WE ARE NOW A NATION WHERE THE BANKSTERS APPOINT AND ANNOINT THE LYING BRIBES SUCKING LAWLESS LAWYERS THEY WANT RENTING THE WHITE HOUSE.
THE CRIME DUAL OF HILLARY AND BILLARY, THE OBOMBS, 'CREDIT CARD' JOE AND WELLS FARGO'S GIRL KAMALA HARRIS. ALL UP THE BANKSTERS' ASSES AND RAKING IN THE 'SPEECH' FEE BRIBES BECAUSE OF IT. DO A SEARCH.
Wall Street cracks the whip and Senate passes short-term extension of debt ceiling
Late Thursday evening, the US Senate passed a bill by a 50–48 party-line vote extending the government debt ceiling into early December. While all voting Republicans opposed the debt extension, passage of the legislation was virtually assured when 11 Republican senators joined all 50 Democrats to supply the necessary super-majority needed to end a filibuster.
Senate Minority Leader Mitch McConnell set the stage for the compromise bill on Wednesday when he bowed to immense pressure from Wall Street and offered to avert a looming government default by allowing passage of a $480 billion extension of the debt limit. This was a retreat from his previous insistence that any extension would have to be passed by Democratic votes alone under the complicated and potentially lengthy budget reconciliation process, which averts a filibuster and permits passage of certain measures in the Senate by a simple majority.
Treasury Secretary and former Fed chair Janet Yellen, who had been warning of a collapse of the financial markets and damage to the dollar, estimated that the $480 billion increase in the debt ceiling would allow the government to meet its obligations until December 3. That is the same day that a temporary extension of funding for federal government operations is set to expire, posing the possibility of a simultaneous debt default and partial government shut-down.
Senate Majority Leader Chuck Schumer of New York, known as the “senator from Wall Street,” announced his acceptance of McConnell’s offer on Thursday morning. The plan of McConnell and his leadership team in the Senate was to forego a filibuster and simply allow the Democrats to pass the measure, using their 50 votes in the 100-member chamber plus the tie-breaking vote of Vice President Kamala Harris.
However, during a closed-door meeting of the Republican caucus prior to the Thursday night floor vote, far-right Trump acolytes Rand Paul and Ted Cruz rejected that approach and insisted on mounting a filibuster, requiring McConnell and his allies to come up with at least 10 Republican votes to break the filibuster.
Republicans who voted to end the filibuster and allow the Democrats to pass the short-term debt extension included McConnell (Kentucky), John Thune (South Dakota), John Cornyn (Texas), Roy Blunt (Missouri), Mike Rounds (South Dakota), Lisa Murkowski (Alaska), John Barrasso (Wyoming), Susan Collins (Maine), Richard Shelby (Alabama), John Portman (Ohio) and Shelley Moore Capito (West Virginia).
Following the Senate vote, Democratic House Majority Leader Steny Hoyer announced that the House would be recalled from its recess on Tuesday to vote on the bill and send it to President Biden for his signature on Tuesday, just days ahead of the October 18 date when, according to Yellen, the US would no longer be able to pay its debts.
While the debt limit extension provides only a short reprieve, the process by which it is being enacted is an object lesson on who rules America. When it comes to the basic financial interests of the corporate-financial oligarchy, and Wall Street cracks the whip, partisan gridlock in Congress suddenly dissipates.
McConnell’s shift coincided with a White House event Wednesday morning in which Biden met with the CEOs of Citigroup, JPMorgan Chase and Nasdaq to denounce the Senate Republicans’ blockade of a debt extension. Biden warned that the approaching debt limit deadline risked a default that would act like a “meteor” in crushing the US economy and undermining the position of the US internationally.
He berated his Senate Republican “friends” for actions that “risk the market tanking.”
The White House did not shoot down reports that Democrats were considering carving out an exception for bills to raise the debt ceiling from the Senate filibuster rule, allowing all such measures to pass by a simple majority. When it comes to amending or scrapping the anti-democratic filibuster rule to pass legislation defending voting rights and abortion rights, or to enact measures to address the catastrophic social crisis and raise taxes on the rich, Biden and the Democratic Party resist any change. But it is a different story when it comes to protecting the markets and the wealth of the ruling elite.
