July 24, 2011, 7:58 pm
Heres a roundup of the latest market reaction to the ongoing U.S. debt ceiling impasse:
The United States appears no closer to an agreement to raise the debt ceiling by the August 2 deadline than it was on July 13, when we looked at the potential implications of failure to raise the debt ceiling. Our conclusion at that time remains valid—there will be a massive fiscal contraction and a financial crisis, but not necessarily a debt default. But the odds that the United States will face a ratings downgrade, even if the debt-ceiling is raised, have clearly risen.
Nigel Gault, chief U.S. economist, IHS Global Insight
US does not default. It has not defaulted in the past and it will not default next week. The US is not Argentina. The US is not Greece. The US is not Russia… all of whom have defaulted on sovereign debts in the past one hundred years, and in the case of Greece has defaulted several times. The Full post…
July 24, 2011, 10:37 am
Once Obama, Boehner and friends work out our debt problems, its time to sell.
That’s the advice of Doug Kass but it’s not just Kass who’s saying it. From the floor of the NYSE trader Steve Grasso agrees. “I think any debt ceiling dip should be purchased,” he says.
However once lawmakers reach a deal – the trade changes. That’s the time to reposition, either defensively – or into cash – or short.
(cnbc.com) Find that trade hard to swallow? Here’s the thesis:
Buy the DC Debt Rumor
Kass and Grasso feel reasonably confident that lawmakers understand the seriousness of a debt default and regardless of the rhetoric, they won’t let allow it to happen.
And to take that a step further, they believe that’s the prevailing feeling on the Street — that the squabbling is more a political game of chicken than a real threat to the nation’s triple A credit rating.
“Ulti
Full post…
July 15, 2011, 5:09 am
Ezra Klein explains thirty years of the debt ceiling in one graph (note the Congressional control appears to be backwards):
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