Debt Ceiling
The House passed a Budget deal on October 28, 2015 that, among other things, will extends the government’s borrowing authority through mid-March 2017. In 2013, the Republican-controlled House and the Democrat-controlled Senate negotiated with the White House on three fiscal matters with looming deadlines: raising the debt ceiling now approaching the limit $16.5T, massive federal spending cuts known as sequester and a budget resolution. On February 4th, the President signed a bill into law extending the debt limit debate until 5/18/13. This date may also get extended as far as August due to financial manipulations similar to those used in 2011. The "No Budget, No Pay Act of 2013" also mandates that pay for lawmakers be held in escrow starting April 16 until their chamber has passed a 2014 budget resolution. Congress must pass a spending bill, called a continuing resolution or “CR,” which would continue spending after Sept. 30, 2013, the end of the 2013 fiscal year. As it stands now, the government’s legal authority to borrow more money runs out in mid-October, 2013. According to the Bipartisan Policy Center, if that date arrived on October 18, the Treasury “would be about $106 billion short of paying all bills owed between October 18 and November 15. The congressionally mandated limit on federal borrowing is currently set at $16.7 trillion. The debt limit has been raised 13 times since 2001 and has grown from about 55 percent of Gross Domestic Product in 2001 to 102 percent of GDP last year. The hoped for legislation will raise the debt ceiling through Dec. 31, 2014.

Bullish or Bearish on the future? Keep our time frames straight.

8/11/18
By John Mauldin,
from Maudlin Economics,
8/10/18:

First question: Is John Mauldin bullish or bearish? The answer is “Yes.” I’ve received several reader e-mails accusing me of straddling the fence. I can see why some might think this. I wrote a rather depressing “Debt Train Wreck” series (recap here) then capped it by describing the good things waiting on the other side. That’s perfectly consistent in my mind, but not everyone read it that way. So let me clarify again. The key is to keep our time frames straight. Here’s what I think.

Long Term (2030 and beyond): I’m amazingly bullish and optimistic. The Great Reset will be behind us (although we will be living with the outcomes) and an honest-to-God recovery will be gathering speed, technology will have created many new jobs, and we’ll be healthier and longer-lived thanks to biotech breakthroughs. I can’t wait to get there. But then again, part of the adventure is in the journey. Medium Term (2020–2030): We will experience a rough decade as crushing debt forces the global economy into a series of recessions and credit events, culminating in some kind of debt liquidation, i.e. the Great Reset. It will stretch out for several years. We will see social and political turmoil and possibly wars as well. People are going to get hurt, badly. I am not looking forward to this period at all. As I’ve said recently, I think we can not merely survive, but actually thrive. It won’t be by continuing to do business as usual, however. As the header for this letter says, the Maine surprise was time. I now believe we have more time to prepare than I thought a year or two ago. Short Term (2018–2020): This is where I am genuinely uncertain. I’ll admit to having wavered, mostly because the data has wavered, too. I thought the second quarter’s 4.1% US GDP growth estimate pretty impressive, but not necessarily enough to prevent a latter-half 2019 recession. But now some data suggests the third quarter will be north of 3%, too. That is much better than we have seen in a long time. So for the next couple of years, call me “neutral to concerned” that we can totally avoid a recession into the early 2020s. I think there are good reasons to expect recession sooner rather than later. But if (and it's a big if) this whole tariffs/protectionism thing can be brought to a reasonable resolution, then perhaps the recovery can last a little bit longer. Headwinds? Sure. But there are some nice tailwinds as well.

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