gold ever mined. The gold market in its entirety throughout all human history is a drop in the bucket to the trillions changing hands in derivatives daily.)

[Mutatis-Mutandis]

It's a display of how poor our (America) politics has become. This is just a little game for the republicans and democrats to play--they care nothing for the people. I hate all of them.

Plus, the whole thing is a stupid, amorphous conflagration of ambiguous, meaningless numbers.

[The Atheist]

Also Atheist, I have to disagree with your gold statements. Since 2007, Gold has had a huge jump in price, many thousands making fortunes off of it in these last years.

I will be ther first to admit gold has had a good run over the past couple of years, and I can even point you to a thread at another forum where I took bets with a load of other guys back in 2008 where I predicted that gold would continue to be a good investment for several years yet.

The reasons for that are varied, and I can explain them to you if you like - top of the list is the way gold is marketed and sold - but the fact remains that only a few immature investors would consider gold a hedge in the 21st century.


If America does default, there will be a second wall street crash such as that of 2008 or 1929,...

I'm pretty sure that's wrong. Those events were unseen and hit like a ton of bricks. This one has been on the radar for some time, the likelihood (very high) has already been priced into markets over the past few weeks and while I'm sure there will be some pain, the sky will still be up on 3 August.

A global recession is immensely unlikely. The days of US dominating world economies are long gone.


For 90% of the American population, if the country defaults, they will suffer heavily. For the wealthy 10% a default means an ability to move money and make huge gains and start moving the market again.

I don't think that will happen either - the pain felt is likely to be monor - maybe 0.5% onto interest rates, which, considering how low they are now, will not be that horrendous.



But as far as I understand it, these countries, and China, can't be profitable consumer markets. Companies can't go there to sell cars and ipads to these people because they earn so little they can barely subsist from day to day. I know in China there's a small power elite, known as the Princelings, that can of course live in grand style, but I think they'd have to really buy a lot of stuff to make it worth the time of the companies.

Wow, that's well out of date.

As Emil noted, the "middle class", i.e. those with disposable income, is enormous. Remember, there are more people on the internet in China than the entire population of USA, and while owning a PC doesn't make you sure, you sure as hell won't find people starving to death while surfing the net.


If US is going broke, maybe IMF can come in and install some austerity measures, that way all creditors to the US might get paid and be happy.

:smilielol5:

Sorry, but all the money in the IMF would keep USA afloat for about two days. Their recent injection of money brought the war chest up to $500b, I think.

[The Atheist]

And hot off the presses at Bloomberg (http://www.bloomberg.com/news/2011-07-31/white-house-republicans-said-to-reach-tentative-deal-on-u-s-debt-ceiling.html) comes the news that an accord is "very close".

[Mutatis-Mutandis]

And what also pisses me off is that when the deal will be struck to raise the debt ceiling (which it will), all the politicians will be smiling and shaking hands. They really do make me sick.

[lawpark]

I :smilielol5:

Sorry, but all the money in the IMF would keep USA afloat for about two days. Their recent injection of money brought the war chest up to $500b, I think.

The key irony is the austerity measure part ... needing to hone my skills in writing ironic comments ...

[Michael T]

Atheist, you seem to be in a complete muddle here when it comes to the gold issue – hence your contradictory posts on the subject:

You start with…
1) “As I stated, you can prove it by checking the price of gold against other countries, and those with strong dollars against USA - i.e. almost every other currency on the planet (except for the $C, sorry Pip!) - gold has stayed level, and in some cases, actually gone down.”


And then you follow it up with…
2) “I will be ther first to admit gold has had a good run over the past couple of years, and I can even point you to a thread at another forum where I took bets with a load of other guys back in 2008 where I predicted that gold would continue to be a good investment for several years yet.”
(My underlining)

That would be these guys then…
3) “There are certainly a number of ill-informed minor punters who will be sucked into the hype and buy gold thinking it's smart money, but it is demonstrably wrong.”


And this is the crux of your misunderstanding…
4) “The reasons for that are varied, and I can explain them to you if you like - top of the list is the way gold is marketed and sold - but the fact remains that only a few immature investors would consider gold a hedge in the 21st century.”


