Wednesday, 16 October 2013
Tuesday, 15 October 2013
. - by New Deal democrat
I can only hope that Ezra Klein was not acting as a mouthpiece for the Administration when he wrote this morning that the House GOP's latest ransom note was kinda, sorta reasonable.
The GOP has pulled a classic good-cop, bad-cop routine in the last few days. First, Mich McConnell, the good cop, gets Senate Democrats to agree to an outer edge of the envelope deal, that isn't quite a ransom. Then John Boehner, the bad cop, makes a few additional demands that don't look so different fron what Reid has already consented to. This is a classic nudge, hoping the other negotiating party is so exhausted that they simply throw in the towel for the new, additional demands.
Does the latest House plan reward the GOP for its hostage-taking? You betcha!
Let me put this another way: this deal only extends the debt limit for 4 months. Have you seen anything in the House GOP behavior in the last 48 hours that gives the slightest indication that they won't be back with a new set of ransom demands when next February rolls around? The only way to end the hostage-taking is to call their bluff (if my out-of-the-box proposal is off the table).
We have reached the end of the line. President Obama should announce that he is going to Camp David, where he will remain incommunicado until tomorrow night. At that point he will return to the White House, and there will either be a clean bill on his desk, or the US defaults.
From Bloomberg:
Rice stockpiles in Thailand, once the world’s biggest exporter, are expanding to a record as a government program to buy production spurs farmers to plant the most crops ever and add to a global glut.
Reserves in Thailand will increase 24 percent to 15.5 million metric tons in 2013-2014 as global output rises 1.7 percent to an all-time high of 476.8 million tons, the U.S. Department of Agriculture estimates. The price of 5-percent broken Thai white rice, an Asian benchmark, will drop 12 percent to $390 a ton by April, a five-year low, according to the median of eight trader and analyst estimates compiled by Bloomberg.
We've seen this type of action in the agricultural sector for the last few years. Prices spiked in 2011 but have since been declining as the private sector has responded with increased production and governments have instituted programs like those in Thailand. We see the overall trend best in this chart of the agricultural ETF:
The weekly chart shows that prices are clearly in a downtrend. Momentum is weak and volume flow is weak as well. However, notice the buy signal given by the MACD. My guess is we'll see a slight uptrend take over, moving towards the 200 week EMA. But it won't be much of a rally and until we start to get a tightening of supply there won't be much bullish sentiment in the Ag markets.
Rice stockpiles in Thailand, once the world’s biggest exporter, are expanding to a record as a government program to buy production spurs farmers to plant the most crops ever and add to a global glut.
Reserves in Thailand will increase 24 percent to 15.5 million metric tons in 2013-2014 as global output rises 1.7 percent to an all-time high of 476.8 million tons, the U.S. Department of Agriculture estimates. The price of 5-percent broken Thai white rice, an Asian benchmark, will drop 12 percent to $390 a ton by April, a five-year low, according to the median of eight trader and analyst estimates compiled by Bloomberg.
We've seen this type of action in the agricultural sector for the last few years. Prices spiked in 2011 but have since been declining as the private sector has responded with increased production and governments have instituted programs like those in Thailand. We see the overall trend best in this chart of the agricultural ETF:
The weekly chart shows that prices are clearly in a downtrend. Momentum is weak and volume flow is weak as well. However, notice the buy signal given by the MACD. My guess is we'll see a slight uptrend take over, moving towards the 200 week EMA. But it won't be much of a rally and until we start to get a tightening of supply there won't be much bullish sentiment in the Ag markets.
Oil's chart is pointing lower. The MACD is declining, the CMF is showing declining volume flow and the shorter EMAs (the 10, 20 and 50 day EMA) are all indicating declining prices. However, consider this chart in the context of weekly price moves:
On the weekly chart, we have rising volume flow and momentum (despite the shorter term sell signal). While the 10 and 20 week EMAs are moving lower, the 50 and 200 week EMAs are moving higher.
The point here is to look at multiple time frames when thinking about price movement.
Monday, 14 October 2013
The Washington Post has a really good piece that explains the overall impact of a default. Here are some of the more important points:
Experts on federal finances say that money might be enough to make payments for a few days, but certainly not for more than two weeks. In any event, they say, President Obama will have to make untested decisions about who and what to pay because daily tax receipts will make up only about 70 cents of every dollar of necessary spending.
Economists roundly agree that no matter which course Obama chooses, a drop in federal spending that large would exert a huge drag on economic growth. And in contrast to what happens during a traditional downturn — the safety net expands to help the vulnerable — assistance to seniors and low-income people could be delayed or reduced if Congress doesn’t raise the debt ceiling.
.....
According to the Bipartisan Policy Center, which has done the most detailed analysis of federal finances in a debt-ceiling breach, administration officials would have to consider delaying or suspending tens of billions of dollars in critical payments to low-income people and seniors.
Under the most alarming scenario, as soon as Friday, payments to Medicare and Medicaid providers, unemployment benefits, Social Security checks and tax refunds would be postponed for one to four days.
Food stamps due to be distributed Oct. 25 could be held until Oct. 30. The same would happen to payments to defense contractors.
With huge payments due in early November, the situation would become grimmer. Nearly $60 billion in Social Security checks, veterans benefits and pay for active-duty troops is due Nov. 1. Those could be delayed nearly two weeks, according to the Bipartisan Policy Center’s analysis.
Experts on federal finances say that money might be enough to make payments for a few days, but certainly not for more than two weeks. In any event, they say, President Obama will have to make untested decisions about who and what to pay because daily tax receipts will make up only about 70 cents of every dollar of necessary spending.
Economists roundly agree that no matter which course Obama chooses, a drop in federal spending that large would exert a huge drag on economic growth. And in contrast to what happens during a traditional downturn — the safety net expands to help the vulnerable — assistance to seniors and low-income people could be delayed or reduced if Congress doesn’t raise the debt ceiling.
.....
According to the Bipartisan Policy Center, which has done the most detailed analysis of federal finances in a debt-ceiling breach, administration officials would have to consider delaying or suspending tens of billions of dollars in critical payments to low-income people and seniors.
Under the most alarming scenario, as soon as Friday, payments to Medicare and Medicaid providers, unemployment benefits, Social Security checks and tax refunds would be postponed for one to four days.
Food stamps due to be distributed Oct. 25 could be held until Oct. 30. The same would happen to payments to defense contractors.
With huge payments due in early November, the situation would become grimmer. Nearly $60 billion in Social Security checks, veterans benefits and pay for active-duty troops is due Nov. 1. Those could be delayed nearly two weeks, according to the Bipartisan Policy Center’s analysis.
- by New Deal democrat
Yesterday I made an out-of-the-box proposal to end the government shutdown / debt ceiling crisis in Washington. It boils down to the GOP agreeing to a permanent repeal of the debt ceiling law in return for Democratic concessions for a debt ceiling increase now.
This morning it was adopted by Greg Sargent of the Washington Post in an article called "A way out of the Crisis."
The trial balloon has now been floated. As Sargent correctly notes:
If Republicans refuse this request, it will be a clarifying moment: It will confirm Republicans are fully intent to use the threat of default as leverage to get what they want in later showdowns. And the refusal to renounce this tactic will become what kills any hopes of a compromise. “If a deal fails on that basis, it becomes clear that Republicans are intent on using this as a weapon of extortion over and over again.”A big thank-you to Greg Sargent, and if somebody else forwarded my post to him, a big thank-you to that person as well.
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