I love both the concept and execution of this Debt Ceiling Probability Flow Chart from SocGen. It shows their estimates of the probable outcome of the debt ceiling negotiations, in all its glorious permutations:
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click for ginormous graphic
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
The best way to keep money in perspective is to have some. —Louis Rukeyser
"It's the end of the world as we know it and I feel fine" say the French as consumer confidence in May rose to the highest since Nov '10 as they welcome and get excited about new Pres Hollande. Also, the French 10 yr bond yield touched the lowest on record this morning. June consumer confidence in Germany held at 5.7, just .2 pts off the highest since Mar '11. To the euro bond debate which is now taking on greater rhetoric with those with high bond yields wanting them and those with low ones saying no way, ECB member...
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July 6th, 2011 at 8:12 am
Given that Obama has joined the austerity caucus (and the confidence fairy caucus and the false equivalency between govt and households caucus), I’d rate the odds of austerity higher than SocGen does. If it weren’t for the Republicans inability to take yes for an answer, I’d rate the odds much higher.
Is there anyone with a rational model of the economy that shows austerity increasing GDP or employment over any reasonable timeframe?
July 6th, 2011 at 8:24 am
Can hardly wait for CNBC to take on a special ‘debt ceiling’ countdown theme leading right up to the moment of doom.
July 6th, 2011 at 8:31 am
Doubt those numbers but there’s really no way to argue or check.
July 6th, 2011 at 8:42 am
foosion:
“Is there anyone with a rational model of the economy that shows austerity increasing GDP or employment over any reasonable timeframe?”
_______
Austerity, like the excesses that both require and preceded it, will not be shared equally among the population. If buying power, wage growth and participation in the economy based on gainful employment are any indicators, we’ve been on the austerity path for decades. Increase in the debt ceiling or not, the disenfranchisement of the middle class will continue unabated. In my view, the tipping point will be reached when the middle class true believers in “conservative” ideology find themselves among the demographic they love to hate.
Reminds me of the story of the water buffalo and the scorpion (the link is the only/quickest version I could find using the google):
http://thelevendian.com/?p=588
July 6th, 2011 at 8:44 am
walking around dull moments I’ve been wondering (on this ceiling thing):
bonds / stocks = better off
interest collected / interest paidout = banks / populace
more jobs / same jobs / less jobs (rate per hour) business / laborers
in general my view of why the GOP wants this fight .. higher interest rates help banks .. disruption disses BHO WH .. default pushes the cart towards government should not provide services (business is for that) government is for laws that promote business / at the general populace expense
my bias shows
I’m understanding the pov of less government more these days (but) in the age of high industrialization and many more people need providing to than needed to do the proviing .. the horses are out of the barn / no sense in burning down the barn and letting them go back wild
July 6th, 2011 at 10:37 am
Deal or no deal – am I missing something or is there a problem with the numbers?
Deal by Aug 2 – probability 70%
No deal by Aug 2 – probability 1%
And the other 29% change is ??
Same problem with most of the other branches on the chart.
July 6th, 2011 at 10:38 am
I suppose if you go down to the next level, the “too early to know” is, by definition, 29%.
July 6th, 2011 at 10:40 am
Actually, just ignore the above dumb comments – I’m off to have another coffee …
July 6th, 2011 at 11:05 am
They’ll reach a deal and it will include austerity measures because that is what is desired by elites no longer willing to pay the price for their privilege. As J.K. Galbraith commented several decades ago:
“Increasingly in recent times we have come first to identify the remedy that is most agreeable, most convenient, most in accord with major pecuniary or political interest, the one that reflects our available faculty for action; then we move from the remedy so available or desired back to a cause to which that remedy is relevant.”
That aside the entire ‘debt ceiling’ issue is utter, unmitigated bullshit: It means the legislature has passed bills requiring revenue which they now refuse to pay or allow anyone else to pay (by buying govt bonds for e.g.); these are the actions of a liar and a scofflaw.
That’s one of the reasons section 4 of the 14th amendment to the Constitution, which mainly addresses treason and insurrection, includes a statement about honoring debt and why there was a long-standing rule in Congress (that the Republicans voided last winter) that all bills passed automatically approve the revenues necessary to implement them.
July 6th, 2011 at 12:09 pm
I’ve been carrying about 20% of qualified retirement saving in S&P 500 Index funds and the remainder in so-called managed mutual funds (plus a little Exxon.) Yesterday I moved the S&P to cash to wait out the debt ceiling theater. Don’t know what the fund managers are doing, but I’m too old to want to see another 50% drop in equities.