The thing is Atheist, these people aren’t looking for a good return on their investment – but instead, have moved their capital from a downwardly volatile shares market into gold bullion in order to protect what they already have. The effect of all these people trying to protect their money has pushed the price to record highs, and ironically given those who were wise enough to switch earlier a very good return should they decide to cash in whilst the price is so high. No doubt when the stock markets start to recover and again make gains, investors will be confident enough to risk their money there. The demand for gold will then drop and so will the price.

I stand by what was said in both my earlier posts.

[MystyrMystyry]

I always put my spare cash into gold because it's safe.

But I think the issue refers to the price relative to inflation, because gold is always worth gold, and currency isn't.

If the price seems to go up, it's actually that dollars have devalued.


GOLD

[The Atheist]

Atheist, you seem to be in a complete muddle here when it comes to the gold issue – hence your contradictory posts on the subject:

they are not contradictory at all. They may not have been explained well, but the points are correct. I will try to explain where I may have been lacking:



You start with…
1) “As I stated, you can prove it by checking the price of gold against other countries, and those with strong dollars against USA - i.e. almost every other currency on the planet (except for the $C, sorry Pip!) - gold has stayed level, and in some cases, actually gone down.”

That proves there has been no flight to gold, because with a limited supply, prices would have inflated a lot more had there been any general move to gold.


And then you follow it up with…
2) “I will be ther first to admit gold has had a good run over the past couple of years, and I can even point you to a thread at another forum where I took bets with a load of other guys back in 2008 where I predicted that gold would continue to be a good investment for several years yet.”
(My underlining)

That's no contradiction at all. Gold has been a good investment over the past few years and will probably continue to be so for the next couple. As with all commodities, it has good times and bad. By a "good investment" it had to pass inflation - we're talking about 5 or 6% per annum here.


That would be these guys then…
3) “There are certainly a number of ill-informed minor punters who will be sucked into the hype and buy gold thinking it's smart money, but it is demonstrably wrong.”

Correct. It's a small market, and even silly things like selling bullion at the airport in Dubai will add to the demand.



And this is the crux of your misunderstanding…
4) “The reasons for that are varied, and I can explain them to you if you like - top of the list is the way gold is marketed and sold - but the fact remains that only a few immature investors would consider gold a hedge in the 21st century.”

The thing is Atheist, these people aren’t looking for a good return on their investment – but instead, have moved their capital from a downwardly volatile shares market into gold bullion in order to protect what they already have.

That hasn't happened. Again, the evidence is there, because we know exactly how much changes hands on any given day. The volumes have increased steadily with the growth of money supply in China and India, but there has been no sign of additional capital coming in.


The effect of all these people trying to protect their money has pushed the price to record highs, and ironically given those who were wise enough to switch earlier a very good return should they decide to cash in whilst the price is so high.

Unfortunately, you've missed my earlier point that gold is not at a record high, or anywhere near one. Even in US-inflation-adjusted dollars, gold is still well short of its historical highs. Its present "high" is simply because it's quoted in USD, which has fallen off a cliff.

[The Atheist]

I always put my spare cash into gold because it's safe.

It's not, but it is safer than some. Sub-prime mortgages and Bernie Madoff spring to mind.

:D


But I think the issue refers to the price relative to inflation, because gold is always worth gold, and currency isn't.

If the price seems to go up, it's actually that dollars have devalued.

That's all correct, though.

[YesNo]

I think gold coins look pretty, but I can't see owning any except maybe as art objects--but other kinds of art are even nicer according to my taste. Also the carrying cost of gold is too high, and it doesn't earn a dividend nor pay any interest. So why own it?

I'm somewhat conservative in terms of investments. An investment from my perspective, as distinct from a market speculation play, has to generate an income of some sort by just holding it, not by waiting for it to increase in market value nor by selling derivatives on it.

Regarding US debt and the current US debt ceiling, if it turns out that money will inflate in value, then holding debt is great. The money will come in faster in the future and paying off the debt should not be a problem.