McConnell reportedly told his Republican caucus on Wednesday that increasing pressure among Democrats to weaken the filibuster was a major factor in his decision to propose a stop-gap extension of the debt ceiling. Prior to his announcement on Wednesday, he met with the two most prominent right-wing Democratic senators, Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, who have staunchly opposed any change in the filibuster rule. They presumably advised him that they might have to change their position on the filibuster in relation to the debt limit unless the logjam was broken.
The Senate deal was all the more politically significant given the ferocious intervention of Donald Trump against the agreement and its author, McConnell. The Senate minority leader has gone out of his way to appease the fascist ex-president, and the Republican Party as a whole has promoted his lie of a stolen election and worked to block any investigation of the January 6 coup attempt.
“Looks like Mitch McConnell is folding to the Democrats, again,” Trump said in a statement issued through his Save America PAC. “He’s got all of the cards with the debt ceiling, it’s time to play the hand. Don’t let them destroy our Country!” Less than an hour before the scheduled Senate vote, Trump again urged Republicans not to vote for “this terrible deal.”
Trump’s co-conspirator and former White House adviser Stephen Bannon titled his Wednesday podcast, “McConnell’s Betrayal of America Will Create Debt Slaves.” The openly fascist wing of the Republican Party headed by Trump, following the Hitler playbook, considers a financial crash a potential boon to its ongoing plot to establish a dictatorship.
Bernie Sanders, who as chairman of the Senate Budget Committee is playing a key role in drastically downsizing Biden’s social spending and climate bill to accommodate the most right-wing Democrats, hailed the debt ceiling deal, calling McConnell’s offer “very good news.” The self-styled scourge of the “billionaire class” spoke unabashedly as a supporter of the “wealthiest nation on earth” and its need to “pay its debts.”
Jeff Bezos’ Washington Post summed up the position of the ruling elite on the use of obstructionist tactics for partisan political gain, editorializing: “This may be fair legislative play in many other realms of congressional business, but it should be off-limits when it comes to raising the debt limit.” The Democrats, the Post demanded, should choose either the budget reconciliation process or a change in the filibuster rule to push through a debt limit hike, and “get on with it.”
BANKSTERS COME FIRST. BAILOUTS FOR BANKSTER PROFITS ARE OUR PRIORITY!
HOW THE HOUSING BUBBLE WILL BURST... HOME PRICES TO CRASH? REAL ESTATE MARKET UPDATE, MORTGAGE RATES
The Five react to the meltdown of Biden's 'Build Back Better' agenda
WORKING CLASS BEING DESTROYED, POVERTY AND DEBT EXPLODE, WORLD WIDE BORROWING BING
BIDENOMICS: WATCH HOW WELL THE SUPER RICH COME OUT OF THIS ONE!
Next Recession Imminent (Ignore Fed)
Yellen: McConnell Could Cause Catastrophic Financial Crisis with Debt Ceiling Brinkmanship
Treasury Secretary Janet Yellen said Sunday on ABC’s “This Week” that if Senate Minority Leader Mitch McConnell’s (R-KY) followed through on his threat that Republicans would not help to raise the debt ceiling in December, there could be a financial crisis.
Anchor George Stephanopoulos said, “We all dodged a bullet this week. Senator McConnell has warned President Biden that Republicans won’t help next time on the debt limit. I want to read part of his letter to President Biden. Quote, ‘I will not be a party to any future effort to mitigate the consequences of Democratic mismanagement. Your lieutenants on Capitol Hill now at the time they claim they lack to address the debt ceiling through stand-alone reconciliation and all the tools to do it.’ What are the consequences if he keeps his word?”
Yellen said, “Well, it is absolutely imperative that we raise the debt ceiling. Debt’s necessary not to fund any new spending programs but to pay the bills that result from Congress’ past decisions. A group of business and community leaders met with President Biden and me last week to talk about the disastrous impact it would have for the first time America not paying its bills. Fifty million Americans who would receive Social Security payments would be put at risk. Our troops won’t know when or if they would be paid. The 30 million families that receive a child tax credit, those payments would be in jeopardy. And the nation’s credit rating would be in jeopardy as well. U.S. treasuries are the world’s safest possible asset that would be at risk as well. And that really underpins the reserve status, currency status of the dollar. So there is an enormous amount at stake. A failure to raise the debt ceiling would probably cause recession and could even result in a financial crisis. It would be a catastrophe.”
