Wednesday, March 29, 2017

Everything will grind to a halt

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Jump to 13:25 for this gem:
Mick Mulvaney, the new budget director, has clearly understood that when the Treasury runs out of cash and the debt ceiling has been used up and you can't borrow anymore, the President has the authority to allocate spending.  and so therefore ...  
ha ha ha oh my god, that's like a line item veto, but live ... yes ... oh ha ha my god ...
so the point that I am trying to make here is that we have in a typical month, there is 250 to 300 billion of revenue coming in, that will readily cover the debt service, that will readily cover social security and other critical payments, but when it comes to paying grants to state and local governments, and a whole range of other activities, that if you don't have the cash you put the bills in the drawer.  I think that is what will shock the system and scare the living bejesus out of Wall Street and the financial markets because then you won't have a sudden clarification and resolution of the problem.  It could go on for days and weeks.  In the past since no president has been advised to allocate spending, it comes to an inflection point, somebody blinks, they pass a resolution in the wee hours of the night, and the government goes on its merry way spending and borrowing against the debt ceiling.  This time this summer there's going to be day after day of uncertainty as to whose going to blink, what the deal is, who's getting paid, who isn't, which bills are building up in the drawer and which ones aren't.  This is going to be a malestrom, if I can use that word, like we have never seen before and the markets are not even remotely prepared for this.

BTW, the definition of malestrom is "a situation or state of confused movement or violent turmoil".

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