I am pleased to report the debt-limit charade is progressing in order, right on cue, perhaps slightly ahead of schedule.

In Trillion Dollar Coin Idea Dies Sudden Death; Treasury, Fed Oppose Using Platinum Coin; Republican Strategy I proposed this seven-stage sequence of events.

Politics of the Debate

  1. Obama will chastise Congress with talk of financial Armageddon if Congress does not raise the debt ceiling.
  2. Congress will pretend to hold the president hostage
  3. The secretary of the Treasury will get into the act with its own version of the default debate
  4. Perhaps a few payments on non-critical budget items will be temporarily skipped
  5. Wall Street will feign panic
  6. Constituents will pressure Congress to approve a new debt ceiling
  7. Congress will raise the ceiling with another useless warning about next time


Obama Chastises Congress With Talk of Financial Armageddon

Exhibit 1A: Bloomberg reports Obama: No `Ransom’ for Debt Ceiling

“The issue here is whether or not America pays its bills,” Obama said. “We are not a deadbeat nation.”

He also issued a warning about the potential tactics that House Republicans in particular are discussing, including demanding a new round of spending cuts attached to each incremental increase in the debt ceiling.

“They will not collect a ransom for not crashing the American economy,” Obama said.

Increase the Debt Ceiling or Else

Exhibit 1B: CNBC reports Obama: Congress Must Increase Debt Ceiling or Else
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Mike Shedlock

Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.

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11 Comments So Far
airstart Wrote: Jan 16, 2013 5:14 AM
Why couldn't the house prepare to start cutting funding to useless gov't. entities. Start with funding for the executive branch, continue with salaries and expense accounts both legislative branches next could be national endowment for the arts, dept. of ed.,dept.of labor and so on, you catch my drift, the possibilities are almost unlimited.
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eddie again Wrote: Jan 15, 2013 4:56 PM
it may well be that the gop has become far too lukewarm to remain a viable political party.

if that is the case, those who believe that should definitely act because regardless of what they do as members of the gop, the party is on life-support anyway.
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eddie again Wrote: Jan 15, 2013 4:54 PM
why does the house not simply pass laws appropriating the funds it believes necessary for the federal government to function adequately?

if the funds they perceive as necessary for the government to function adequately require raising the debt limit, then do it.

but, make sure the american people know that the gop led house appropriated the monies necessary to pay active duty military, the interest on the federal debt and social security and medicare payments.

it would be a severe blow to the u.s. economy to suddenly and absolutely reduce economic activity by the 1.5 trillion dollars that the federal government borrows annually.

that is not to say we should not inflict that severe blow if it is the best way to resolve our proble
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1ConservativeUSA Wrote: Jan 15, 2013 4:24 PM
Why bother?

Take a look at the signatures on the Declaration of Independence and wonder what this world would look like if they, instead, said "Why bother?".

Take a look at the war memorials in this country and ask yourself what this world would look like if the soldiers, instead, said "Why bother?".

Think about how much worse off this country would be in if the voters in November 2010, instead, said "Why bother?".

Their are no perfect solutions and sometimes we will lose battles and be heartbroken, but for those of us who believe in freedom, it's never a bother.
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Joe 145 Wrote: Jan 15, 2013 9:06 AM
Hey, I thought that having wealth Americans "pay their fair share" would end the financial problems. I also seem to remember back in 2009 when after the stimulus was passed, how President Obama went outside and "it was a nice day". Disaster averted. He had saved us all. I guess it is like the Incredibles, President Obama has to keep on saving us. The U.S. just can't seem to just 'stay saved'.
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para_dimz Wrote: Jan 15, 2013 7:54 AM
Please consider, electing just four Libertarians to the senate would upend these games. It would deny either party a majority if we might presuppose a continued near even split in that delegation for the future. Pick small states to make a try.
I see nothing else that will really work short of another revolution. The Republican Party is funded by fascists, politely called crony capitalists. The Party cannot afford to abondon them and the people cannot afford to continue to support a party that is controlled by fascists.
We try to insist that the Republicans go out on a ledge for their principles. What about us?
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Pistol Wrote: Jan 15, 2013 5:21 AM
Agreed, rp. The dog and Pony show resulting in same-O same-O is the worst possible. Either give them enough rope to hang themselves bringing on educational pain, or bite the bullet now, and cut real spending until bone shows through. If Barry decides to pay the parasites, and default on legal debts, let him explain why unemployment checks and food stamps are distributed, but not SS checks.
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anonymous Wrote: Jan 15, 2013 10:05 AM
If Boehner would only recognize and hold true to what you said. Obama would be breaking, yet another Law.
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rpexplorer Wrote: Jan 15, 2013 4:58 AM
Exactly, Why bother? Instead, if Obama wants 2 tril, give him 4 and pass the continuing resolution with large increases over the baseline. Lets get this train off the tracks quickly and spread the pain because it is only then that the uninformed will get the message. This whole thing is unsustainable so why string it out?
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