Prof. ST Hsieh
Director, US-China Energy Industry Forum
May 27, 2023
The US is staring at a self-inflicted debt ceiling crisis with a self-imposed deadline about nine days away till June 5, 2023. But fortunately,
Sat, May 27, 2023 at 7:26 PM PDT
President Biden and House Speaker Kevin McCarthy reached a tentative agreement to raise the debt ceiling, ending a three-month-long standoff that threatened to trigger a US default.
It is almost insane and somewhat comical. But it is actually very sad because the world is watching closely how/when the US crisis will be over. It is over now and most of us are convinced that the US will NOT default anyway. But the damages are piling up…
It is unfortunate that the US partisan politics pushed this crisis to the extreme. We are not taking sides or playing the blame game. Because the top two players: President Biden (D) and Speaker of the House McCarthy (R) are both elected by the people, we “the people” have no one else to blame for this mess except ourselves who voted for them to the offices.
Real smart people like Warren Buffett had decried that the debt ceiling crisis is a big stupid waste of time. Congressman Josh Gottheimer (D-NJ) just said today that “We’ve got to get out of this cycle of insanity.” The shell game or game of chicken is so obvious because the so called X-date when the US Treasury actually has zero cash is not clearly defined. Of course, the date is not “elastic” per se but how and when the Treasury of the world largest economy will run out of cash to cover the bill.
MSBC: May 27, 2023
News about a debt ceiling deal is sounding more optimistic but discussions between White House and Republican negotiators are still ongoing. “We’ve got to get out of this cycle of insanity,” says Rep. Josh Gottheimer (D-NJ), as the debt ceiling deadline of June 5th approaches. As Co-Chair of the Problem Solvers Committee and a member of the Financial Services Committee, he’s looking for his colleagues to arrive at a sensible solution instead of “holding the country and the full faith and credit of the United States hostage.” He tells Ali Velshi, “This is not the way you should be governing.”
Warren Buffett slammed the last debt-ceiling crisis as a stupid waste of time – and called for the government’s borrowing limit to be removed
Sat, May 27, 2023 at 11:15 AM PDT
- Warren Buffett doesn’t expect the debt-ceiling debacle to result in a US government default.
- He slammed the 2011 standoff as a silly waste of time, and said the borrowing limit shouldn’t exist.
- Buffett warned that not raising the debt ceiling might be Congress’ most idiotic move ever.
Warren Buffett has dismissed concerns that Congress won’t raise the debt ceiling and the federal government will be forced to default on its loans. He went even further during a previous standoff, describing the clash as an idiotic waste of time, and calling for the borrowing limit to be removed entirely.
Lawmakers aren’t “going to let the debt ceiling cause the world to go into turmoil,” the famed investor and Berkshire Hathaway CEO said during his company’s annual shareholder meeting this month. “It’s going to get changed.”
During the debt-ceiling crisis in 2011, Buffett underscored how stupid it would be for legislators to let the country run out of money.
“It would probably the most asinine act that Congress has ever performed,” he said, according to CNBC’s Warren Buffett Archive.
Buffett argued that a debt limit never made sense in the first place, as America’s borrowing capacity increases as it grows.
“Having a debt ceiling to start with is a mistake,” he said, before adding that it might not be desirable for America’s debt to rise as a percentage of its GDP.
“These games get played, and all the time that gets wasted, and the number of silly statements you hear,” he complained about the political gridlock in Washington during that period. “It just seems such a waste of time for a country that’s got a lot of things to do.”
The US breached its $31.4 trillion debt ceiling in January, and experts believe it could run out of money by early June. It’s now up to a politically divided Congress to raise the limit and allow the government to cover the costs of Social Security checks, veterans’ benefits, and its other financial obligations.
Biden on debt talks: ‘I’m very optimistic’
Fri, May 26, 2023 at 5:20 PM PDT
President Joe Biden said a deal to resolve the government’s debt ceiling crisis seemed “very close” late Friday, even as the deadline for a potentially catastrophic default was pushed back four days until a week from Monday. (May 26)
McCarthy still “an optimist” about debt ceiling deal
Sat, May 27, 2023 at 2:45 PM PDT
Markets don’t believe Yellen’s warning that the US government will be out of money by June 1, Jim Bianco says
Fri, May 26, 2023 at 11:56 AM PDT
- Markets don’t seem to believe Janet Yellen’s warning that the X-date – when the US government would run out of cash – is June 1, Jim Bianco said.
- “All signs point to more time than June 1,” he tweeted Thursday.
- Yellen has repeatedly warned that the Treasury will soon run out of money and be unable to pay its debts if the borrowing-limit standoff isn’t quickly resolved.
The so-called X-date – when the Treasury will run out of cash – is further away than Yellen has suggested, according to the Bianco Research president, who referenced an analysis by another Twitter user suggesting the date could fall later in June or even in July.
“All signs point to more time than June 1. So, the market does not believe Yellen about this date. If this is still the date, she can no longer just say it. She has to show her homework,” he said in a lengthy Twitter thread on Thursday.
Bianco also referenced an analysis from Donald Schneider, deputy head of U.S. policy at investment bank Piper Sandler, who projected that after deploying all extraordinary measures the Treasury could squeeze the X-date out to June 9, but would just have $2 billion in cash left on hand.
“The lack of urgency suggests they think they have more time than June 1 (cannot write the bill, give 72 hours to read it and pass it in 6 days),” Bianco concluded in the thread.