Wall Street Ignoring Thursday’s Debt Ceiling Nightmare
Oil prices are rising, with crude oil soaring $75 a barrel. This has the energy-heavy Dow Jones index up over 200 points in early trading. The S&P and the NASDAQ are down slightly. This is amazing, given the country could default on its debt this Wednesday and shut down.
Reuters reported this past Friday that the Biden Administration is expected to ask federal agencies to prepare for a possible U.S. government shutdown. Former twice impeached and disgraced President Trump and far right wing nut Rep. Marjorie Taylor Greene (R-GA) aggressively push fellow Republicans to shut the country down.
Green told Steve Bannon a little over a week ago during an off-the-wall, insane interview that …
“I’ll tell you what I have to say, Steve: Shut it down!” she said. “Shut the government down. Who cares?”
Ms. Greene went on to say that Americans shouldn’t trust the government to spend money on infrastructure. She went on to say…
“You can’t trust these people with your money.”
…Implying that the nation’s infrastructure could be maintained and developed by private citizens instead. Her comments ignore the fact that Bannon and a partner raised millions of dollars from Trump to privately build a wall on the southern border and Bannon and his partner in crime were both indicted for stealing all the money!
Trump is now pushing the same nonsense. It matters not that he and his Republican supports in Congress spent $8 Trillion in just four years thanks to tax breaks they passed for the ultra-rich.
Trump is out for revenge and wants to destroy the United States by any means unless he is reinstated as president immediately. On Friday, in a speech in Perry, Georgia, he bragged about committing the crimes he is under investigation for in Georgia, in which a grand jury has been convened.
Wall Street has ignored the danger of a debt ceiling impasse like the one that took place in December and January of 2018/19 that kept the U.S. government shut down for a record 35 days.
This shut down would come as U.S. health authorities struggle with the COVID-19 pandemic. Moody’s released a statement last week saying a shutdown of the U.S. government would cost $16 Trillion in lost GDP and 6 million jobs.
The House has already passed a debt ceiling measure this past Friday. Still, the U.S. Senate is at a stalemate on a criterion to suspend the $28.4 trillion debt ceiling and keep federal agencies operating after Sept. 30, the end of the fiscal year.
The White House Office of Management and Budget naively expects Congress will act in a bipartisan fashion to extend government funding “especially as we continue to confront the pandemic and power an economic recovery,” OMB spokesperson Abdullah Hasan said in response to questions.
The OMB relies on the consistent longstanding practice of bipartisan cooperation without mentioning the 2018/19 shutdown. It, however, has said was…
“Preparing for any contingency and determinations about specific programs are being actively reviewed by agencies.”
Given a shutdown may be just three days away, the OMB is likely asking agencies to review and update their shutdown plans, regardless of the prospects of new funding being approved in time, according to an August OMB budget circular.
Top infectious disease official Dr. Anthony Fauci warned the pandemic made this the worst time for a government shutdown, the Washington Post reported quoting him as saying…
“The worst time in the world we want to shut down the government is in the middle of a pandemic where we have 140,000 people a day getting infected and 2,000 people a day dying.”
Wall Street is not discounting the power of Trump and his far-right Congressional supporters, which amount to insanity after the House vote to enshrine Roe V Wad protections into law. Not a single Republican votes to protect a woman’s right to terminate their pregnancy, not even in cases of rape, incest, or cases where the mother’s life is in grave danger.
Mitch McConnell Says The GOP Will Not Vote To Increase Debt Ceiling
The Republican Senate Majority Leader wants the Democrats to raise the debt ceiling or suspend it via reconciliation. But that requires rule changes that would take several days, and then there’s the problem facing the Democratic caucus in which they have yet agreed on the proposed $3.5 Trillion infrastructure package. Wall Street, however, shows no fear of a shutdown. Then again, it shows no fear of over the slow-moving right-wing coup that will transform the world’s leading democracy into an authoritarian dictatorship.
If the U.S. government defaults, we could see the S&P fall 10% to 15% and drift lower if the shutdown continues for several days. A great deal of financial damage will be done.
How will a government shutdown affect the market?