Brazil’s Flamboyant Playboy Tycoon Falls, His Oil Company Filing For Bankruptcy Protection

The oil company of Brazil’s one-time richest man Eike Batista has filed for bankruptcy protection on Oct. 30, 2013. (AP Photo/Ricardo Moraes, File)The Associated Press RIO DE JANEIRO Just a few years ago, flamboyant billionaire Eike Batista was boasting that he’d soon be the world’s richest man. He loved to show visitors his Mercedes-Benz McLaren kept parked right in the living room of his mansion. The fall has been deep and fast. Batista’s OGX oil company filed for bankruptcy protection Wednesday in a stunning reverse for the champion speedboat racer who came to symbolize the country’s economic boom with Brazilian flair. Batista was born to privilege. His father was the mines and energy minister and also led what was then the state-run Vale mining company, which has since been privatized. The younger Batista made his first fortune in his 20s, scouring the Amazon to buy up gold, which he resold in Brazil’s big cities and Europe. Those beginnings led to his current conglomerate of oil, mining, infrastructure and real estate companies firms, all suffering as his once high-flying OBX faces possible liquidation. Married for more than a decade to Luma de Oliveira, a former model and one of Brazil’s most beloved Carnival queens with whom he had two sons, his life was as much fodder for celebrity scandal sheets as business pages. Now 56, Batista’s fortune has reportedly dwindled to less than 1 percent of the $34.5 billion that Forbes magazine estimate he was worth in early 2012. He’s ordered that his luxury yacht be cut up and sold for scrap. His problems have extended into his personal life. In June, his son Thor, 21, was convicted of involuntary manslaughter for running over a slum-dwelling cyclist while driving the same model of Mercedes-Benz his father keeps parked near a family couch. Critics contend Batista misled investors about the size of the oil fields that OGX had found in recent years and say his troubles are a new sign that Brazil won’t soon see an end to its economic slide. The economy grew 7.5 percent in 2010, but then eked out just a 0.9 percent gain last year amid a downturn in world commodity prices and Brazilian consumer spending. OGX didn’t respond to requests for comment. His star wasn’t supposed to stop glittering so soon. Just 18 months ago, President Dilma Rousseff attended a ceremony marking OGX’s first offshore oil production and said resolutely that state-run oil company Petrobras would go into deep partnerships with Batista’s firm. “Eike is our standard, our expectation and, above all, the pride of Brazil when it comes to a businessman in the private sector,” Rousseff told those in attendance. Some say Batista’s failure to deliver on producing offshore oil and the resulting inability to obtain more investor credit was a byproduct of a toughening economic environment as well as underlying weaknesses in his Batista’s company.

Brazilian oil giant OGX files for bankruptcy

Four weeks ago, OGX, once the jewel in the crown of Batista’s flagging EBX empire, opted to forego a $44.5 million interest payment to its international creditors, precipitating the current crisis. If bankruptcy protection is approved, all of OGX’s legal actions and debts will be suspended for 180 days. The company has 60 days to present a restructuring plan while creditors have 30 days to come forward and then hold an assembly to vote on whether to accept the plan. The process can last six months. Thursday, a 30-day deadline was set to expire for OGX to take necessary measures before its $3.8 billion debt matures. In December, the company is also supposed to pay interest on $110 million in notes due in 2018.


Detikfinance | Tak Ada Hanky Panky Di Seleksi Bisnis Toko Bandara

The mechanism, Budget Secretary Florencio Abad said on Sunday, has been integrated at the electronic Transparency and Accountability Initiative for Lump Sum Funds (e-TAILS) web site ( ) to better monitor the spending of pork-barrel funds allocated to lawmakers. Launched in 2011, e-TAILS keeps track of the use of PDAF by showing information on the breakdown of releases to legislators, where and when the funds were released, the projects that a legislator endorsed for PDAF support, as well as the project beneficiaries. Abad said the new features allow Filipinos to download the yearly report of PDAF releases, post comments and upload photos or videos as feedback on PDAF-funded projects, as well as find key information on how PDAF works. The rationale behind the e-TAILS web site is to make sure that information on PDAF releases and the projects they support are presented in an accurate and user-friendly platform, so that the public can gain quick access to PDAF information and give feedback on the projects endorsed by legislators.With its new features, the e-TAILS web site strengthens the DBMs commitment to increase citizen awareness and engagement, specifically with respect to PDAF use and management, Budget Undersecretary and Chief Information Officer Richard Moya said. Although the new features are already up and running, were continually improving the site post-launch so it better responds to the needs of those who visit it, he added. According to Moya, citizens can now click on a specific project and post a comment using their Facebook account, or post a photo or video to show the implementation status and result of PDAF-supported projects. The homepage also leads site visitors to frequently asked questions on PDAF, besides featuring a step-by-step guide in navigating the new features on the web site. Were keeping pace with an audience that uses the Internet as their main information resource. More important, however, is the fact that were also giving concerned citizens an interactive online venue, where they can give honest feedback on PDAF projects, Abad also said. Altogether, e-TAILS has been improved to empower the Filipino people by giving them easier access to information. This is also a very well-timed development, given the growing clamor for better transparency and accountability in the government, a call that the Aquino administration is responding to by creating spaces for dialogue and public participation in the budget process, he added. RSS Feed

Disebutkan Tommy, proses tender pengelolaan kawasan komersial dilakukan secara online. Konsep ini diakuinya pertama kali diterapkan oleh operator bandara di Indonesia. Seperti saat mengikuti tender di Bandara Ngurah Rai. Peserta tender bisa mengunjungi website Ia membantah terjadi perlakuan khusus bagi peserta ataupun ada permainan dalam tender. Di sana pakai sistem QA, kalau anda peserta peserta tender bisa tanya, si peserta B bisa liat pertanyaannya. Itu sangat terbuka dan pertama kali. Ini hasilnya 100%. Kalau panitia tender dari Prancis, jelasnya. Diakuinya dahulu untuk membuka toko atau menjadi mitra di bandara susahnya bukan main. Umumnya terjadi permainan dengan jajaran manajemen atau internal bandara. Biasanya kalau saya mau cari toko. Ini temannya dirut, saudaranya dirut, anggota DPR atau ini gitu.

Lady Gaga Settles Up With Ex-assistant Who Claimed Mother Monster Owed Her Overtime

R2bn owed to eThekwini

4. But Gaga didn’t initially move toward an out-of-court agreement without showing her teeth . PHOTOS: Lady Gaga in bra tops “She’s justshe thinks she’s just like the queen of the universe,” she fumed about plaintiff Jennifer L. O’Neill in a deposition taken in August 2012 . “And you know what, she didn’t want to be a slave to one, because in my work and what I do, I’m the queen of the universe every day.” “You don’t a fantastic read get a schedule,” she reportedly testified. “You don’t get a schedule that is like you punch in and you can play…at your desk for four hours and then you punch out at the end of the day. This is when I need you, you’re available.” U.S. District Judge Paul G. Gardephe had set a trial date after ruling that being “on call” 24/7, as O’Neill referred to it in her suit, could potentially qualify for overtime compensation.

Lady Gaga

The figure emerged on Tuesday as the city revealed plans to borrow R1.5bn to fund capital projects over the next three years. A budget statement report presented to the councils executive committee on Tuesday showed that provincial and national government departments owed the city nearly R142 million, while businesses owed R196m. The biggest defaulters were residents, who owed more than R1.6bn. Among the government departments, the Department of Housing was the biggest offender, owing more than R36m for water and electricity, followed by the Department of Education, whose schools owed more than R27m. DA councillor Zwakele Mncwango said the city should disconnect services to departments that did not pay, just as it did with ratepayers. ANC councillor Fawzia Peer objected to this, saying the last thing the city should do was disconnect schools water and electricity supplies. We cannot do that to our kids, she said. Mncwango then suggested that the departments offices be disconnected if schools fell behind in paying for services, but deputy mayor Nomvuzo Shabalala said that this would be improper. Patrick Pillay, of the Minority Front, said government departments should not burden the citys ratepayers with unpaid bills. We are a sphere of government and other government departments should not burden ratepayers with this sort of debt. This city should not be taken for granted, he said. DA councillor Heinz de Boer said the city should aggressively target businesses that did not pay. We should apply the same principles to big business as we do to ratepayers, and cut their services. If we cut their electricity and their business did not run for one hour, I can guarantee that they would pay the bill, he said. At the same meeting, city manager Sbu Sithole said eThekwini needed to borrow up to R1.5bn to fund major projects over the next three years. He said the decision to allow the city to borrow the money should be taken in the light of its not having borrowed any money in the past two financial years. It was anticipated that the capital budget for 2013/14 would be fully spent, a report to the executive committee stated. This will put strain on the cash resources of the municipality. Consequently, it may be necessary to increase the forecast borrowing amount of R1bn hence the request to borrow up to R1.5bn, the report said. Mncwango said that borrowing was not the best practice and the city should try to recover the R2bn it was owed. If we recovered the R2bn we might not have to take the loan. Taking a loan is not a bad thing, but can we at least try to recover the R2bn that is owed? he argued. Peer said that the DA should realise that running a municipality was like running a business. You cannot expect to recover debts before you do planning. That is not good thinking, she said. De Boer said he had no objection to the city borrowing money, but he hoped the money would be used to fund worthwhile projects instead of projects that were politically expedient.

Welcome To Ify’s Blog: Super Eagles’ Coach Owed Seven-month Salary

Keshi is being owed about N35million in salary arrears. Keshi however said the NFA had not done him any favour with the Super Eagles coaching job, because he had done the job with all he had. Owing me up to seven months makes me feel I am not being appreciated. It is like they (my employers) think I am being favoured in what I am doing. I am not being favoured. Whatever I am doing here, I am doing it with everything I have and I need to be respected and be paid The former Super Eagles captain recalled that he was never owed his salaries when he worked with the Malian and Togolese football federations as coach of their senior national teams. In Mali, they will never owe you. Your salary will hit your account before the end of every month. It was the same thing in Togo. He said it was unbelievable that he and his colleagues had worked without pay for about eight months out of the 24 months they have worked with the Super Eagles. I dont like discussing about money issues and if there is any NFA member who said we can work for free, then I will want to speak with him face to face. If they say we can work for free and that they are not going to pay, so be it. I cant have my family abroad and I will be in debt because I have not been paid for seven months and somebody is saying we should not complain, the coach said. He regretted that the NFA appears not to be concerned about their plight in spite of training under rain and sun to make Nigerians happy. Aminu Maigari, the NFA chairman, had recently confirmed the debt owed Keshi and his colleagues.

Cohen Lets face it: if youre working as a server or bartender, tips can be your lifeline. If you work in the state of Florida, and you are under a tip credit, there are certain job duties that you are not required perform, and certain things you should know to make sure you are being compensated correctly. What is a Tip Credit? First off, what exactly is a tip credit? Section 3(m) of the FLSA permits an employer to take a tip credit toward its minimum wage obligation for tipped employees to equal the difference between the require cash wage. What this means is that the money you get in tips actually becomes part of your pay, and your employer DOES NOT have to pay you full federal minimum wage , because your tips become part of your pay check. While you will be paid at least minimum wage, your employer is only paying the difference between minimum wage, and your tips. What is the FLSA? Now that we understand what a tipped credit is, its important to know who regulates your tips. The Fair Labor Standards Act (FLSA) was passed in 1938, and prescribes standards for wages and overtime pay. This act requires employers to pay covered employees at least the federal minimum wage, and overtime pay of one-and-one-half-times the regular rate of pay. Dos and Donts Lets get into the dos and donts of tip credits. If you are under a tip credit system, your employer must first explain the system to you. Your employer cannot allow the tip credit to exceed the actual amount of tips you receive. If you are a NON TIPPED employee, such as a manager, cook, janitor, etc., then the tip credit system cannot be forced upon you. Finally, if more then 20% of your work is spent performing non-tipped work, such as cleaning, stocking, getting ice, rolling silverware, (there are other duties included here), then you are entitled to at least FULL minimum wage. What if your Employer is violating the FLSA? So now that you are knowledgeable about the tip credit system, what if you realize that your employer has been violating the FLSA? What do you do? First of all, you should contact an experienced attorney, such as Cohen Battisti, Attorneys at Law . You may eligible to receive two times the amount of money owed to you, and you may not have to pay dime for it. How? Florida Statute 627.428 allows YOUR attorneys fees to be shifted to the other party. If you prevail, THEY will have to pay YOUR attorneys fees! What if this happened at an old job? Dont worry about it! Under Florida law, you have four years to file a claim against a previous (or current) employer, but you have five years to file a claim if you know that employer was violating the FLSA willingly. If this has happened to you, then dont wait. Act now! Cohen Battisti, Attorneys at Law are always here for you. Give us a call today at 407-478-4878, or go to . All initial consultations are free and confidential. Remember: Its About Justice!

