View Full Version : This President Is Actually Trying to Talk the Markets Into a Panic.
07-23-2011, 01:30 AM
An enraged Barack Obama just took to the nation’s airwaves to announce his effort to strike a deal with Republican Speaker of the House John Boehner has fallen apart... Perhaps for the first time in American history, this president is literally using this press conference to create a financial panic over the weekend about the opening of the markets on Monday.
He is warning of disaster on Monday. Clearly, he wants to use this as leverage to frighten the GOP into passing the plan proposed by Senate Minority Leader Mitch McConnell, which will push the debt ceiling problem into 2013, but it’s still an entirely new and astonishingly reckless gambit.
Watching the insta-reaction on Twitter is very instructive. Liberals say this is good for Obama because it shows GOP recalcitrance. Conservatives say that he has remained so committed to enormous tax increases that he tanked the very possibility of a deal.
Time will tell, but it strikes me that the heated rhetoric he is using—”I didn’t get my phone call returned,” “I’ve been left at the altar,” “there’s nothing Republicans will say yes to”—does not suggest he, Obama, feels he has been handed a gift by Boehner and the GOP.
07-23-2011, 01:40 AM
Obama Is Nearing His Goal
As I have written and argued repeatedly for months, President Obama wants a crisis. He plans to use a crisis to seize even more power for himself and for the government. Now he is a significant step closer to his goal. Despite his finger-pointing con-job in his nasty press conference this afternoon, Obama is the one who deliberately torpedoed the budget talks..... He is the one who has yet to put an actual plan on the table. He is the one who refused to even let GOP negotiators talk. He is the one who insisted through most of the year that no other provisions be attached to the hike in the debt limit — that the debt limit hike should be “clean” rather than include even a single cost saving.
Now, as Speaker John Boehner just said, and as so many others have said in less vivid language, “dealing with the president is like negotiating with a bowl of Jello.” He just won’t stay still. And he’s doing it on purpose. He’s doing it because he doesn’t want a deal. He wants a crisis.
07-23-2011, 01:43 AM
Armageddon On Or After Aug. 2 Not Very Likely
The Treasury's Aug. 2 deadline for reaching the federal borrowing limit is rapidly approaching,
but prospects of a budget deal remain unclear.
House Republicans seem resolved to shun compromise until that deadline, perhaps until well beyond it. But dire warnings about financial Armageddon if the deadline is breached seem vastly exaggerated.
As House Republicans proceeded to pass their Cut, Cap, and Balance legislation, President Obama has shifted his position with increasing frequency. He initially painted himself into a corner by ruling out a short-term budget deal. Later he embraced the McConnell plan, only to soon switch in favor of the Gang of Six approach.
He now appers to be backed into a corner, suggesting a temporary stop-gap measure would be acceptable "if it is tied to an agreement by both parties on a broader deficit-reduction deal" — whatever that means.
House Republicans appear steadfast in rejecting all deals between Senate leaders and Obama that include tax increases and do not include a balanced budget amendment to the U.S. Construction. They ask why such an amendment to ensure that we never return to a similar fiscal precipice is so unreasonable when Americans must do the same — a question that resonates with their constituents.
And they strongly believe that pushing the deadlock through Aug. 2 will only increase their leverage with the president and other leaders.
But House Republicans also risk being characterized as unreasonable and intransigent — if prognostications by administration officials of a financial Armageddon after Aug. 2 without a higher debt ceiling prove true. Do such dire warnings have much merit?
Markets view U.S. treasury securities to be the safest of all financial securities because the U.S. is considered to be most resilient of economies. This also confer reserve currency status to the U.S. dollar, reducing the price of foreign products and savings for Americans.
Those features and the Federal Reserve's historical anti-inflationary monetary policy stance support the highest credit rating of U.S. treasury securities and investor confidence in the U.S. economy.
If the U.S. government misses interest payments on public debt soon after Aug. 2, rating agencies will downgrade U.S. treasuries, prompting investors to dump those securities and sell dollars en masse.
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