The Debt Ceiling Show: Congress Fiddles While the Economy Sinks
The debt ceiling is all about politics. You know that, right? It's got very little, if anything, to do with how much the government spends, or how fast they're digging us into a debt-hole with no bottom in sight. Nothing that has been proposed by either side will do anything of any significance to address the government's deficit or it's debt.
But the politicians and the media are having a grand old time, aren't they? Even a lot of folks who've hardly paid much attention to this circus before are finally being sucked in. For example, the Wall Street Journal today features an article about the treasury bill due August 4th. There's an interview with an investment manager who holds a slug of these. Of course, neither the manager nor the author expects much more to happen than maybe - MAYBE - if there's no resolution by August 2nd, the government will just "roll" these treasuries into new treasuries due a few month out in the future. The only conceivable problem that could arise might be for someone who absolutely must cash these things in like right now because they need money to spend on something right away. And even those folks would probably be able to trade the treasuries in exchange for cash anyway.
Meanwhile, in what does count as news, the latest GDP report came in at 1.3% way below the expected 1.9%. On that news, stock futures dropped and gold popped (up). Part of the report in the Journal went on to mention "bright spots" like housing. Sales of homes rose 3.8% in the second quarter compared to the first quarter.
Of course, in order to achieve that increase, home prices had to fall, mortgage rates had to drop, and foreclosures had to rise, putting more houses into the available pool (thereby causing prices to drop). Oh, and let's not forget the tax credit available to first-time buyers. So it took all that to get a rise in sales. That's good news? Coulda fooled me.
So in the face of all this, Congress continues to fiddle with the debt ceiling. The media circus goes on.
But the politicians and the media are having a grand old time, aren't they? Even a lot of folks who've hardly paid much attention to this circus before are finally being sucked in. For example, the Wall Street Journal today features an article about the treasury bill due August 4th. There's an interview with an investment manager who holds a slug of these. Of course, neither the manager nor the author expects much more to happen than maybe - MAYBE - if there's no resolution by August 2nd, the government will just "roll" these treasuries into new treasuries due a few month out in the future. The only conceivable problem that could arise might be for someone who absolutely must cash these things in like right now because they need money to spend on something right away. And even those folks would probably be able to trade the treasuries in exchange for cash anyway.
Meanwhile, in what does count as news, the latest GDP report came in at 1.3% way below the expected 1.9%. On that news, stock futures dropped and gold popped (up). Part of the report in the Journal went on to mention "bright spots" like housing. Sales of homes rose 3.8% in the second quarter compared to the first quarter.
Of course, in order to achieve that increase, home prices had to fall, mortgage rates had to drop, and foreclosures had to rise, putting more houses into the available pool (thereby causing prices to drop). Oh, and let's not forget the tax credit available to first-time buyers. So it took all that to get a rise in sales. That's good news? Coulda fooled me.
So in the face of all this, Congress continues to fiddle with the debt ceiling. The media circus goes on.
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