I’m 41! Like Loading… About BC “That’s baseball, and it’s my game. Y’ know, you take your worries to the game, and you leave ’em there. You yell like crazy for your guys. It’s good for your lungs, gives you a lift, and nobody calls the cops. Pretty girls, lots of ’em.” larry { ….never seen so many cowards and criminals, in one place!! } Oct 24, 12:22 PM larry { ….yep, we all have things that we don’t need and… } Oct 24, 12:15 PM larry { ooooohh thou shall not insult the king!!!!!! } Oct 24, 12:01 PM larry { ….if we had a REAL justice system, skank hill would… } Oct 24, 11:26 AM Hack McFree { I missed the first pitch. Who threw it out? } Oct 23, 11:21 PM Monica Meme { As a mother I can’t understand it. She must be… } Oct 23, 11:18 PM da_truth36 { Nathan Hunt is apparently a calmer man than I. Had… } Oct 23, 7:51 PM

Anyway, he said to me that, according to the law, the only way that the government can collect the fine or penalty for you not buying insurance is if you are owed a tax refund. If you do not owe a tax refund, they cannot go into your bank account or anywhere else and get that money. Now, the sad thing is that most people file their taxes to get a refund ’cause they think they’re screwing the government, and they’re not. You’re giving the government all that money all that year, but, no, look, what it means is that it can’t work. The whole point of this is the individual mandate. The guts of this are the mandate that you buy, that young, healthy people get screwed price-wise by being forced to buy insurance. You’ve got to. And in three or four years, if things don’t change, it’s gonna be bad. I’ll tell you, by then, if this thing goes forward, and it looks like it may not, but, if it goes forward, these are gonna be the good old days, because right now with the website broken, these kids can’t find out how badly they’re gonna get screwed, although some people are. By kids I mean 18-24, 18-30. (interruption) I know, we’re gonna get to the hearings in a minute. There’s nothing wrong, folks. Did you know the site’s working? Everything’s happening as it should. The only problem is the Republicans. That’s what I meant, we’re loaded here. I’m sorry to be hop-scotching all over the place. I’m trying to do an hour’s worth of content here in five minutes. I really apologize. I’m bursting at the seams here. Anyway, the website not working and therefore people losing their policies, being dropped, they don’t know yet. People really don’t know how they’re gonna get savaged price-wise on health insurance premiums, and they’re not gonna know that for a couple, three years once the fines catch up with the price. The fines are always gonna be the first preference ’cause it’s so much cheaper than buying a policy. Now, by the way, the whole point of this, Obamacare, is to fail and usher in single payer. And, as I say, Obama can’t even manage to structure that right. This is glaring here, what is going on. Let me read this to you from the joint tax committee. They talk about the mandate here. “The penalty applies –” this is for not having insurance. “The penalty applies to any period the individual does not maintain minimum essential coverage and is determined monthly. The penalty is assessed through the Code,” the tax code, “and accounted for as an additional amount of federal tax owed.” So it’s tax. “However,” look at me. “However, it is not subject to the enforcement provisions of subtitle F of the Code. The use of liens and seizures otherwise authorized for collection of taxes does not apply to the collection of this penalty. Non-compliance with the personal responsibility requirement to have health coverage is not subject to criminal or civil penalties under the Code and interest does not accrue for failure to pay [the fine] in a timely manner.” Therefore, the only way that they can collect the penalty or the fine is by taking money from your refund. If you are not owed a refund, they cannot get money from you. They can’t issue a lien. They can’t garnish your wages. They can’t use any of the normal procedures available to them if you owe them money, even though the Supreme Court has said it’s a tax. So for those of us — I mean, folks, I’m in fat city. I’m in fat city because I always structure to where I owe money. Well, not entirely. There have been years. But if you structure your taxes so that you do not get a refund, you do not have to buy insurance and you do not have to pay a fine ’cause they can’t collect it from you if you don’t have a refund due. And that is just another nail in the coffin of Obamacare imploding on itself. BREAK TRANSCRIPT RUSH: Warrensburg, Missouri. This is Gary. Gary, great to have you on the EIB Network. Hello. CALLER: Thank you, Rush. I believe you made a statement earlier that said that the only way they could collect the fine was by tax returns. Am I right? RUSH: It’s the joint tax committee, they summarized Obamacare, and they point out that the only legal way that a fine or penalty or tax can be collected from somebody who doesn’t buy insurance is if they are owed a refund from the IRS on their tax return. CALLER: Right. Well, I think you’re wrong. And the reason I say that is here you have a Congress that broke the law by the 28th amendment that states that they should pass no laws on the people that they won’t do themselves, and here they exempt themselves on Obamacare. So what makes people think that they won’t just go into the checking accounts anyway and just take the money? RUSH: Well, now, that’s an entirely different thing. I don’t disagree with you. Obama just broke the law yesterday by granting six weeks more time to sign up for Obamacare. He can’t do that, unless nobody stops him. I mean, people are gonna do criminal things. Even the law says you can’t rob a bank, people are gonna do it, and especially if you let them, and if you don’t try to catch them and hold ’em accountable. And nobody does with Obama. So I know what you’re saying. The law says that the IRS cannot collect a fine or penalty from you unless you are owed a refund and they can take it out of that. If you’re not owed a refund, they can’t fine you or penalize you or tax you. Old Gary here is saying, “That’s not gonna stop them. If they wanna fine you, they’ll go put a lien on your bank account and get it.” But Gary, the law says they can’t. When’s that stopped ’em, is Gary’s point. I’m not arguing. I’m just telling you what Obamacare says. END TRANSCRIPT

WASHINGTON Nearly 700 employees of Internal Revenue Service contractors owe $5.4 million in back taxes, said a report Wednesday by the agencys inspect WASHINGTON Nearly 700 employees of Internal Revenue Service contractors owe $5.4 million in back taxes, said a report Wednesday by the agencys inspect Rating: 0 You Are Here: Home Economics $5.4 Million Owed to IRS; By Their Employees $5.4 Million Owed to IRS; By Their Employees Posted by: Michelle Wright Posted date: October 24, 2013 In: Economics , News WASHINGTON Nearly 700 employees of Internal Revenue Service contractors owe $5.4 million in back taxes, said a report Wednesday by the agencys inspector general. More than half of those workers are supposed to be ineligible to do work for the IRS because they are not enrolled in installment plans to pay the taxes they owe. Unlike other federal agencies, the IRS requires employees and those who work on agency contracts to comply with federal tax laws. That means they have to file returns on time and either pay all the taxes they owe or enroll in a payment plan. Because many contractor employees have access to sensitive IRS systems and facilities, the IRS should address tax noncompliance for these employees in a similar manner as it would for its own employees, said J. Russell George, Treasury inspector general for tax administration. The IRS does a good job of checking compliance when contract workers first start their jobs, the report said. But the agency should do a better job of monitoring whether workers continue to follow tax laws afterward. The report said the IRS vigorously checks tax compliance among the agencys 90,000 employees. Contract workers should be held to the same standard, the report said. The IRS takes tax compliance for taxpayers and those who work for the IRS very seriously, the IRS said in a statement. For an IRS employee, failure to timely pay ones full federal tax liability is considered misconduct, which may result in discipline or removal. With regards to contractors, the IRS remains committed to working with these employees to help resolve their tax liabilities, and we remain committed to strengthening our policies to ensure that contractor employees are and remain tax compliant, the IRS said. The inspector generals office reviewed tax records for nearly 13,600 employees of IRS contractors. Investigators found 691 who owed back taxes as of June 2012, the report said. Some 352 of the workers owed back taxes and were not enrolled in a payment plan, for a delinquency rate of 2.6 percent. Those workers owed a total of $2.7 million in back taxes, the report said. By comparison, the delinquency rate for all federal workers and retirees was 3.2 percent in 2011, according to the IRS statistics. The Treasury Department, which includes the IRS, had the lowest delinquency rate, at 1.1 percent. Among the general public, 8.2 percent of taxpayers owed delinquent taxes in 2011. IRS employees are held to a very strict standard, even in cases of personal hardship. If they fail to file on time or pay their tax debts, they face disciplinary action, including removal, said Colleen M. Kelley, president of the National Treasury Employees Union, which represents IRS employees. The IRS has the same requirement for contractors, but they are monitored with much less frequency. The IRS said it will review cases of delinquent contract workers and take additional action as necessary. Wednesdays report looked only at employees of IRS contractors. The inspector generals office is working on a separate report on back taxes owed by companies that have been awarded IRS contracts, which is expected in the next several weeks. In 2010, the inspector general reviewed tax records for 135 IRS contractors with contracts of $250,000 or more. At the time, investigators found 20 contractors that owed a total of $5.2 million in delinquent taxes.

The business with enough money must help to needy business while making an agreement. This agreement contains norms about the debt which both the parties have to fulfill. If the business who owes money becomes insolvent and cannot repay money well on time then the business who owed to money must get worried. Here, the business needs such an effective solution for small business debt recovery so that the business doesnt have to face any loss. There are multiple solutions for this issue but you need to choose best and successful approach which can work perfectly over your requirement. Tips to choose small business debt Recovery Company The business doesnt need to waste its time while preferring to court. Basically, the people dont follow the order of court so it is meaningless if you think to go for court at the time of commercial debt recovery. In other side, if you think to go for debt collectors then they will not suit you as they are rude people and they have negative reputation in the market. They charge quite higher fee which you may not like to pay for this purpose. They accept fee prior whether they will be able to get money back or not. There is a solution which is effective and perfect for your necessity to get money back and that is online website. This online website makes you possible to get result within small time or without paying any fee for it. You must have ABN number of the business to access this online website or to post payment information. You need to post complete payment information about the bankrupt business or need to mention how the business becomes insolvent. The website makes this post publicly within small time and you dont need to do anything as it is a hassle-free and frequent method for small business debt recovery. If you think to go for any other solution then it will be time wastage or imperfect as this online website provide lucrative support ever. Dont believe on others reference if they recommend you to go toward any debt recovery company and so on except this online website. In this way, this online website provides an effective and valuable resource to get owed money back from business. There is no other solution which can work perfectly over your requirement.

Keshi said this in Abuja at the Home-based Super Eagles interactive session with the media ahead of the teams upcoming international friendly with Jordan in Amman. He spoke in reaction to a statement credited tothe NFA that the allowances and bonuses the teams coaches earn were enough to sustain them. Keshi is being owed about N35million in salary arrears. Keshi however said the NFA had not done him any favour with the Super Eagles coaching job, because he had done the job with all he had. Owing me up to seven months makes me feel I am not being appreciated. It is like they (my employers) think I am being favoured in what I am doing. I am not being favoured. Whatever I am doing here, I am doing it with everything I have and I need to be respected and be paid The former Super Eagles captain recalled that he was never owed his salaries when he worked with the Malian and Togolese football federations as coach of their senior national teams. In Mali, they will never owe you. Your salary will hit your account before the end of every month. It was the same thing in Togo. He said it was unbelievable that he and his colleagues had worked without pay for about eight months out of the 24 months they have worked with the Super Eagles. I dont like discussing about money issues and if there is any NFA member who said we can work for free, then I will want to speak with him face to face. If they say we can work for free and that they are not going to pay, so be it. I cant have my family abroad and I will be in debt because I have not been paid for seven months and somebody is saying we should not complain, the coach said. He regretted that the NFA appears not to be concerned about their plight in spite of training under rain and sun to make Nigerians happy. Aminu Maigari, the NFA chairman, had recently confirmed the debt owed Keshi and his colleagues. He had however said the Nigerian football governing body could not help it as it was cash-strapped. -vanguard

Top China Banks Triple Debt Write-offs As Defaults Loom

(939) , it was 2.63 percent. Not all banks report the figure. Press officers at Beijing-based ICBC and Construction Bank, which is ranked second by assets in China, declined to comment. Allowing the banks to use their gigantic loan-loss reserves to eliminate the worst of the debt indicates that China is beginning to adopt a more modern approach to credit management, said Jim Antos, an analyst at Mizuho Securities Asia Ltd. in Hong Kong. Putting the provisions to use — instead of letting them accumulate — may also give investors more confidence in the reported bad-loan figures . Every other banking sector in the world does write off loans that are totally uncollectible, Antos said. Finally, we see evidence that this is happening in China. The next step should be urging banks to move more quickly in reporting that loans have started to sour, he said. Souring Debts When a borrower starts facing difficulties with repayments and the loan is classified as nonperforming, the bank sets aside funds in case the debt becomes unrecoverable. The new provisions pare earnings, though the loan remains on the balance sheet while the bank attempts to collect the funds or sell it at a discount. The last resort is writing off the loan, reducing both the reported bad-debt and provision figures. The five biggest banks — which include Agricultural Bank of China Ltd. (601288) , Bank of China Ltd. (3988) and Bank of Communications Co. — posted a 22.4 billion yuan increase in nonperforming loans during the first half to take the total to 349.9 billion yuan, or 1 percent of total loans, according to data compiled by Bloomberg. They added 83.1 billion yuan to funds set aside as provisions, compared with 72.9 billion yuan in the six months ended June 2012, the data show. Real Levels Banks have an incentive to write off NPLs because that will make their loan books look cleaner, said Tang Yayun, a Northeast Securities Co. analyst in Shanghai. The government is also pushing for a faster process to reflect the real level of bad loans, especially when theres rising pressure on banks to manage their asset quality in an economic slowdown. ICBC abandoned efforts to reclaim payments on 6.52 billion yuan of bad loans in the first half, more than double the year-earliers 2.5 billion yuan. Its shares have dropped 1.8 percent in Hong Kong this year, compared with a 2.9 percent gain for the citys benchmark Hang Seng Index. (HSI) The practice of writing off loans has been uncommon in China, where banks need to get approval from the Finance Ministry to remove debt from their books. In most cases, a court also has to declare the borrower bankrupt before the lender can seek that permission. That rule was revised in 2010, when the ministry gave banks authority to write off small-business loans of less than 5 million yuan after one year of collection efforts, without getting approval. Rising Bankruptcies Chinas courts have also been processing bankruptcies faster. The eastern province of Zhejiang, a region south of Shanghai thats home to many of the countrys largest private companies, accepted 143 bankruptcy petitions last year, according to the most recent figures reported by its high court in May. Thats almost twice the number from a year earlier. The rising bankruptcies may have helped Bank of Communications , the nations fifth-largest lender, become the most aggressive among the top five in expunging bad loans from its books so far: its write-offs surged sevenfold to 4.82 billion yuan in the first six months. A press officer for the Shanghai-based lender, known as BoCom, declined to comment. The bank also disposed of 5.1 billion yuan in soured loans through sales to asset-management companies, according to analysts at Sanford C. Bernstein. Without the sales, bad debt would have risen 36 percent in the first half, instead of a reported 17 percent gain, while its bad-loan ratio would have expanded to 1.15 percent rather than the reported 0.99 percent. The faster pace of write-offs and the sales helped mask the growth of defaults at lenders such as BoCom, said Grace Wu, an analyst at Daiwa Capital Markets Hong Kong Ltd. About a third of BoComs loans were made in the Yangtze River Delta region, which includes the troubled Zhejiang province, she said. More Aggressive BoComs been seeing more NPL formation compared to the other, larger banks, Wu said. In order to try and manage the NPL balance, they have chosen to take on more aggressive write-offs as well as disposals. The volume of soured debt at Chinese banks will probably continue to increase in 2014, though the bad-loan ratio may remain quite stable as credit growth surpasses the pace of rise in defaults, said Daiwas Wu. Almost half of the loans made to local governments wont come due until 2015, at the earliest, making them medium-term risks, she said. Investors will get their next picture of the biggest banks financial health at the end of this month, when lenders publish third-quarter earnings. Construction Bank will report on Oct. 27, with the other four scheduled to follow on Oct. 30. Debt write-offs in the past have been posted only in first-half and full-year reports. Defaults Rise Third-quarter net income at the five banks may have risen 11 percent from a year earlier to a combined 226 billion yuan, according to Edmond Law, an analyst at UOB Kay Hian (Hong Kong) Research. Nonperforming loans probably climbed by a mild 5 percent in the three months to Sept. 30 as lenders continued to write off or sell bad debt, he wrote in an Oct. 10 report. Uncertainty about the quality of assets at Chinese banks has made global investors nervous, sending their stocks to near record-low valuations this year. ICBC is trading at 1.01 times estimated book value for 2014 while Construction Bank exchanged hands at 0.97 times, according to data compiled by Bloomberg. Jim Chanos, the founder of Kynikos Associates Ltd.