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Treasury Secretary Yellen warns US government could run out of money unless debt ceiling is lifted
A crisis for the US and global financial system is looming, unless a conflict over lifting the US debt ceiling can be quickly resolved.
The conflict came into public prominence last week, when US Treasury Secretary Janet Yellen wrote a letter to Congress, warning that the government was running out of money, after a debt limit on government borrowing was reinstated on August 1. The limit had been suspended for the previous two years.
Since then, Yellen wrote, the Treasury had been “employing certain extraordinary measures” to ensure that the government could continue to fund itself, but these measures were reaching their limit.
“Once all available measures and cash on hand are fully exhausted, the United States of America would be unable to meet its obligations, for the first time in our history,” she said.
The Treasury was not able to provide a specific estimate of how long the extraordinary measures would last, but the best and most recent estimate was that money would run out some time in the middle of October.
This is not the first time a conflict has arisen over the debt ceiling. The last major battle was in 2011, during the Obama administration. While it was ultimately resolved, and a default avoided, the conflict produced significant turbulence in financial markets and led to a downgrade of the US government’s credit rating, for the first time in history. Standard and Poor’s lowered the nation’s credit worthiness from AAA to AA+.
It is estimated the conflict cost the government $1.3 billion in increased interest charges on its debt in 2011, with additional costs in the years that followed.
Reporting on the present dispute, the Financial Times wrote that “stand-offs over the debt limit are sometimes dismissed as political theatre that is ultimately resolved, but top Biden administration officials view the stand-off with increasing seriousness.”
Those concerns were set out in Yellen’s letter.
“We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States,” she wrote.
“A delay that calls into question the federal government’s ability to meet all its obligations would likely cause irreparable damage to the US economy and global financial markets.”
She urged that Congress address the debt limit with “broad partisan support,” in order to “protect the full faith and credit of the United States by acting as soon as possible.”
But “broad partisan support” is the least likely of all outcomes, as the debt ceiling issue has become part of Republican opposition to the Biden administration’s spending programs.
The Republicans have insisted that any resolution must be part of a budget reconciliation vote. It can be passed in the House, where the Democrats have a majority, and by the Senate, which is split 50–50, with Democratic Vice-President Kamala Harris having a tie-breaking vote, without any Republicans having to vote for it.
They have refused to pass stand-alone legislation that would lift the debt ceiling, with 46 Republican senators signing a letter to that effect, meaning that it would not reach the level of 60 votes needed to defeat a filibuster.
Their position was summed up in an interview given by Wisconsin Senator Ron Johnson, who said the Democrats “shouldn’t be expecting Republicans to raise the debt ceiling to accommodate their deficit spending.”
Republican Senate leader Mitch McConnell has insisted in the past that Democrats not expect any Republican support on the debt limit, a position he repeated in an interview last week.
“This debt ceiling is going to cover all of the things that all of us have been opposing,” he said, and the Democrats “need to do the responsible thing and raise the debt ceiling because America must never default on its debt.”
In fact, the raising of the ceiling is needed to cover measures already authorised by Congress and reductions in revenue, going back to the Trump tax cuts of 2017, as well as relief packages carried out under his administration.
White House Press Secretary Jen Psaki appealed for bipartisan support, saying the debt issue was a “shared responsibility,” and “Congress should move forward as they have multiple times.”
But these times are very different. Large swathes of the Republican Party continue to insist that the election was “stolen” and provided crucial support for the attempted coup by Trump of January 6, with the fascist-led storming of the Capitol.
House Speaker Nancy Pelosi told reporters last week: “We have several options.” But she maintained that an increase in the debt ceiling would not be part of the Biden spending package, which the Democrats are now seeking to put through Congress.
In what could become a high-stakes conflict, the Wall Street Journal reported last month that one option being considered was a stand-alone bill, that would put pressure on Republicans to support it or risk rattling financial markets.