However, if money deflates, like housing has done, and perhaps the stock market if the debt ceiling isn't raised, then the debt could be disastrous. A real default would be imminent since there wouldn't be any way to pay the current debt off.

Anyway, I'm no expert. Just my 2 cents worth.

[Mutatis-Mutandis]

Just keep your gold safe from the aliens. That is what they're really after, you know.

[Vonny]

It's really bad for Canada, since our entire economy operates under the principle of selling stuff to Americans.


Can you continue to supply this Canadian Club Whiskey? I was told, "We're now drinking blended whiskey because it's cheaper," whatever that means. The houseboat people can no longer afford Jack Daniels, but after a weekend on the lake I have a new appreciation for Canada. (Actually, I've always had an appreciation for Canada.) That is smooth straight from the bottle.

What's thriving in the U.S. during recessionary times, is gold, Petco and liquor stores. We know where our priorities lie.

(oops I'm not sure I meant to submit this!)

[The Atheist]

I'm somewhat conservative in terms of investments.

Sensible.

It's worked ok for Warren Buffett.


Just keep your gold safe from the aliens. That is what they're really after, you know.

What on earth is all the anal probing for then? Do people hide their gold there?

[Mutatis-Mutandis]

What? Aliens aren't allowed their fetishes?

[The Atheist]

Accord now reached!

In the final nail of the gold flight myth, gold has fallen all of $1.20 per ounce, however, when the fall in USD today is accounted for, gold is actually up about $2. (0.1%)

[MystyrMystyry]

I think (actually damn certain) America is working on the principle of inflation in order to see it through the crisis - if not for inflation it may as well declare itself bankrupt (and gets marks for trying) or Socialist (can't see that one happening any time soon)

Canadian Club is quite nice even if you can afford the decent stuff, and the more you have the more aliens you see (or so a drunk once explained to me)

The thing I found with gold is that I've been poor with things to hock, with no gold; and I've lived poor with with things to hock, with gold - and the latter is far greater for peace of mind.

Stock exchanges, shares and real estate etc just don't interest me at all, other than to sell them and buy more gold.

I keep it in the bank out of reach which forces me to think about what I'm going to buy and reduce any impulse purchasing. I think if I was a shares-type person I'd be truly horrible to be around most of the time

[JuniperWoolf]

It's really bad for Canada, since our entire economy operates under the principle of selling stuff to Americans.

I think we'll just branch out and do business with other countries instead as America's economy slowly declines. I don't think the US economy will affect us too much, BC is still taxing like crazy and Alberta is pulling money right out of the ground in the oil sands. The Maritimes are still useless, though.

P.S., you guys drink Canadian Club? *gag* We don't. It's all about the JD and R&R as far as whiskey goes up here.

[OrphanPip]

The Maritimes are still useless, though.

They even have oil in Newfoundland now. I don't know what's going to happen to our drunk-useless-unemployed-sealclubbing Newfy stereotypes if they're suddenly much richer than the rest of us.

[MystyrMystyry]

Give you a good excuse to cull them :)

[ralfyman]

The U.S. economy is based heavily on borrowing and spending, which is why there is no choice but to raise the debt ceiling. The problem is that increasing debt is what got it into trouble in the first place.

Ultimately, everyone will have to cut down on borrowing and spending, if not accept much lower wages and factory work to export, but most will probably not accept such terms.

In which case, what's left is to continue borrowing and spending while the number of cents that can be spent on every dollar borrowed continues to drop. After that....

[Alexander III]

They signed the bill, but no one is happy least of all Obama - the dam Tea Bags managed to ruin the bill. They are allowed to raise the debt ceiling but the tea bags said no to tax increase and they forced a very weak austerity measure.

In essence the problem has been swept under the rug for a little while longer...

And this view shows - The stock market is weakening and sliding down and gold is beginning to rise.

Everyone on CNBC is emitting deep black waves of pessimism.

Hopefully things will shape up in a day or two...

[stlukesguild]

The problem is Obama has no balls. Clinton faced up to an opposition just as vociferous... in many cases its the same people... but he stood his ground and he knew how to take his case to the public. Obama seems to frequently forget that he's actually the president.

[papayahed]

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