Oprah Winfrey’s Debt Diet Is Only Your First Step

Essentially, it’s an assemblage of non-athletic media types intent on extracting detail upon detail out of Clemson quarterback Tajh Boyd. Post to Facebook Clemson QB Tajh Boyd shoots down gambling debt rumor on Incorrect please try again A link has been posted to your Facebook feed. Sent! A link has been sent to your friend’s email address. Join the Nation’s Conversation To find out more about Facebook commenting please read the Conversation Guidelines and FAQs Clemson QB Tajh Boyd shoots down gambling debt rumor Scott Keepfer , USA TODAY Sports 1:25 a.m. EDT October 23, 2013 Clemson Tigers quarterback Tajh Boyd shot down a gambling debt rumor that had emerged on the internet in his weekly meeting with the media. (Photo: Joshua S. Kelly, USA TODAY Sports) Story Highlights Tajh Boyd shot down a gambling debt rumor during his weekly meeting with the media An internet report surfaced over the weekend that said Boyd owed more than $80,000 in gambling debt The report claimed that Boyd had incurred the debt by betting on NFL games SHARECONNECT 25 TWEET COMMENTEMAILMORE CLEMSON We gather every week to talk to the quarterback, and he always obliges. Essentially, it’s an assemblage of non-athletic media types intent on extracting detail upon detail out of Clemson quarterback Tajh Boyd. These informal meetings have grown to become known as “Tuesdays with Tajh,” which might also be a good name for a book or a movie. We arrive with questions fully loaded, then leave after having been effectively disarmed by Boyd. “I like you guys, I really do,” Tajh has said. That sentiment must be true, because it would explain why he has felt obligated to answer questions ranging from which actor he’d like to portray him in a movie to his musical preferences to why he plays better in domed stadiums. BOWL PROJECTIONS: Big changes after upsets Questions of a more serious ilk were lobbed his direction Tuesday, spawned by an Internet report that surfaced over the weekend citing sources that claim Boyd has accumulated more than $80,000 in gambling debt. “I have no idea where that came from,” Boyd said. “It was kind of shocking to me as well. That on top of the loss (to Florida State) made for a rough little weekend.” The report claimed that the bulk of Boyd’s debt was incurred through betting on NFL games, which brought laughter from Boyd as he cited the fact that his cable provider allows him access to only two games each Sunday. “I rarely watch NFL games,” Boyd said. Clemson coach Dabo Swinney heard the report, too, and asked Boyd about it Sunday morning. “He just shook his head and said, ‘No way, coach,'” Swinney said. “I have no reason not to believe Tajh Boyd. He’s never lied to me before. His character and integrity from my view are impeccable, so I’m going to take his word over some website that I’ve never heard of, ever.” HEISMAN WATCH: Ranking the top 10 candidates after eight weeks The university is investigating the report, but Boyd has a more urgent task at hand namely, regrouping a team for which he’s the unquestioned leader and personally redeeming himself after what many would consider the worst performance of his career. “It was disappointing because I know what type of team we have,” Boyd said. “It was frustrating to go out there and not put our best foot forward. I don’t think I responded like I needed to as a leader.” There’s no blame game when it comes to Boyd. He assumes accountability, which is a good thing for a player in his position to do, but he does so with aplomb, which makes it difficult not to regard him in high esteem, even as an unbiased journalist. Bad games, good games, fair to middling games, Boyd always shows up, smiling. He’s cordial and candid, thoughtful and insightful. Boyd has regaled us with anecdotes, jokes, quips and song, even in times when it would’ve been much easier to cut the interviews short and move on to something considerably more pleasurable. DEREK CARR: Driven by Heisman hopes Heck, if anything, Tajh talks too much. In fact, he recently began telling us how excited he was about the commitments Clemson had from several high school stars, even though his playing days as a Tiger would be over before they arrived on campus. Boyd began to rattle off their names before being interrupted midstream and politely informed that such chatter is off limits until players have actually signed their letters-of-intent. “Well, there are some great players who could potentially end up playing here,” Boyd said, obeying the letter of the law. Boyd is on the cusp of becoming the winningest quarterback in Clemson history. But he’s also turned out to be much more. Boyd is so engaging, so gregarious, so personable that reporters from other media markets take notice. “Gee whiz, you don’t know how lucky you are to have a guy like Tajh to interview every week,” more than one member of an opponent’s media throng has told me this season. After giving it some thought, they’re right. Perhaps I’ve taken him for granted because interviewing him has always been so easy. There are only five more “Tuesdays with Tajh,” which is a shame. I’m going to miss him. Scott Keepfer also writes for The Greenville News. GALLERY: HOW THE HEISMAN CANDIDATES FARED IN WEEK 8 Oregon Ducks quarterback Marcus Mariota completed 23 of 32 passes for 327 yards with two passing touchdowns, and ran for 67 yards with one rushing touchdown. Scott Olmos, USA TODAY Sports

Clemson QB Tajh Boyd shoots down gambling debt rumor

Oregon Ducks quarterback Marcus Mariota completed 23 of 32 passes for 327 yards with two passing touchdowns, and ran for 67 yards with one rushing touchdown.

Getting out of debt is indeed an essential part of declaring your financial independence. But Oprah’s Debt Diet is only the first step toward financial security. Let’s take a closer look at what Oprah and her team suggested in the Debt Diet and then turn to what your logical next step should be after getting your debt issues resolved. Oprah Winfrey. Photo by Alan Light, courtesy Wikimedia Commons . Understanding Oprah’s Debt Diet For those who have already gotten out of debt, Oprah’s Debt Diet might sound simple. But for the millions of Americans who owe more than they can afford, the day-to-day struggle against debt is real, and it’s hard for many people to break the debt cycle for good. Oprah’s eight-step plan boils down to three key areas. In the first, you gather information about where you currently stand financially. By gathering bills and looking through credit reports, you can find out how much you owe and what your current spending habits are. Next, you start taking action based on the information you’ve gathered. Steps like creating a budget and cutting your spending focus on the expense side of your financial situation, helping you make your money stretch further. Steps to boost income can also help you make ends meet. Finally, as the Debt Diet starts to reduce your outstanding debt, you take a longer-term view at what drives your spending and saving behavior. The goal here is to find long-term solutions that will help you maintain your debt-free status and start building emergency savings. Moving on to phase two To Winfrey’s credit, Oprah’s Debt Diet ends with a single line that suggests a path forward beyond eliminating debt. In it, she notes that investing can help create a “real foundation of wealth for your future.” But to help you take further steps forward after you’ve successfully completed Oprah’s Debt Diet, let me share some of the guidance that The Motley Fool has given its readers for more than two decades: 1. Investing in stocks is essential to produce long-term returns great enough to make you wealthy. Historically, stocks have produced much higher returns than you’ll get from a savings account. With many banks paying almost no interest in savings right now, keeping more than the three to six months’ worth of expenses you might need in an emergency fund will cost you the chance at much more substantial returns in the long run. Of course, many investors remember all too well the bloodbath that the stock market suffered in 2008 and early 2009. What many forget, though, is that the market had produced years of solid gains leading up to that drop. Moreover, in the years since the crisis, the stock market has regained all its lost ground and then some, rewarding those investors who stayed the course. 2. Mutual funds and exchange-traded funds can be a great way to get your feet wet in the stock-investing world. Individual stocks are intimidating for many investors. That’s why starting with mutual funds and ETFs can give you a great place to start. ETFs and funds are useful in letting you tailor your investment exposure. For instance, the SPDR ETF above tracks the S&P 500 Index, which includes 500 of the largest U.S. companies in the market. A combination of these and other funds can help you round out a well-diversified portfolio. Focusing on the lowest-cost options in the fund world is usually the smartest move. Doing so will help you minimize the amount coming out of your pocket to pay for fund expenses and other costs. 3. For the best potential returns, individual stocks offer better prospects than more diversified funds. If you really want the best returns, you have to take more risk by picking individual stocks. Obviously, the key there is being smart about which stocks you pick. Fortunately, there are many ways to pick stocks well. Dividend stocks offer a combination of growth potential and regular income for those who need their investments to produce cash for living expenses. High-growth stocks often don’t pay dividends , but the most successful of these high-risk companies can produce life-changing gains for investors who recognize their potential early on. Whether you prefer to pick stocks based on dividends, inexpensive valuations, potential for fast growth, or a combination of all three , the top picks can deliver gains over the long run that can add up to financial success. Don’t wait If you’re still struggling to get out of debt, following a plan like Oprah Winfrey’s Debt Diet can rescue you from dire financial straits. But once you’ve solved your debt problem, don’t stop there. Move on and get started with an investing plan that will give you the full benefit of the work you’ve done to get your finances in shape. For many, that’s easier said than done. That’s why The Motley Fool has always tried to help would-be investors find out what they need to know in order to get comfortable with investing and start making money in stocks. Our brand-new special report, ” Your Essential Guide to Start Investing Today ,” includes guidance from The Motley Fool’s personal finance experts, who show you why investing is so important and what you need to do to get started. Click here to get your copy today — it’s absolutely free. Tune in to for Dan’s regular columns on retirement, investing, and personal finance. You can follow him on Twitter @DanCaplinger .

How the debt ceiling threatens to turn the U.S. into an economic turkey

The White House hailed the pact, which it said would remove the threat of economic brinkmanship. But simply extending the debt ceiling deadline a few months leaves the U.S. economy and its most lucrative asset the dollars status as the worlds reserve currency vulnerable to further political shocks. The worlds longstanding demand for dollars has provided a key ingredient to U.S. economic growth: low long-term interest rates. These rates helped fuel the U.S. economys unprecedented expansion through the turn of the century and buttress it during the recent global financial crisis. We can think of interest rates as part of the floor underpinning our economy. The problem is that brinksmanship involving the debt ceiling threatens default and thus warps this valuable interest-rate floor. The necessary solution is to eliminate the debt ceiling. A credible commitment to debt repayment is the cornerstone of a healthy relationship between creditors and debtors. Even during the 2008-2009 recession and financial crisis, global investors rarely doubted the full faith and credit of the U.S. government. This allowed the U.S. to finance its obligations cheaply over a long-term horizon, separating it from other highly indebted countries. These other countries have often struggled to stay afloat, given the relatively short-term horizon provided by international investors. Concerned that these governments might default, investors have often issued debt with maturities of less than one year. As I show in my book , many developing countries have built institutions, such as currency boards, fiscal rules, inflation targeting, and independent central banks, in part to convince creditors that default was unlikely. This has worked, providing economic stability but often at the cost of lower growth and employment and sometimes even social instability. Despite these economic reforms, a short-term refinancing horizon leaves countries vulnerable to rapid changes in investor sentiment. As governments from East Asia to Latin America know all to well, sudden capital withdrawals can produce dramatically higher interest rates and leave economies in shambles. Argentina, Brazil, Mexico, South Korea, Thailand, and more recently much of Southern Europe, have suffered such a fate, turning from economic tigers into economic turkeys seemingly overnight. Repeated budgetary stalemates have started to make the U.S. look like a turkey too. Few creditors doubt the U.S.s capacity to pay its debt, but the political theater surrounding the debt ceiling has clouded market perceptions about the U.S.s willingness to pay its debt. Most recently, Fitch Ratings expressed concern about the prolonged negotiations over raising the debt ceiling, placing the U.S. on watch for a potential credit downgrade. Similar concerns are evident abroad. The U.S.s low interest rates arise in part because we borrow so much from countries with a long-term stake in the global economic system. China, Brazil, Japan, Singapore, and others invest in dollars not because dollars are profitable but because they represent safe, liquid assets. This helps explain why foreign governments hold almost two-fifths of the $11.6 trillion U.S. debt. With these governments among its major creditors, the U.S. has been less subject to the whims of short-term private capital. In return, foreign governments simply ask that these assets hold their value over time so they are available for financial insurance or reserve management purposes. Over the last two years, however, these governments have become increasingly skeptical about the U.S.s fiscal governance. During the first debt ceiling showdown in 2011, China expressed its hope that the U.S. government adopts responsible and measures to guarantee the interests of investors. More recently, however, Chinas sentiments have become far less mild. Chinas state newspaper, Xinhua, said that it was time to start considering building a de-Americanized world that would include the introduction of a new international reserve currency. And notwithstanding the budget deal, Chinas largest credit rating agency, Dagong Global, downgraded U.S. debt. To mitigate this growing global scrutiny and rising interest rate premium, the U.S. should scrap its debt ceiling. It serves such little economic purpose that most countries do not have it, and in the U.S. it often has been used as a political tool, allowing the opposition party to signal its discontent with deficit spending. In 2006, for instance, then Sen. Barack Obama opposed raising the debt limit saying, America has a debt problem and a failure of leadership. By magnifying the stakes of political theater over the budget, the debt ceiling undermines the U.S.s credible commitment to pay its debt. It imposes a short-term financing calendar, with creditors wondering every few months about the U.S.s fiscal resolve. By definition, AAA borrowers should not be subject to such market uncertainty about their financial commitments. Endowing the U.S. Treasury with automatic authority to fund congressionally approved spending will help mitigate some of this uncertainty.