But given the overriding concern of the Democrats for the stability of Wall Street, and their continued subservience to the Republicans, this option would have to be considered as highly unlikely. Another option may be to attach the debt ceiling to another piece of necessary government funding.
While it has not been featured heavily in news coverage, the debt ceiling issue is attracting international concern, because of its possible impact on highly fragile global financial markets.
Last week, the Financial Times ran the Yellen letter as its lead news story, warning of the “mounting risk of a US sovereign debt crisis.”
In Australia, a column last Friday, by Sydney Morning Herald financial commentator Stephen Bartholomeusz, warned that America could be only weeks away from a debt default that would throw the “US economy and global financial markets into chaos.”
He wrote that a default on US debt was “almost unthinkable,” and Congress had always found a way to avert such an outcome. However, he continued, it “can’t be ruled out entirely given how intense and unpredictable politics has become since last year’s US election, and Trump’s eviction from the White House.”
A study in contrasts: Wall Street and the underlying economy
The contrast between the rise of the stock market and the underlying state of the US economy was highlighted on Monday when Wall Street’s main index, the S&P 500, reached a level double its low of March 2020 as the initial effects of the COVID-19 pandemic led to chaos in US financial markets.
The new high was recorded despite the debacle in Afghanistan, sharply falling consumer confidence, slowing growth in China and the widening impact of the Delta variant both in the US and internationally.
The markets fell on Tuesday with the S&P 500 having its worst day for a month, falling by 0.7 percent and the Dow dropping by 500 points at one stage, on the back of data which showed a 1.1 percent fall in retail sales in July compared to June.
But with money continuing to pour into the financial system from the Fed the general sentiment appears to be that the Wall Street surge will continue. “I don’t think it portends a precipitous drop around the corner. I think it’s very temporary,” one financial manager told the Wall Street Journal .
Fears of worsening conditions in the underlying economy were revealed in the results of the widely watched Michigan consumer confidence survey published at the end of last week.
It showed that the Consumer Sentiment index fell by 13.5 percent from July to August to a level just below the April 2020 low. The University of Michigan (UofM) survey reported that the only faster rates of decline in the Sentiment Index were in April 2020, when it recorded a drop of 19.4 percent and in October 2008, during the global financial crisis, when it dropped 18.1 percent.
“The losses in early August were widespread across income, age, and education subgroups and observed across all regions,” according to the survey. Richard Curtin, the UofM economist in charge of the survey called the results “stunning.”
It indicates that the Biden administration’s economic policies and its claims that the US economy is on the way to recovery could well be going the same way as Afghanistan.
A survey of small businesses conducted by the Wall Street Journal showed a fall in sentiment similar to that recorded by the UofM.
It found that small business confidence in August had dropped to its lowest level since the early spring, largely as a result of the rise in COVID-19 infections due to the more infectious Delta variant.
Some 39 percent of small business owners expected economic conditions in the US to improve in the next 12 months, down from 50 percent in July and 67 percent in March. Reporting on the survey, the Journal cited the owner of one small business, an event production company, which reported a flurry of cancellations.
“We were slowly ramping up in anticipation of a robust third and fourth quarter,” he said. “You can drop the ‘ro’ part. It seems like it is just bust.”
The resurgence of the pandemic via the Delta variant is also putting a damper on international economic growth, particularly in China.
According to data released by China’s National Bureau of Statistics on Monday, the economy slowed in July by more than expected. This was the result of Delta infections as well as flooding due to extreme weather events in parts of the country.
Retail sales in July rose by 8.5 percent in July compared with the same month a year ago and industrial production increased by 6.4 percent. But both these figures were below the level anticipated by economists of 10.9 percent and 7.9 percent respectively.
China has imposed strict travel restrictions in response to an outbreak of the coronavirus that began in the middle of last month in Nanjing. But even before the latest outbreak there were signs that the initial bounce back of the Chinese economy was slowing.
Reporting on the latest data, Fu Linghui, a spokesman for the statistics bureau said; “Growth in some consumer sectors and services slowed.” He warned that growth in the second half of the year was likely to be lower than the first six months.