Debt Deadline: What Happens, What You Should Do

AP Wall Street

Post to Facebook Dow jumps more than 200 points on debt deal on Incorrect please try again A link has been posted to your Facebook feed. Sent! A link has been sent to your friend’s email address. 37 To find out more about Facebook commenting please read the Conversation Guidelines and FAQs This story is part of Government shutdown Punchlines: End of the shutdown Dow jumps more than 200 points on debt deal Senate leaders announced a last-minute agreement Wednesday to avert a threatened Treasury default and reopen the government after a partial, 16-day shutdown. Wall Street rallied on the news. AP Adam Shell, USA TODAY 7:23 p.m. EDT October 16, 2013 Traders on the floor of the New York Stock Exchange on Tuesday. (Photo: Richard Drew, AP) House agrees to move Senate debt ceiling deal S&P 500 index gains 1.4% Nasdaq surges 45 points to 3,839 SHARE 301 CONNECT 123 TWEET 37 COMMENTEMAILMORE NEW YORK The big bet on Wall Street that fueled Wednesday’s stock market rally proved to be correct as top Senate leaders say they have struck a bipartisan deal to reopen the government and extend the nation’s debt ceiling. The Dow Jones industrial average jumped 205.82 points, or 1.4%, to 15,373.83 and the Standard & Poor’s 500 index gained 23.48 points, or 1.4%, to 1,721.54. The S&P 500 is now only four points below its record close of 1,725.52 set Sept. 18. The Nasdaq composite index surged 45.42 points, or 1.2%, to 3,839.43, a fresh 13-year high. The deal likely marks the end of a debt impasse that has shut down the government for 16 days. It will also remove the threat of the nation defaulting on its debts for the first time in history and reduce the level of market uncertainty. It also, of course, needs to be ratified by votes in both houses of Congress and signed into law by President Obama. House leaders said they would accept it and allow a vote on the bill. DEBT DEAL: 5 things to know about debt-ceiling deal The deal calls for the government to reopen and be funded through Jan. 15 and the debt ceiling to be extended through Feb. 7. If the deal closes, investors will breathe a big sigh of relief and refocus their attention on more mundane matters such as corporate earnings and the economy, says Nicholas Sargen, chief investment officer at Fort Washington Investment Advisors. “If a default is ruled out (by a “Yea vote), the market will say it’s time to refocus on business fundamentals,” says Sargen, adding that he doesn’t think the nearly three-week budget fight will cause “lasting damage to the economy or the nation’s financial reputation.” Stocks have held up fairly well during the government shutdown, a sign that Wall Street was correctly betting that Washington would reach an agreement. The market began to price in a positive resolution last week, fueling a big market rally that saw the Dow climb more than 500 points. ‘LONDON WHALE’: Costs JPMorgan another $100M Whether stock prices will skyrocket even more is in question, given the market’s sharp rise in anticipation of the crisis ending without financial calamity, says Rod Smyth, chief investment strategist at Riverfront Investment Group. “The market never panicked and never priced in the bad scenario, so it’s unlikely to storm away to the upside if we get a resolution,” says Smyth. While stocks shot up, investor fear took a big dive. A closely watched Wall Street fear gauge fell by 20% on news that a deal had been worked out. The key reason investors thought a deal would get done: the fallout of a U.S. default would be so unpredictable and potentially damaging to the financial system that few people on Wall Street believed Congress would let such a self-inflicted wound occur. “We have to assume that it is in no one’s interest for the government to default,” says Rob McIver, co-portfolio manager at Jensen Quality Growth Fund. The market for U.S. Treasury bills reflected relief among bond investors. The yield on the one-month T-bill dropped to 0.13% from 0.40% Wednesday morning, an extraordinarily large move. The decline means that investors consider the bill, which would have come due around the time a default may have occurred, to be less risky. This type of short-term bond is typically referred to as a risk-free asset, but investors had been selling these bills because they are the most likely government security to be hit by a U.S. default, according to Boris Rjavinski, an interest rate strategist at UBS. The yield on the 10-year Treasury note edged down to 2.67% from 2.74% Tuesday. Yields on longer-term U.S. government debt haven’t moved as much as those on short-term debt because investors believed that the government would work out a longer-term solution. MATTEL: Monster High, Barbie boost results In overseas trading, the Nikkei 225 Stock Index closed up 0.2% to 14,467.14, however Hong Kong’s Hang Seng fell 0.5% to 23,228.33. Similarly, key European stock indexes closed mix. Britain’s FTSE 100 index rose 0.3% to 6,571.59.

Four facts about the national debt you may not know

And the longer before the U.S. raises the limit, the more people it affects. STOCKS WEDNESDAY: How markets are doing Even without passing the limit, the nation’s borrowing costs are already rising. The U.S. issues Treasury securities in order to borrow: Treasury bills, notes and bonds are simply IOUs backed by America’s promise to repay. When a lender suspects you might not pay on time, it will demand a higher interest rate. That’s happening right now. For example, a three-month Treasury bill that matures Oct. 24 — seven days after the date the Treasury says the nation will be out of money — now yields about half a percentage point. While that may not seem like much, the rate on that issue at auction was 0.005%. Standard & Poor’s has already downgraded the nation’s credit rating during the last tussle over the debt limit, saying that political brinksmanship was incorporated into the nation’s less-than-perfect AA+ rating. On Tuesday, Fitch said it was considering lowering the nation’s credit rating as well. Should the U.S. actually default, S&P would lower its rating to “selective default,” since nations, unlike companies, typically don’t default on all their debts at once. Were the U.S. to actually default, you could expect other interest rates to rise, such as the rate on the 10-year Treasury note, because lenders would worry about being repaid. Rising rates would hit prices on bond mutual funds. Americans have $2.8 trillion invested in taxable bond funds, according to the Investment Company Institute, the mutual fund industry’s trade group. Bonds wouldn’t be the only victim. Rising rates means tougher competition for stocks from other investments, and would undermine investors’ faith in the economy. The value of the dollar would also fall on world markets, as investors sell dollar-denominated investments for other investments less likely to default. Rising rates would also rise for other borrowers, since many other rates, such as mortgage rates, key off Treasury rates. But Treasury borrowers aren’t the only ones affected by default. The debt limit applies to all government spending — Social Security payments, Veterans benefits, even military pay. The government shutdown alone shaves 0.3% a week from fourth-quarter GDP, according to John Chambers, chairman of the Sovereign Debt Committee at S&P, speaking on CBS This Morning. Shutting down payments altogether would be “worse than Lehman Brothers in my judgment, and I think it’s needless,” Chambers said. What’s an investor to do? As bad as the situation is — and it’s bad — you need to think carefully about selling your stocks and bonds. If you’re investing in a taxable account, you’ll trigger capital gains taxes. You may also owe commissions and fees on selling your holdings. You’ll also have to think about where you’ll put your money when you sell. If your sales go to a money market mutual fund, you need to be aware that a staple of money funds is Treasury bills. While many funds have taken steps to rid themselves of the most default-prone T-bills, a lengthy default could hurt money fund returns as well. Other possible moves: Consider an inverse fund, which rises when stocks fall, and vice-versa. These funds use futures and options to go in the opposite direction as stocks. Rydex Inverse S&P 500 Strategy fund (ticker: RYURX) is one of the best-known inverse funds. Consider buying put options on the S&P 500. A put option is the right, but not the obligation, to sell stocks at a set price. A put option to sell the S&P 500 at current levels would soar if the stock market dropped 10%. Consider international bond funds. International stock funds will likely drop along with the U.S. markets. And a default will send the world bond market in turmoil. But a falling dollar is good for investors in international securities. Take your risks with a money fund. Even if a money fund let its share price drop below $1, the loss would likely be small. Reserve Fund, the money fund that broke the buck during the Lehman Brothers crisis, saw its share price fall to about 97 cents. But some shareholders had to wait before getting their hands on their money.

Obama signs bill to end partial shutdown, stave off debt ceiling crisis

Maybe savvy investors know something the rest of us dont. Maybe they know, for instance, that past arguments over raising the debt ceiling have always ended short of disaster. History counsels complacency. Or does it? After all, history is not all about continuity it also involves a lot of change. And in fact, this debt limit debate is differentthan all the rest. Different because its a lot more dangerous. Traditionally, arguments over raising the debt limit have been a form of political theater, with lots of overheated rhetoric but no real chance of default. Of course, to the extent that the debt limit gives Congress any sort of leverage, in its fiscal battles with the executive, that leverage depends on the threat of default. But in the past, that threat has been largely implicit and always empty. Even historys most dramatic debt limit debate was largely a charade. In 1953 Congress refused President Eisenhowers request for an increase. Newspaper editorials chided Congress for playing games with the nations credit; then, as now, the president had elite opinion on his side. But except for the doomsayers in Treasury, few observers believed that default was a serious possibility. Raising the ceiling was a matter of prudence, not necessity. That was certainly the view of Sen. Harry F. Byrd of Virginia, the leading congressional opponent of raising the debt limit. Byrd knew that Eisenhower wanted a debt limit hike, but he was certain that the president could survive without it. Byrds confidence was quickly vindicated. Eisenhower responded to the debt limit defeat by slashing expenditures across the board, thereby giving Byrd exactly what he wanted in the first place. In addition, Treasury engaged in some of its famous fiscal gymnastics (now called extraordinary measures but then lacking a hyperbolic label). When all was said and done, default didnt happen. And no one was surprised, least of all Harry Byrd. I think this action [the debt limit refusal] brought the administration to the realization that Congress is determined to have economy, he crowed in the wake of the budget cuts. It brought in the results, and there wont be any special session of Congress to raise the debt limit. Byrds victory would seem to vindicate the debt limit brinkmanship of todays GOP. But in fact, it points out the differences between then and now. In 1953 no one thought default was possible, not even the debt limit deniers. Today, even most Republicans acknowledge that default could really happen. Sure, some skeptics have questioned whether default is the inevitable sequela of an unraised debt limit. Ostensibly, some sort of payments prioritization could avoid actual default on federal debt instruments. Instead, we could just fold up most of the federal government semi-permanently. But in fact, the nations fiscal shortfall cant be permanently finessed with any sort of measures, be they ordinary, extraordinary, or even superhuman. Defaultwillhappen the only question is when. By and large, both parties agree on this reality, but they differ in their level of distress at the prospect. Democrats are suitably terrified, which serves their partisan agenda but also probably reflects their actual convictions. Many Republicans, on the other hand, seem less concerned. A sizable number of Republicans have publicly entertained the notion that default might not be a wholesale disaster. At least one has even suggested that it might be good for the country . To be sure, this is still a minority point of view. In particular, it doesnt seem to extend to the GOP leadership on Capitol Hill. But the willingness to consider fiscal triage in the wake of a debt ceiling breach is not confined to a few radical voices. Its become a common GOP talking point. And all this talk, even when confined to a minority of the minority, makes the risk of default much more serious today than its ever been before. Past debt limit debates have been conducted with a wink and a nod; everyone understood that necessary increases would not be refused. And Wall Street seems to think that the old rules still apply; that the Tea Party doesnt mean what it says; that GOP tough talk about the debt ceiling is just a bluff.

Debt Limit Fights Are All The Same — Except For This One


The United States still has the skills to pay the bills. Whew. The debt ceiling has been raised … but only until February 7. So unless Republicans and Democrats suddenly grow up, the American people may have to brace for another dance with default sometime in 2014. Or will we? Is it remotely possible that Congress actually learned a lesson? I hope so. To quote Mary J. Blige, we need no more drama. And guess what? Maybe lawmakers will stop kicking the debt ceiling can down the road so we can avoid another scare like this one. Dr. Robert Shapiro, chairman of Sonecon, an economic advisory firm in Washington, is guardedly optimistic that we won’t go down the debt ceiling rabbit hole again. Shapiro, who served as Under Secretary of Commerce for Economic Affairs in President Clinton’s administration, said that it’s possible the government could shut down in January. But he thinks that lawmakers will not tie decisions about re-opening the government to raising the debt ceiling next time around. “I cannot imagine that anyone wants to go through this again,” he said. “The damage from an actual default would have been so enormous — on the scale of 2008 and 2009.” Related: China not impressed with debt deal Even though the stock and bond markets were relatively calm throughout October, Shapiro said that politicians have to realize that the rest of the world is growing tired with the tomfoolery in Washington. The U.S. won’t be able to remain the preeminent global economic powerhouse if our nation’s least and dimmest (I should trademark that) continue to act more like a banana republic — and I’m not referring to the clothing chain owned by the Gap (GPS) . “It’s remarkable to be in a position where we’re relieved that the United States did not default on its debt. This was always more about politics than economics,” he said. “The world has to be wondering if we’re going to be dealing with this issue every six months for the next 10 years.” Related: Washington is slowly killing the dollar Jerry Webman, chief economist with OppenheimerFunds, agrees. He said that Congress must recognize that it can’t risk missing payments to bondholders, Social Security recipients and others just to score partisan points. “It makes sense to take the discussion of the budget away from the debt ceiling. That would be good policy as long as Congress sticks with it,” he said. That doesn’t mean that Congress can’t have a reasonable conversation about taxes, entitlement spending and other big picture budget issues. They are incredibly important.
> And no matter which party you belong to, I think all Americans can agree that the U.S. needs to do something soon to address longer-term fiscal challenges. But that needs to be removed from the debt ceiling equation. “The debate needs to be about how much the government should spend, what it should spend it on and how it should raise the money to do that,” Webman said. “The debt ceiling is a historical artifact that should not be politicized.” Compromise may be a dirty word in Washington. But Congress and the president must pull an Avis and try harder to work together. Related: Shutdown took $24 billion bite out of economy Webman said that the most significant cause for concern is that lawmakers continue to do nothing. Extend and pretend nothing’s wrong. Delay and pray. (Not sure why I was suddenly possessed by New York Knicks legend and rhyming master Walt “Clyde” Frazier there.) “The biggest negative for investors and the economy is continued uncertainty. Businesses would rather have clarity about policies they may not like because you can at least deal with that,” he said. Exactly. There’s got to be a lot of stubbed toes on Capitol Hill from all that can kicking. So here’s hoping that Congress doesn’t repeat the mistake of the past few weeks. Reader Comment of the Week! Lot of tweets about the lunacy in DC this week. But this one was by far my favorite.

Stop kicking the debt ceiling can!


Sequestration Is Back in Center of Budget Battle October 14, 2013 7:20 AM PDT Reid: Productive Conversation With McConnell October 14, 2013 7:20 AM PDT White House, GOP commit to talks on avoiding debt default October 11, 2013 House GOP, White House Seeking End To Budget Fight October 11, 2013 12:19 PM PDT Starbucks petition urges Congress to end shutdown October 11, 2013 Could it Be? Compromise in Washington? October 11, 2013 10:49 AM PDT Negotiations Begin Over Debt Deal October 11, 2013 7:40 AM PDT Carney: Obama Happy to See Cooler Heads Prevailing October 10, 2013 11:24 AM PDT Republicans offer plan to extend debt ceiling October 10, 2013 11:05 AM PDT Boehner: ‘The President Doesn’t Want to Talk’ October 10, 2013 9:14 AM PDT House Speaker John Boehner offered a short-term extension of the debt ceiling Thursday. Is the Affordable Care Act Off the Table? October 10, 2013 9:16 AM PDT Starbucks offers free coffee amid government shutdown October 9, 2013 Washington DC mayor protests government shutdown October 9, 2013 12:20 PM PDT Washington (UNITED STATES) (AFP ) (AFP) – The mayor of Washington, DC, and residents protest the budget gridlock in Congress. While the shutdown continues, the federal capital remains unable to access the funds it collects through its own taxes and the ci Now telemarketers are free to call you thanks to government shutdown October 8, 2013 3:04 PM PDT Now telemarketers are free to call you thanks to government shutdown Government Shutdown Continues, No Progress To Break Stalemate October 8, 2013 3:54 PM PDT Government Shutdown Continues, No Progress To Break Stalemate Video: How government is like the elevator operator October 9, 2013 7:09 AM PDT Chicago Tribune columnist John Kass and reporter Jenniffer Weigel talk Senate elevator operators. service members killed in combat is adding to the already existing anger over the partial federal government shutdown. Video: Government shutdown, Day 8 October 8, 2013 7:13 AM PDT Oct. 8 (Bloomberg) — Stalemate enters an eight day, as the Senate works on a new plan and continuing questions on the number of votes in the House for a clean resolution. Shutdown Enters 7th Day October 7, 2013 12:04 PM PDT Armed Forces Network Affected by Government Shutdown October 6, 2013 10:19 AM PDT Howie Long on how the government shutdown affects troops. The Government Shutdown: The Effects On Travel October 5, 2013 7:15 AM PDT The Government Shutdown: The Effects On Travel Government shutdown could stunt economy’s growth October 4, 2013 3:14 PM PDT Government shutdown could stunt economy’s growth Pentagon to Call Back Civilian Workers October 7, 2013 6:57 AM PDT The U.S. Defense Department plans to call back most of the civilian employees it furloughed last week under the federal government shutdown. Gov’t shutdown enters 7th day October 7, 2013 6:57 AM PDT The partial government shutdown is entering its seventh day. Veterans Affairs employees not receiving pay during shutdown October 4, 2013 9:40 AM PDT Veterans Affairs employees are still working during the government shutdown, but some are not getting paid. Shutdown Hits Low-income Food Plan October 3, 2013 3:30 PM PDT Nine million low-income women and children rely on the federal Women, Infants and Children program _ a food program that’s now jeopardized by the gov’t shutdown. Without new funds, states say programs can stay open for just another few weeks. (Oct. 3) FEMA workers recalled despite shutdown for tropical storm October 3, 2013 3:34 PM PDT FEMA workers recalled despite shutdown for tropical storm Why federal employees working through shutdown could cost taxpayers BILLIONS October 3, 2013 3:30 PM PDT Why federal employees working through shutdown could cost taxpayers BILLIONS Shutdown Could Jeopardize School Field Trips To D.C. October 3, 2013 5:05 PM PDT Shutdown Could Jeopardize School Field Trips To D.C. Obama Pins Government Shutdown on Boehner October 3, 2013 9:25 AM PDT President Barack Obama says House Speaker John Boehner is the only thing standing in the way of reopening the federal government. Obama is speaking at a small business just outside of Washington on the third day of the shutdown. (Oct. 3) Government Shutdown: Stalemate Continues in Washington October 3, 2013 11:35 AM PDT The U.S. government has been shutdown for three days, and congressmen are no closer to agreeing on a budget. Eric Spillman reports from LAX for the KTLA Morning News on Thursday, Oct. 3. Ireland Baldwin Studies Politics During Government Shut-Down October 3, 2013 12:30 PM PDT The 17-year-old model and daughter of Alec Baldwin and Kim Basinger might seem to have a life of luxury. But let’s not forget she’s also just a normal high schooler who does her homework just like any other kid her age. Obama blasts ‘reckless Republican shutdown,’ warns of debt-ceiling danger October 3, 2013 Cantor: Democrats Must Negotiate to End Shutdown October 3, 2013 8:25 AM PDT As the partial government shutdown entered its third day, House Republicans again called on President Barack Obama and Senate Democrats to ‘sit down at the table’ and work out differences over ‘Obamacare.’ Democrats insist that’s a non-starter. (Oct. 3) Government Shutdown: Stalement Continues in Washington October 3, 2013 7:05 AM PDT No resolution seemed near as the government shutdown entered its third day. KTLA’s Eric Spillman reports from LAX on Oct. 3, 2013. Anger, Frustration Continues Over Government Shutdown October 2, 2013 10:00 PM PDT Anger, Frustration Continues Over Government Shutdown How the Government Shutdown Could Affect Your Ability to Get a Mortgage October 2, 2013 11:35 PM PDT How the Government Shutdown Could Affect Your Ability to Get a Mortgage Federal employees protest government shutdown October 2, 2013 1:15 PM PDT Washington (AFP) – The Federal employees protest the government shutdown as Congress’ inability to approve a budget has closed capital-area museum and monuments. Duration: 01:14 Local Workers Hurt By Fed Government Shutdown October 2, 2013 4:00 PM PDT Local Workers Hurt By Fed Government Shutdown Boehner: House Wants Government Open October 2, 2013 1:58 PM PDT Film Industry Affected By Government Shutdown October 2, 2013 1:00 PM PDT Film Industry Affected By Government Shutdown Government shutdown moves into second day October 2, 2013 Day 2 of government shutdown: Republicans and Democrats continue to spar October 2, 2013 5:30 AM PDT Day 2 of government shutdown: Republicans and Democrats continue to spar Obama to hold budget talks with top congressional leaders October 2, 2013 Stocks Resilient to Gov’t Shutdown October 1, 2013 11:40 AM PDT The partial shutdown of the U.S. government failed to spook markets Tuesday, with stock indexes rising around the world. Analysts say significant damage to the U.S. economy is unlikely unless the shutdown lasts more than a few days. (Oct. 1) Obamacare Begins as Government Shuts Down October 1, 2013 9:49 AM PDT The first shutdown of U.S. government in 17 years began Tuesday at 12:01 a.m.

AP Debt Limit

President Barack Obama signed a bill that ends the 16-day partial government shutdown and raises the debt ceiling, the White House said early Thursday morning. Weeks of bitter political fighting gave way to a frenzied night in Washington as Congress passed the bill that would prevent the country from crashing into the debt ceiling. Lawmakers worked precariously close to the midnight debt ceiling deadline amid warnings the government could run out of money to pay its bills if it didn’t raise the debt ceiling. Federal workers should expect to return to work Thursday morning, the director of the Office of Management and Budget said. Director Sylvia Mathews Burwell said employees should check the Office of Personnel Management’s website for updates. Yosemite National Park said it was already resuming operations Wednesday night. The GOP-led House gave the final stamp of approval to the Senate-brokered bill, passing it easily late Wednesday night. But it wasn’t Republicans who made it happen; a majority of that party’s caucus actually voted against the measure, which only passed because of overwhelming Democratic support. A temporary bandage The debt cushion now extends through February 7, with current spending levels being authorized through January 15. That means a few months of breathing room, but little more. After all, the bill doesn’t address many of the contentious and complicated issues — from changes to entitlement programs to tax reform — that continue to divide Democrats and Republicans. “We think that we’ll be back here in January debating the same issues,” John Chambers, managing director of Standard and Poor’s rating service, told CNN on Wednesday night “This is, I fear, a permanent feature of our budgetary process.” The heads of the Senate and House budget committees — Democratic Sen. Patty Murray of Washington and GOP Rep. Paul Ryan of Wisconsin — will meet Thursday with an eye on addressing these budget divides. They’ll helm budget negotiations intended to come up with a broader spending plan for the rest of fiscal year 2014, which ends on September 30. Obama, for one, didn’t seem in the mood Wednesday night for more of the same — saying politicians in Washington have to “get out of the habit of governing by crisis.” “Hopefully, next time, it will not be in the 11th hour,” Obama told reporters, calling for both parties to work together on a budget, immigration reform and other issues. As he left the podium, Obama was asked whether he believed America would be going through all this political turmoil again in a few months. His answer: “No.” Come together The past 16 days of the partial government shutdown have come at a steep cost. Standard and Poor’s estimated it took $24 billion out of the economy. The possibility of a debt default — something that, Chambers pointed out, is gone for now but not entirely — spooked investors on Wall Street and hiked interest rates. And then there’s the impact the ordeal had on politicians’ image. If there’s one thing polls showed Americans agreed on, it’s that they don’t trust Congress — with Republicans bearing more blame than anyone else for what transpired. Both sides talked past each other continuously, with Republicans insisting for a time that defunding, delaying or otherwise altering Obamacare must be part of any final deal. Democrats, meanwhile, stood pat in insisting they’d negotiate — but only after the passage of a spending bill and legislation to raise the debt without unnecessary add-ons. In the end, Democrats largely got what they wanted — after some last-minute talks by Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell. “We’ve been able to come together for a lot of different reasons,” said Reid, a Nevada Democrat. Republicans did get a small Obamacare concession: requiring the government to confirm the eligibility of people receiving federal subsidies under the health care program. But while some Republicans, such as tea party favorite Sen. Ted Cruz, claimed moral victories in energizing their movement, House Speaker John Boehner didn’t pretend his side was the victor. “We fought the good fight; we just didn’t win,” Boehner told a radio station in his home state of Ohio. Democratic Sen. Chuck Schumer of New York blasted Cruz and the rest of the tea party wing in Congress for what he called the “reckless, irresponsible politics of brinksmanship over the last few weeks.” “It was not America’s finest moment,” he said. Markets soar on agreement News of the deal brought some relief to Wall Street as well as Washington, with pressure to resolve the impasse building with the approach of the Thursday deadline to raise the debt ceiling or face default. U.S. stocks rose on the news of an agreement, with the benchmark Dow Jones Industrial Average jumping more than 200 points on the day. Reid hailed the agreement he worked out with McConnell as “historic,” saying that “in the end, political adversaries put aside their differences.” McConnell fired an opening salvo for the budget talks expected to begin soon and continue until December when he said any ensuing spending deal should adhere to caps set in a 2011 law that included forced cuts known as sequestration. “Preserving this law is critically important to the future of our country,” McConnell said of the Budget Control Act, which resulted from the previous debt ceiling crisis in Washington. The focus on an agreement shifted to the Senate after House Republicans failed on Tuesday to come up with a plan their majority could support, stymied again by demands from tea party conservatives for outcomes unacceptable to Obama and Senate Democrats, as well as some fellow Republicans. Rep. Charles Rangel compares tea party in House to ‘confederates’ Cruz, despite being in the Senate, is credited with spearheading the House Republican effort to attach amendments that would dismantle or defund the health care reforms known as Obamacare to previous proposals intended to end the shutdown. All were rejected by the Democratic-led Senate, and Obama also pledged to veto them, meaning there was no chance they ever would have succeeded.

House Plans Debt-cap Bill Today Device Tax Cchanges

House Plans Debt-Cap Bill Today With Device Tax Delay

7. Meanwhile, Senate leaders are poised to reach an agreement as early as today to halt the fiscal standoff, and now must race the clock to sell the plan to lawmakers before U.S. borrowing authority runs out this week. The emerging Senate deal would stave off a potential default, end the 15-day-old government shutdown and change the immediate deadlines in favor of three new ones over the next four months. Its far from complete as the Senate may delay passing the plan and House Republicans are seeking changes. Under the Senate plan, lawmakers would be required to hold budget talks by Dec. 13, fund the government through Jan. 15, 2014, and extend the nations borrowing authority until Feb. 7, according to a person familiar with the Senate talks who spoke on condition of anonymity to discuss the concept. Weve made tremendous progress, Senate Majority Leader Harry Reid, a Nevada Democrat, said yesterday on the Senate floor with his Republican counterpart, Mitch McConnell of Kentucky. We are not there yet. Delay Deadline An agreement would forestall the immediate crisis. It would end the shutdown that has closed many federal services and prevent a possible U.S. default that the Treasury Department said may be catastrophic. U.S. lawmakers, who have governed from fiscal crisis to fiscal crisis for more than two years, may be setting up more crises in the near future. The agreement would delay the next major deadline — the Jan. 15 lapse in government funding — until after the holiday shopping season. There are two potential obstacles to a Senate agreement. First, a single senator would be able to use procedural tactics to push a final vote past the Oct. 17 lapse in borrowing authority. Texas Republican Senator Ted Cruz, who spoke for more than 21 hours during a budget debate last month, wouldnt rule out stalling maneuvers, saying he wants to see the details of the plan. Also, House Republicans, who have demanded major changes to President Barack Obamas signature health-care law, may resist any proposal that contains few of their priorities. Debt Limit Sounds like everything the president asked for, Representative Blake Farenthold, a Texas Republican aligned with the Tea Party movement, said yesterday when asked about the Senate framework. The House Republican alternative would prevent the government from making any employer-side contribution to the health insurance of members of Congress, the president, the vice president and the cabinet. Obama has insisted that Congress raise the $16.7 trillion U.S. debt limit without add-ons and that stopgap spending bills be free of policy conditions. Speaker Boehner A Senate agreement would again put pressure on House Speaker John Boehner, who has a 232-200 Republican majority. He may have to decide whether to side with hardliners insistent on changes to Obamacare or rely on Democratic votes to pass a bipartisan Senate plan through the House. Reid and McConnell may release the plans details as early as today. Any one senator could push a final vote until at least Oct. 18, after the debt ceiling is breached though before the U.S. runs out of cash and begins missing payments between Oct. 22 and Oct. 31. Representative Paul Ryan, a Wisconsin Republican and chairman of the House Budget Committee, today said the budget provision included in the Senate plan isnt enough to resolve the fiscal impasse. You need to do more than that, Ryan told reporters as he walked into the meeting of House Republicans. Benchmark Treasury 10-year yields rose two basis points, or 0.02 percentage point, to 2.71 percent at 9:05 a.m. New York time, according to Bloomberg Bond Trader prices. The rate touched 2.74 percent, the highest since Sept. 23. The Stoxx Europe 600 Index gained 0.8 percent at 7:57 a.m. in New York on Yahoo in the longest winning streak in two months. The Standard & Poors 500 Index fell 0.4 percent to 1,703.23 at 9:49 a.m. Positive Comments We had very positive comments from the Senate leaders, and if you take those comments at face value, a deal looks fairly imminent, Otto Waser, chief investment officer at R&A Research & Asset Management AG in Zurich, said by telephone today.