International banks and forecasting agencies are revising down their estimates for Chinese growth. Goldman Sachs, Morgan Stanley and Nomura as well as other investment banks have all reduced their forecasts. The ANZ bank added its voice on Monday when it downgraded its forecast for full year growth from 8.8 percent to 8.3 percent. It pointed to a “broad-based slowdown in domestic activities in July, which suggests that the economy is rapidly losing steam.”
Julian Evans-Pritchard, senior economist at Capital Economics, told the Financial Times (FT) that in addition to the fall in the growth of retail sales, investment spending and industrial activity that were less sensitive to COVID-19 restrictions were also weaker.
“The drop back in consumption should reverse once the virus situation is brought under control and restrictions are lifted,” he said. “But we think the slowdown elsewhere will deepen over the rest of the year.”
And if there is a slowdown in the rest of the world, it will heavily impact on China as can be seen in the latest figures on exports which showed growth of 19 percent in July as compared with 32 percent in June.
The increasingly complex situation in the global economy is adding to the problems confronting the major central banks as they consider whether they should start to ease or “taper” their support for financial markets.
There appears to be something of a shift among members of the Fed’s governing body towards tapering. In an interview with the FT last week, San Francisco Fed president Mary Daly, regarded as being on the dovish side, said it was “appropriate” to start dialling back accommodation, starting with asset purchases.
“Talking about potentially tapering those later this year or early next year is where I’m at,” she said.
Esther George, the president of the Kansas City Fed, has also indicated that it is time to “transition from extraordinary monetary policy accommodation to more neutral settings.”
The key issue here is inflation and whether this will lead to a push by workers for higher wages. George alluded to this issue, referring to “firm inflation expectations” and a “recovering labour market” as being consistent with Fed objectives that could provide the basis for “bringing asset purchases to an end.”
The question was dealt with more bluntly in remarks by David Kelly, chief global strategist at JPMorgan Asset Management, reported in the FT.
The official Fed position is that the present spike in US inflation is “transitory.” “But there is nothing transitory about wage inflation,” Kelly said, warning that present Fed policies “will trigger higher wages and pressure corporate margins.”
On the other side, there is a fear that such is the dependence of Wall Street on the flow of cheap money from the Fed and the mountain of debt and fictitious capital it sustains that any move to curb it in order to counter inflation and a wages push by workers will set off financial turbulence.
The financial markets will be closely following the remarks by Fed chair Jerome Powell at the annual conclave of central bankers and financial analysts at Jackson Hole, Wyoming at the end of this month which may give some indication of the direction in which the US central bank is heading.
At present the differences, at least as they appear in public, are relatively muted. But that could rapidly change as indicated by developments in Britain.
In the middle of July, the House of Lords economic affairs committee, which includes former Bank of England governor Mervyn King, issued a scathing report on the Bank of England’s (BoE) quantitative easing (QE) asset purchasing program.
Lord Michael Forsyth, the chair of the committee, said the BoE “has become addicted” to QE using it as the “answer to all the country’s economic problems.”
The report said there were wide perceptions the bank was “using QE mainly to finance the government’s spending priorities” and if these continued to grow “it would lose credibility destroying its ability to control inflation and maintain financial stability.”
BoE governor Andrew Bailey responded testily to the use of the word “addicted” saying it had a “very damaging meaning for many people who are suffering.”
Last week the BoE made a tentative move towards tightening monetary policy when it announced a plan to start reducing its holding of £900 billion worth of government bonds, equivalent to about 40 percent of GDP.
Announcing the policy at a press conference, Bailey said when interest rates reached 0.5 percent the central bank would stop reinvesting the proceeds of bonds it owns and when they reached 1 percent it would consider selling some of them. The process of unwinding QE would proceed on “autopilot” along a “gradual and predictable path.”
But as the FT reported this “breeziness” seemed odd given the “market upheavals” when the Fed sought to reduce its balance sheet in 2013 and 2018. In 2013 the initial move to end QE resulted in a spike in interest rates.
In 2018, when Fed chair Powell indicated further rate rises in 2019 following four rises over the previous 12 months and that the reduction in asset holdings was on “autopilot,” Wall Street responded with a significant fall, recording its worst December since the Depression.
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