House Plans Debt-Cap Bill Today With Medical-Device Tax Changes

(Scott Eells/Bloomberg) Many economists are playing up the scary possibility that the United States could default on its debt, triggering a financial crisis. Other analysts and some Republicans, however, think this is overblown . Even if the debt ceiling isn’t raised, they say, the Treasury Department can keep making interest payments on the debt. There’s no absolutely no reason to default. Both views are incomplete. Yes, it’s possible that the Treasury Department could avoid an outright default on debt payments if the borrowing limit isn’t increased before Oct. 17 though this is far from certain. But a failure to raise the debt ceiling would still be highly disruptive even if we don’t default, raising the possibility of delayed Social Security checks and economic havoc. Can we avoid a debt default? Maybe. Remember, if the debt ceiling isn’t lifted by Oct. 17, then the Treasury Department will only bring in enough tax revenue to pay about 65 percent of the bills that arrive over the next month. And it won’t be able to borrow any more money to pay the rest. That means some of the government’s bills will go unpaid. Now, which bills go unpaid? That’s the all-important question. Some observers think the Treasury Department will do everything in its power to ensure that the U.S. government continues to pay interest on its debt. After all, huge swathes of the global financial system are structured around the idea that U.S. Treasuries are the safest asset in the world. if that assumption were ever called into question, havoc would ensue. This is precisely why Moody’s thinks that a default on U.S. debt is unlikely, even if we smash into the debt ceiling. I took a more detailed look here at whether Treasury can actually “prioritize” payments to avoid a debt default. Short answer: There are big legal and technical challenges, but the numbers might work out. Between Oct. 18 and Nov. 15 the government will bring in roughly $222 billion in taxes and owe roughly $328 billion. But it will only need about $35 billion on hand to make interest payments over that time. So the money to avoid default is there, at least in theory. But that doesn’t mean our problems would be over… The problem with avoiding a debt default Here’s the big problem with prioritization: If the Treasury Department wants to conserve enough cash to keep servicing the debt, then it will have to miss or delay a bunch of other important payments in the weeks ahead. Again, here’s a refresher on the major bills that are coming due in the weeks ahead: If the Treasury Department wants to save up enough cash to make that $6 billion interest payment on Oct. 31 and that $29 billion interest payment on Nov. 15, then it might have to delay Social Security checks or Medicare payments or even military pay in order to conserve cash. So, for example, Social Security checks might go out two weeks later than scheduled at the start of November. Here’s an illustrative example of what those delays might look like, courtesy of the Bipartisan Policy Center: Food stamps could get delayed five days. Social Security checks and military pay could get delayed two weeks. And that’s not the end of the story.These delays would be disruptive enough. But a prioritization plan to avoid default would also have major economic impacts. And it could still spook the financial markets. Case in point: Alec Phillips of Goldman Sachs has estimated these missed and delayed payments would cause the economy to shrink as much as 4.2 percent of GDP in that quarter. Paul Krugman has estimated that the damage could rise to as much as 10 percent of GDP. So have economists at Citi Research . Again, this is in an “optimistic” scenario where we avoid defaulting on the debt. The same goes for market confidence: In a recent note, David Bianco estimated that any prioritization plan to avoid default would still cause the S&P 500 stock index to lose 10 percent of its value (the orange line below): (Deutsche Bank) That’s not nearly as bad as outright default which he thinks would cause a 45 percent wipe-out and a global financial calamity but it’s quite severe. Note that there’s ample room for market panic in the weeks ahead if the ceiling isn’t raised. For instance:The Treasury Department has to roll over about $302 billion worth of debt on Oct. 17, Oct. 24, and Oct. 31.

Hitting the debt ceiling would be terrible even if we didn’t default

Republicans scare anybody with a brain. These knuckle-dragging dinosaurs need to come into the 21st century. October 13, 2013 11:47 pm at 11:47 pm | ELIDA RAEL SENATOR RON PAUL ,he has my vote and he is right about everything… Obama should HAVE been impeached long ago.. He;s a LIZARD ….. October 13, 2013 11:47 pm at 11:47 pm | gene here’s a man without any real knowledge. Planning to run in 2016 for pres- we’re in really big trouble October 13, 2013 11:57 pm at 11:57 pm | ThinkAgain Only a repub would dismiss as trivial America defaulting on her financial obligations. October 13, 2013 11:58 pm at 11:58 pm | ThinkAgain @Not-DixieCrat: “Let’s vote for a clean bill, shall we? Why not?” Because it will go down in defeat, denying the tea baggers the opportunity to righteously proclaim only they represent the “will of the people.” October 13, 2013 11:59 pm at 11:59 pm | joe Rand Paul, the Tea Party, and the Republicans are the only people who know how bad the debt really is. If you don’t believe this, try raising your credit card limit every year, max out your credit card, and repeat. See how long you can do that before its too late. But yes, blame the republicans and tea party for keeping us from financial ruin. Wake up people. October 14, 2013 12:16 am at 12:16 am | BenFranklin Trying to understand what doesn’t make sense about being fiscally responsible. Is there a never ending reservoir of funds to pay for unfunded liabilities? Does putting your fiscal house in order seem irresponsible? You may not like the messenger but how can you not give creedence to a message that is based on fiscal sanity? October 14, 2013 01:03 am at 1:03 am | SteveInMN I thought he was less wack than his wack daddy. Here – in print – I admit – I WAS WRONG. October 14, 2013 02:39 am at 2:39 am | Mugzee44 from a politician that’s from a State that’s so conservative some of its people have never seen a flushing toilet! October 14, 2013 03:02 am at 3:02 am | Jim Rand or Hillary. I think I will take a shot with Rand. Obama has about done us in and Hillary would finish us off. Long live the Tea Party. Make no mistake the Tea Party will take back this country. We have to. Our country is depending on us. We will not let you down. October 14, 2013 05:08 am at 5:08 am | Nancy More than 55 million stupid people voted Bush in for the second time around and they all deserve what is happening now (downward spiral of the economy). Damage is done and there is absolutely no turning back. We simply need to get used to a third world status with much poverty and civil unrest. October 14, 2013 05:40 am at 5:40 am | JerseyJeff78 Rand…. Take an economics class. It’s 99.9% of every economists, financial analysts and investor professionals not just the President, Democrats, most Republicans and world leaders around the globe saying that to you. October 14, 2013 05:53 am at 5:53 am | Paul Rand Paul and his tea party cronies are so out of touch. They really wanted to drag the world into depression by the US Govt shutdown and default, and then surely, they would turn around and blame President Obama for letting it happen. Are they really that satanic just so they could gain more political power by stabbing the whole nation (and the globe for that matter) on its back? October 14, 2013 06:42 am at 6:42 am | Minnie Mouse There’s no scare to anything because it’s the truth. Just like anyone who doesn’t pay bills this happens: you lose your credit rating, your lose your borrowing abilities, countries will lose trust in us, people lose trust in you, you pay more interest ect.. At least President Obama is not standing in front of national TV, telling the public that the Affordable Care Act is going to destroy our country and kill people. Anyone regardless to what party you in and are you are saying this is or have said this, your being ridiculous! You have no proof and it’s far from the truth. October 14, 2013 06:57 am at 6:57 am |

Debt default damage already unfolding

borrowing authority runs out this week. The emerging Senate deal would stave off a potential default, end the 15-day-old government shutdown and change the immediate deadlines in favor of three new ones over the next four months. Its far from complete as the Senate may delay passing the plan and House Republicans are seeking changes. Under the Senate plan, lawmakers would be required to hold budget talks by Dec. 13, fund the government through Jan. 15, 2014, and extend the nations borrowing authority until Feb. 7, according to a person familiar with the Senate talks who spoke on condition of anonymity to discuss the concept. Weve made tremendous progress, Senate Majority Leader Harry Reid , a Nevada Democrat, said yesterday on the Senate floor with his Republican counterpart, Mitch McConnell of Kentucky . We are not there yet. Delay Deadline An agreement would forestall the immediate crisis. It would end the shutdown that has closed many federal services and prevent a possible U.S. default that the Treasury Department said may be catastrophic. U.S. lawmakers, who have governed from fiscal crisis to fiscal crisis for more than two years, may be setting up more crises in the near future. The agreement would delay the next major deadline — the Jan. 15 lapse in government funding — until after the holiday shopping season . There are two potential obstacles to a Senate agreement. First, a single senator would be able to use procedural tactics to push a final vote past the Oct. 17 lapse in borrowing authority. Texas Republican Senator Ted Cruz , who spoke for more than 21 hours during a budget debate last month, wouldnt rule out stalling maneuvers, saying he wants to see the details of the plan. Also, House Republicans, who have demanded major changes to President Barack Obama s signature health-care law, may resist any proposal that contains few of their priorities. Debt Limit Sounds like everything the president asked for, Representative Blake Farenthold, a Texas Republican aligned with the Tea Party movement, said yesterday when asked about the Senate framework. The House Republican alternative would prevent the government from making any employer-side contribution to the health insurance of members of Congress, the president, the vice president and the cabinet. Obama has insisted that Congress raise the $16.7 trillion U.S. debt limit without add-ons and that stopgap spending bills be free of policy conditions. Speaker Boehner A Senate agreement would again put pressure on House Speaker John Boehner , who has a 232-200 Republican majority. He may have to decide whether to side with hardliners insistent on changes to Obamacare or rely on Democratic votes to pass a bipartisan Senate plan through the House. Reid and McConnell may release the plans details as early as today. Any one senator could push a final vote until at least Oct. 18, after the debt ceiling is breached though before the U.S. runs out of cash and begins missing payments between Oct. 22 and Oct. 31. Representative Paul Ryan , a Wisconsin Republican and chairman of the House Budget Committee, today said the budget provision included in the Senate plan isnt enough to resolve the fiscal impasse. You need to do more than that, Ryan told reporters as he walked into the meeting of House Republicans. Benchmark Treasury 10-year yields rose two basis points, or 0.02 percentage point, to 2.71 percent at 9:05 a.m. New York time, according to Bloomberg Bond Trader prices. The rate touched 2.74 percent, the highest since Sept. 23. The Stoxx Europe 600 Index gained 0.8 percent at 7:57 a.m. in New York in the longest winning streak in two months. The Standard & Poors 500 Index fell 0.4 percent to 1,703.23 at 9:49 a.m. Positive Comments We had very positive comments from the Senate leaders, and if you take those comments at face value, a deal looks fairly imminent, Otto Waser, chief investment officer at R&A Research & Asset Management AG in Zurich, said by telephone today. The market is back to the levels it was at before the entire crisis talks started. Reid and McConnell, veteran Senate deal makers, are brokering the agreement, reached during conversations that started over the weekend. Democrats want as long a debt-limit increase as possible and as short a government funding extension at Republican-preferred levels. Republicans want the opposite. Possible sticking points late yesterday included whether Democrats would agree to Republican demands that the Treasury Department be barred from using so-called extraordinary measures to extend the debt-limit deadline after Feb. 7. Five Months Such maneuvers pushed forward the deadline for five months this year, though its not clear how much time they would buy in 2014.

Rand Paul: Obama is trying to ‘scare people’ on debt ceiling

The problem with this scenario is that no one knows when that “last” minuteor hour, or daywill fall. The Treasury’s best guess is it can make it through Thursdaybut no one knows for sure. But without congressional approval to continue selling bondsas the government has done to manage its finances for the past centurythe Treasury will come up short. Soon. On a busy day, the government owes as much as $60 billion in legal obligations authorized by Congress. So the government is already running on fumes. Wait: What’s this about $20 bills being no good? Your paper money is still good. For now. Paper money ultimately relies for its value on trust. The source of Treasury bond’s value is a little more specific: it’s a legal obligation to pay back the money you loaned the U.S. government. The current value is based on the interest promised by the Treasury in relation to the risk and rates paid by other investments. Simply put, if the interest payments are suspended, the bond loses value. Since no one knows exactly which bonds may or may not get paid, the entire batch of debt is suspect. But they’re not going to be suspended. There’s still enough cash coming in to cover the interest payments. This whole thing is a White House scare tactic. Let’s ignore for a moment the Treasury’s multiple, very real concerns about choosing which bills to payincluding technical (the system isn’t set up to do so), legal (Treasury has no authority to do so), and political (paying China before making good on Medicare payments, for example). The larger issue is the wide daily swings in the amount of money flowing in and out of the government’s coffers. Lots of money comes in, for example, around quarterly tax deadlines (the last one was Sept. 15.). Big payments go out at the start of each month for Social Security. The Treasury uses short-term borrowing, among other things, to smooth out this flow of cash. Think of it like overdraft protection on your checking account. If it loses the capacity to borrow, it’s only a matter of time before it overdraws its account at the Federal Reserve and misses an interest payment. So these investors miss a few payments. This is only temporary. Everyone knows they’ll get paid eventually. That may be true, but any “delay”in itselfwill cause major damage. Try telling prospective landlords that you’re “pretty sure” you’ll “eventually” pay your rent each month and see how many of them are willing to rent you an apartment. Investors feel the same way about their interest payments. government’s debt rating. Just like your own credit score, that rating is maintained by three separate agencies, one of which has already knocked the U.S. off its AAA-rated perch. When your score goes down it costs more to borrowif you can get a loan at all. I don’t own any U.S. Treasurys. I can still get my $20 from the ATM machine. What do I care if China doesn’t get paid? For starters, because if you ever plan to borrow money, a Treasury default will make it more expensive. Investors who buy lower-rated debt have to pay more because of the higher risk of not getting paid. Since Treasurys are the safest debt, all other borrowing rates are pegged off them. So rates on credit cards, mortgages, car loans, etc. all go up. China is frustrated with DC: JPM’s Ulrich Jing Ulrich, JPMorgan, says the government shutdown has put a “damper on China’s sentiment towards U.S.; default talk is unsettling to Asian countries.” The larger problem is that Treasury bonds are the $20 bills of the global financial system. If the cab driver refuses your $20 bill, you can walk.

Why Breaking The Federal Debt Limit Sparks Fear

Obama says he’d talk on GOP’s terms — if they raise debt ceiling, fund government

Their conclusion: There is no fair or sensible way to pick and choose among the many bills that come due every day, according to a report by the Treasurys inspector general. Q: Couldnt the government just print more money? A: No. The Federal Reserve, an independent agency, is responsible for creating money. The government funds itself through tax revenue and borrowing. Q: What else could the Treasury do? A: It could make its interest payments first then delay all other payments until it collects enough tax revenue to make a full days payments. That would avoid choosing among competing obligations. But that would lead most other payments to be delayed. For example: Social Security benefit payments worth about $12 billion, scheduled to be paid Oct. 23, would be delayed for two days, according to an estimate by the Bipartisan Policy Center. Tax refunds slated for Oct. 24 would probably be delayed until Oct. 28. And on Nov. 1, nearly $60 billion in Social Security benefits, Medicare payments and military paychecks are due. With no increase in the borrowing limit, those payments would likely be delayed, possibly for up to two weeks. Q: Would that avoid a default? A: Impossible to say. One problem is that the government would likely have to pay higher interest on new debt. Consider: On Oct. 24, the government must redeem $93 billion in short-term debt. Normally, it sells new debt to pay off old debt. This step doesnt increase total debt, so it would still be allowed even if the borrowing limit wasnt raised. Yet given the risk of a default, investors would demand higher rates on new U.S. debt. Short of cash, the government might be unable to pay off its maturing debt. The result: a default. Q: Could the president just ignore the debt limit? A: Some experts say he could. The 14th Amendment to the Constitution says, The validity of the public debt of the United States, authorized by law shall not be questioned. But the White House has said its own lawyers dont think he has the authority to do so. Nor is it clear that many investors would buy bonds issued without congressional approval. Q: Are global investors panicking yet? A: The stock market has drifted lower over the past couple of weeks. But investors arent panicking. And long-term Treasury yields have been mostly unchanged. Stocks could sink further just before Oct. 17 if the government remains partially shut and no sign of a deal on the debt limit seems near. Investors would likely also dump Treasuries. There would be a rush to the door, predicts Steve Bell, an analyst at the Bipartisan Policy Center. Interest rates on some short-term Treasuries have risen slightly in the past week.

Bad Banks Turn Toxic China Debt to Treasure for Investors

Post to Facebook Debt limit breach no big deal, some GOP lawmakers say on Incorrect please try again A link has been posted to your Facebook feed. Sent! A link has been sent to your friend’s email address. 412 To find out more about Facebook commenting please read the Conversation Guidelines and FAQs This story is part of Government shutdown Debt limit breach no big deal, some GOP lawmakers say Gregory Korte and Susan Davis, USA TODAY 9:29 a.m. EDT October 8, 2013 Everyone agrees that the nation is coming up against the $16.7 trillion debt ceiling. The debate is over when that will happen, and what comes next. The U.S. Capitol is seen as heavy rain sweeps through Washington on Oct. 7, 2013. (Photo: J. Scott Applewhite, AP) Story Highlights Treasury Department says its $16.7 trillion borrowing authority will run out Oct. 17 The actual date of default would happen “days, not weeks” after Treasury reaches debt limit Debt limit increase could be part of a deal to end week-old government shutdown SHARE 2935 CONNECT 183 TWEET 412 COMMENTEMAILMORE WASHINGTON Republican lawmakers are voicing increasing skepticism about dire warnings that failing to raise the debt ceiling would result in catastrophic default. “I would dispel the rumor that is going around that you hear on every newscast, that if we don’t raise the debt ceiling, we will default on our debt,” said Sen. Tom Coburn, R-Okla., Monday on CBS This Morning. “We won’t. We’ll continue to pay our interest.” Coburn and other Republicans argue that the Treasury Department could prioritize interest payments while delaying others. The House has passed a bill requiring the Treasury to do just that. “I think one of the things that’s been so disturbing about this period is that you’ve actually had the House leadership pass proposals to implement how you would do prioritization, as if that would be an acceptable solution. It is not acceptable. Prioritization is default by another name,” said Gene Sperling, director of the National Economic Council, at a Politico breakfast Monday. He said President Obama prefers a long-term raise in the $16.7 trillion debt limit, but did not rule out support for a short-term increase. Washington’s attention is turning to the debt limit even as it enters its second full week of a partial shutdown caused by Congress’ inability to pass a spending bill. Although most of the 350,000 civilian Defense employees are going back to work this week, more than half a million federal workers remain furloughed. The House voted Saturday to give all federal workers back pay, but the Senate has yet to schedule a vote on the measure. It’s increasingly likely that a bill ending the shutdown will be packaged with a measure to raise the debt limit. But House Speaker John Boehner, R-Ohio, is seeking budget cuts from the White House as part of that measure. The White House says it wants a “clean” debt limit increase, and that it must happen by Oct. 17. That’s the day Treasury Secretary Jacob Lew says the United States would run out of borrowed money, putting the government in uncharted territory and creating the prospect of a first-ever default. But some Republicans aren’t buying it. US Treasury Secretary Jack Lew (Photo: Saul Loeb AFP/Getty Images) “I will hear language like, ‘Well, we are heading toward the debt ceiling and you are going to default.’ Anyone that says that is looking you in the eyes and lying to you, either that or they don’t own a calculator,” Rep. David Schweikert, R-Ariz., said in a House debate Friday. And Rep. Ted Yoho, R-Fla., even argues that reaching the debt limit could help the economy, by showing the world the U.S. is serious about its debt problem. “I think, personally, it would bring stability to the world markets,” he told The Washington Post Monday. “The bottom line is, Treasury has the ability to manage that, so the date is whatever Secretary Lew claims the date will be,” said Rep. Jeb Hensarling, R-Texas. White House officials concede there’s some truth in that. The government will still have $30 billion in cash on Oct. 17, plus whatever tax receipts come in each day. “You’ll have days, not weeks, until you deplete that money and you default,” said Jason Furman, chairman of the Council of Economic Advisers, at the Politico breakfast. “It’s irresponsible to get to the 17th but no, you don’t fall off a cliff instantly.” The Treasury Department says even approaching the debt limit could rattle the markets and result in increased borrowing costs. Veronique de Rugy, an economist at the free-market Mercatus Center at George Mason University, said the debt ceiling will have to be raised sooner or later and Republicans should know that. “I do not believe that past Oct. 17 the country’s going to hell,” she said. “But I agree that failing to pay interest on our debt has very serious consequences. And there’s no budget out there that doesn’t require us to raise the debt ceiling.

Debt limit breach no big deal, some GOP lawmakers say

Jack Lew

The initial limit prior to World War II, by the way, was $45 billion. That may sound small today but was a lot of money at the time equal to about half of a years gross domestic product (GDP), the value of goods and services produced by the country. 4. Is the US required to have a debt ceiling? No. The Constitution allows Congress to arrange to borrow money, and doesnt require any limit on borrowing. But Congress has always placed restrictions on federal debt, notes a report this year by the Congressional Research Service . Even before there was a cap on aggregate borrowing, legislators set limits on how much borrowing that could occur, and for what purposes. Behind that stance is a lesson of history: Too much debt can be a dangerous thing, whether its for a person, a business, or a nation. Mostly, other nations do not have debt ceilings, but that doesnt mean they dont have no policies related to debt. In 2011, a Government Accountability Office report offered up only one nation, Denmark , that sets an official cap on borrowing the way the US does. But nations find other ways to keep watch on debt. The report said other countries that we reviewed generally use fiscal rules or targets to increase attention to fiscal policy decisions that lead to an increase in debt. Members of the European Union , it noted, agree to the following targets: total debt no greater than 60 percent of one years GDP, and annual deficits no greater than 3 percent of GDP. 5. Is the debt ceiling a good idea? Some economists say its an unnecessary ritual. If Congress wants to keep better watch on the national debt, it can do so by other means. The legislators can easily view reports by their own accounting experts (the Congressional Budget Office ) to see estimates of how their tax-and-spending decisions will affect total debt. Other finance experts say the cap can serve a purpose, nudging lawmakers to focus periodically on the long-term consequences of their fiscal habits. Sometimes lawmakers negotiate over the debt cap, linking a hike to efforts at deficit reduction or other budgetary reforms. But it can be dangerous for the economy if the process leads over a cliff toward a possible default by the Treasury on US obligations. 6. Is the national debt out of control? Its fair to say that the US has deep fiscal challenges. There is some good news that Obama trumpets: Federal deficits are falling, and the Congressional Budget Office says the national debt promises to stay roughly stable as a percentage of GDP during the next decade. All that, coupled with fact of historically low interest rates on Treasury bonds argues against the notion of a near-term fiscal crisis. But economists dont view this as a time to be complacent, either. The debt already equals a full years GDP, which is a very high level compared with most of US history. Many economists would prefer to see a level of 60 or even 30 percent of GDP. And without a course correction, the current path doesnt lead there. Instead, it leads to a steady rise in debt after 2023. Thats mainly because the nations changing demographics push up the cost of entitlement programs such as Medicare . If a nations debt keeps rising higher, it could signal an unsustainable course. The risk grows that America will lose standing as a magnet for global investment. Interest rates could rise and economic growth could slow, so that living standards grow at a slower pace. At a minimum, a high debt-to-GDP ratio leaves a nation little cushion for emergencies. 7. Would a refusal to raise the debt ceiling help control the national debt? Few people view this as a good way to tame the debt. Yes, keeping the current cap in place would stop all borrowing. But if it caused a financial crisis in the process as some economists predict that could end up worsening the nations fiscal position. In a recession tax revenues typically go down, and federal spending goes up. By contrast, in the current economic recovery federal spending is falling as a share of GDP, and tax revenues are rising.

Debt Ceiling: Senate Republicans Flirt With Default

Though initially rejected by GOP leadership, 79 of Meadows’ House colleagues signed on to the letter, which quoted James Madison writing in the Federalist Papers, “the power over the purse may, in fact, be regarded as the most complete and effectual weapon … for obtaining a redress of every grievance.” Speaker John Boehner, R-Ohio — The coach. He’ll make the key play call. The top Republican leader in the land may be the most important player in the days immediately before a possible shutdown. Boehner could decide whether to push through the Senate’s version of a spending bill and keep government running, or he could float a third version with some other Republican wish list items in it. If he takes the second option, Boehner could risk a shutdown but could also force the Senate into a tough position: give House Republicans something or send federal workers home. Timing on all this will be critical. Sen. Ted Cruz, R-Texas — The revolutionary or rabble rouser, depending on your viewpoint. The tea party firebrand could lead a long filibuster on the Senate floor, delaying passage of a spending bill until just one day before the deadline on Monday, September 30. Cruz has stoked the anti-Obamacare flames all summer, but recently angered fellow Republicans by openly saying that the Senate does not have the votes to repeal the health care law. Sen. Marco Rubio, R-Florida — Senator to watch. The potential presidential candidate has been one of three senators (Cruz and Mike Lee, R-Utah, being the others) pushing to use the government shutdown debate as a way to repeal or defund Obamacare. But watch his actions and language as a shutdown nears to see if he digs in or if downshifts at all. Sen. Harry Reid, D-Nevada — The man steering the ship in the Senate. Master at using Senate procedure to his advantage, Reid is the main force in controlling the voting process in the chamber and ensuring that an attempted filibuster by tea party-types fails. The majority leader will be a primary negotiator if we reach phase three, if the House does not accept the Senate spending bill. Sen. Mitch McConnell, R-Kentucky — If Reid steers the ship, McConnell controls the headwinds. Which is good news for Reid, at least initially. The Republican leader and several of his members say they will vote against Cruz’s filibuster and in favor of a spending bill with no limits on Obamacare. Meaning, in favor of a bill that just funds government. McConnell generally has been leery of running into a shutdown or default. In fact, one legislative method for avoiding default is named after him. Sen. Patty Murray, D-Washington — The consigliore. Murray, center, does not seek the outside limelight, but the Senate Budget Committee chairwoman is a major fiscal force behind the scenes on Capitol Hill. Known by fellow Democrats as a straight shooter, she is also an experienced negotiator, having co-chaired the laborious, somewhat torturous and unsuccessful Super Committee. Rep. Tom Graves, R-Georgia — The new militia leader. The freshman congressman from Georgia, second from right, is one reason the debate has reached this point. Graves led the charge that blocked the original proposal by House Republican leaders. That would have kept government funded and had a detachable portion on Obamacare. Instead Graves and other conservatives forced their leaders to pass a spending bill with a mandatory defunding of Obamacare. Rep. Peter King, R-New York — The blunt statesman. King is outspoken against many tea party tactics, calling the move to tie Obamacare to the must-pass spending bill essentially a suicide mission and Cruz “a fraud.” He is pushing for Republicans to accept a more “clean” spending bill that can pass the Senate and avoid a shutdown. Thomas Donohue, president and CEO of the U.S. Chamber of Commerce — The heavy. Donohue is known for his deep connections and his aggressive lobbying on behalf of business. He and the Chamber are urging Republican lawmakers to avoid a shutdown.

Debt ceiling 101: 12 questions about what’s going on

Prioritize the order in which you pay your bills? That’s no definition of default I’ve ever heard used in any way. Default is when you don’t pay your loan. Prioritizing how you pay your bills is prioritizing how you pay your bills.” (Update: Standard and Poor’s did cite the debt ceiling and “brinksmanship.”) And some think the markets will be forgiving. “I don’t think the markets have been spooked so far,” said Hatch, adding that if markets realize there’s an ongoing “legitimate attempt to try and make government work,” they’ll grant the nation leeway. Not all Republicans seemed to agree. Sen. John McCain (R-Ariz.), one of the harshest critics in his party over the attempts to attack Obamacare by linking it to must-pass bills, said Monday night that his colleagues were not listening to the right people. “More important than what some of my colleagues think is what the markets think,” McCain said. “And everybody I’ve talked on Wall Street, they will believe that it’s very serious. As much as I appreciate all the elder statesmen in my party, what I respect more is what I’m hearing from my friends on Wall Street.” Still, McCain did not back moving straight to a vote to raise the debt limit, even for a brief period. “I want to see what the dynamics of it are,” McCain said. “There are too many variables for me to absolutely decide. But anything I decide will be based on the fact that we are not repealing Obamacare until we have 67 Republican votes in the United States Senate. Then we will repeal Obamacare,” he said, referring to the number of lawmakers required to override a presidential veto. Michael McAuliff covers Congress and politics for The Huffington Post. Talk to him on Facebook. Also on HuffPost: Loading Slideshow Healthcare In America Is Already ‘The Best In The World’ One of the more positive sounding admonitions from health care reform opponents was that the United States had “the best health care in the world,” so why would you mess with it? Well, it’s true that if you want the experience the pinnacle of medical care, you come to the United States. And if you want the pinnacle of haute cuisine, you go to Per Se. If you want the pinnacle of commercial air travel, you get a first class seat on British Airways. Now, naturally, you wouldn’t let just anyone mess with someone’s tasting menu or state-of-the-art air-beds. But like anything that’s “the best,” the best health care in the world isn’t for everybody. The costs are prohibitively high, the access is prohibitively exclusive, and the resources are prohibitively scarce. What do the people in America who “fly coach” in the health care system get? Well, at the time of the health care reform debate, they were participating in a system that was, by all objective measurements, overpriced and underperforming — if you were lucky enough to be participating in it. As anyone who’s fortunate enough to have employer based health care or unfortunate enough to have a pre-existing condition can tell you, health care for ordinary people already involved all of those things that we were told would be a feature of the Affordable Care Act — long waits, limited choice, and rationing. When the Commonwealth Fund rated health care systems by nation, the top marks in the surveyed categories went to the United Kingdom, New Zealand and the Netherlands. Ezra Klein examined the study, and observed: “The issue isn’t just that we don’t have universal health care. Our delivery system underperforms, too. ‘Even when access and equity measures are not considered, the U.S. ranks behind most of the other countries on most measures. With the inclusion of primary care physician survey data in the analysis, it is apparent that the U.S. is lagging in adoption of national policies that promote primary care, quality improvement, and information technology.'” Death Panels The only thing that perhaps matched the vastness of the spread or the depth of the traction of the “death panel” lie was the predictability that such a lie would come to be told in the first place. After all, this was a Democratic president trying to sell a new health care reform plan with the intention of opening access and reducing cost to millions of Americans who had gone without for so long. What’s the best way to counter it? Tell everyone that millions of Americans would have increased access … to Death! The best account of how the “death panel” myth was born into this world and spread like garbage across the landscape has been penned by Brendan Nyhan, who in 2010 wrote “Why the “Death Panel” Myth Wouldn’t Die: Misinformation in the Health Care Reform Debate.” You should go read the whole thing. But to summarize, the lie began where many lies about health care reform begin — with serial liar Betsy McCaughey, who in 1994 polluted the pages of the New Republic with a staggering pile of deception in an effort to scuttle President Bill Clinton’s health care reform. As Nyhan documents, she re-emerged in 2009 when “she invented the false claim that the health care legislation in Congress would result in seniors being directed to ‘end their life sooner.'” Nyhan: “McCaughey’s statement was a reference to a provision in the Democratic health care bill that would have provided funding for an advanced care planning for Medicare recipients once every five years or more frequently if they become seriously ill. As independent fact-checkers showed ( 2009b; 2009a), her statement that these consultations would be mandatory was simply false–they would be entirely voluntary. Similarly, there is no evidence that Medicare patients would be pressured during these consultations to “do what’s in society’s best interest…and cut your life short.” But the match that lit the death panel flame was not McCaughey, it was Sarah Palin, who repeated McCaughey’s claims in a Facebook posting and invented the term “death panel.” As Nyhan reports, Palin’s claims were met with condemnation from independent observers and factcheckers, but the virality of the term “death panel” far outstripped its own debunking. To this day, the shorthand for this outrageous falsehood remains more firmly planted in the discourse than the truth. One thing worth pointing out is that Palin, in creating the term “death panel,” intended to deceive people with it.

They did it by selling some loans and converting others into equity stakes. Now theyve expanded into licensed financial firms doing everything from investment banking to trusts and real estate. The AMC balance sheets are relatively clean at this point, said Charlene Chu, Beijing-based head of China financial institutions at Fitch Ratings . You can make a ton of money on NPL workouts if you do them right. Credit Binge Foreign investors led by UBS AG (UBSN) and Standard Chartered Plc (STAN) already have bought stakes in China Cinda Asset Management Co. , which is preparing for a $3 billion initial public offering as early as the end of the year. Buying shares in Chinas bad-loan managers could help the global firms profit from a new round of nonperforming loans following a $6.5 trillion lending spree since the end of 2008. At some point, China will embark on sales of NPLs resulting from the 2009-2012 credit binge, said Ted Osborn, a Hong Kong-based partner at PricewaterhouseCoopers LLP and a specialist in bad debt. International investors are keen to invest in the AMCs, as they are seen as being supported by the government, and this will enhance their future prospects in Chinas ever-developing financial sector. China set up Huarong , Cinda, China Orient Asset Management Corp. and China Great Wall Asset Management Corp. in 1999 to clean up a financial system on the brink of bankruptcy after decades of government-directed lending to unprofitable enterprises. Bad-loan ratios reached as high as 40 percent. Authorities gave each company 10 billion yuan of capital and a 10-year period to dispose of assets. Chalco Swaps The four AMCs reported combined assets of 560 billion yuan and profits of 16 billion yuan in 2011, according to a bond prospectus Cinda issued last October. At Cinda, the second-largest of the firms, profit rose 6 percent to 7.2 billion yuan last year, according to the companys annual report. Huarong , the largest by assets, posted a 68 percent jump in 2012 profit to 5.9 billion yuan. The AMCs helped rejuvenate Chinas economy by turning 405 billion yuan of delinquent borrowings into equity stakes in 601 of the biggest state-owned enterprises, according to Cindas bond prospectus. Freed of their unpaid bank debts, once chronic money-losing firms including Aluminum Corp. of China , known as Chalco (601600) and now the nations biggest aluminum producer, and China Petroleum & Chemical Corp. (600028) , Asias largest refinery, were overhauled into industry leaders and have since gone public. That made the AMCs stakes valuable. About 2 billion yuan of Chalco bad loans given to Cinda converted in 2001 to a 21 percent stake in the company worth 2.2 billion yuan when it listed on the Hong Kong Stock Exchange less than three months later. Cinda still owns a 5.9 percent stake, now valued at 3.5 billion yuan based on the current share price. Tripling Capital Besides turning soured debt into equity, the AMCs enhanced the value of distressed assets by restructuring, bridge loans and other instruments available through their subsidiaries . The combined capital of the AMCs has more than tripled to 148 billion yuan since 1999, according to Tan Ming, a Hong Kong-based analyst at Jefferies LLC. That will give AMCs the financial wherewithal and appetite to deal with more nonperforming assets still to emerge in Chinas financial industry such as trusts, he wrote in a June note. Chinas leaders are under pressure to rein in credit following a lending spree since the end of 2008 of a magnitude similar to the one that pushed Asian nations into crisis in the late 1990s and preceded Japans lost decades. Chinas economy probably will expand 7.6 percent this year, the weakest pace since 1999, according to the median estimate of economists surveyed by Bloomberg News . Goldman Sachs estimated in August that China might face losses of as much as $3 trillion as the speed of its credit expansion over the past four years, particularly by non-bank lenders, has exceeded that seen prior to other credit crises. Soured Loans During the late 1990s, the four Beijing-based AMCs borrowed 570 billion yuan from the central bank and raised 820 billion yuan by selling bonds to four state-owned banks to pay them for the bad loans at face value, according to the Cinda prospectus . They inherited more soured loans from Industrial & Commercial Bank of China Ltd. , China Construction Bank Corp. (939) , Agricultural Bank of China Ltd. , Bank of China Ltd. and Bank of Communications Co. during a 2003-2005 restructuring and also acquired distressed assets from smaller banks after 2005. The bailouts removed trillions of yuan of soured loans off the books of Chinas four biggest banks, enabling them to transform from insolvent institutions into the worlds most-profitable lenders , reporting less than 1 percent of their loans as nonperforming by the end of June. Bond Extension While the AMCs claimed success in dealing with the 1999 bailout, they only recovered 20 percent in cash out of the 866 billion yuan in nonperforming loans they sold by the end of March 2006, when disposal of those debts was completed, according to the China Banking Regulatory Commission . The Finance Ministry in 2010 allowed the firms to extend bonds that should have been due that year by another decade, raising concerns that the bad-loan managers were unable to repay the four banks that purchased them. I dont believe the AMCs are really profitable if they had to demonstrate cash flow and debt-service coverage to support their debts, said Jack Rodman , a former partner at Ernst & Young LLP who advised top China banks and AMCs on bad-loan disposals from 2002 to 2007 and is now a Seattle-based senior adviser at Crosswater Realty Advisors LLC. Their liabilities to the banks and the state are huge. Marked Down Under a government-approved restructuring plan, Cinda marked down legacy-related nonperforming assets and liabilities to market value in 2010 as part of its transformation into a commercially viable operation, enabling the new company to book profit when getting rid of legacy loans. Since then, almost 45 percent of the AMCs bonds have been repaid, according to Mike Werner , a Hong Kong-based analyst at Sanford C. Bernstein HK Ltd. AMCs commercial operations appear financially healthy and their returns on equity are in the 14 percent to 21 percent range, Werner said, citing the direct result of the Finance Ministry carving out the legacy bad-loan disposal business from commercial operations. Cinda credited its expertise in restructuring distressed assets and ownership in state firms for helping it sell a 16.5 percent stake to Zurich-based UBS, Standard Chartered , Chinas Social Security Fund and Citic Capital Holdings Ltd. for 10.4 billion yuan in March 2012. Stabilizing Factor The debt-to-equity swaps in many SOEs not only provided AMCs with a decent return but also improved their bad-loan management skills by helping them grow, said Li Ying , a Beijing-based analyst at China Chengxin International Credit Ratings Co. , partly owned by Moodys Investors Service.

8 States Where Student Debt Is Out Of Control


Post to Facebook 8 states where student debt is out of control on Incorrect please try again A link has been posted to your Facebook feed. Sent! A link has been sent to your friend’s email address. 21 To find out more about Facebook commenting please read the Conversation Guidelines and FAQs 8 states where student debt is out of control Kurtis Droge, Wall St. Cheat Sheet 6:03 a.m. EDT October 6, 2013 Tuition can cost easily more than $10,000 per year, ranging all the way up to $50,000. (Photo: Rana Faure, Getty Images) Story Highlights Tuition can cost easily more than $10,000 per year, ranging up to $50,000 Debt rates on student loans vary widely from state to state No. 1 state has a whopping average debt of $32,440 for graduates with loans SHARE 369 CONNECT 99 TWEET 21 COMMENTEMAILMORE Rising levels of student debt have raised alarm bells in the minds of economists and recent college graduates alike. With a bachelor’s degree virtually indispensable in today’s workplace and a master’s necessary in many fields, as well many people, be they fresh out of high school or not, have found themselves needing to a seek a higher education in order to pay the bills. The problem is that these days, college is far from cheap. Tuition for a four-year college can cost easily more than $10,000 per year, ranging all the way up to $50,000 or even more for top-of-the-line institutions. With many inbound college students finding themselves strapped for cash, their only option aside from obtaining federal aid is to seek loans to cover the difference between the costs of college and living and any income they might obtain in the meantime. This can amount to a crippling debt load by the time students graduate. However, student debt rates are not the same across the nation: In fact, there is a surprising amount of variance, according to numbers collected by College In Sight. The average graduate of a four-year institution (or higher) with student debt has less than $20,000 of debt in Utah or Arizona. Let’s take a look at eight states at the other end of the spectrum, those with the highest amounts of student debt in the country. 8. Vermont If you are graduating with debt from a college in Vermont, you will have an average of $28,873 owed. That’s right: even in a state home to small names like Middlebury College and Norwich University, student debt rates are still fantastically high. What’s worse is that 63% of graduates almost 2 out of every 3 outgoing students are graduating with debt to their name. 7. Ohio We travel to the Midwest for the seventh spot on our list, which belongs to Ohio. With an average debt rate of $28,683 among those graduating with obligations to lenders, the home of Ohio State University is certainly not a cheap state in which to attend university. It might be appealing to root for the Buckeyes, but your pocketbook may not be such a huge fan of the prospect, especially with 68% of outgoing students bearing debts from their education. 6. Iowa Staying in the Midwest, we move on to Iowa, home of the Hawkeyes and the Cyclones. Getting closer to your Big 10 or Big 12 favorites for a few years is going to cost you: Graduates from the state who have borrowed come out with an average of $28,753 in debt. The percentage of students who are in debt has gone up, too, with 72% of those who attend college in the corn belt state turning to the bank for help pay for their tuition. 5. Connecticut Jumping out East, the next state on the list is Connecticut, where the average indebted graduate owes $28,783 after completing college. It will certainly cost you a pretty penny to go to Yale, located in New Haven, and even the home of the Huskies, UConn, isn’t exactly cheap, either. The good news is that more than a third of those graduating from the state are debt-free. 4. Rhode Island We stay on the Eastern Seaboard for the fourth spot on the list, Rhode Island. Breaking the $29,000 mark with an average debt of $29,097 for those who are indebted, it certainly doesn’t seem like it was inexpensive for Harry Potter star Emma Watson to make her foray into the world of American higher education at Brown University. Even schools like the Rhode Island School of Design and Roger Williams University can cause you to rack up the debt. 3. Minnesota The bronze medal goes to Minnesota, the home of the Golden Gophers. The average graduate who isn’t debt-free owes $29,793 to the bank. If you’re looking for an option other than Walden or Capella universities in the state, you can try Carleton College; either way, it seems like there’s no way to avoid tacking on extra debt if you’re bound for the North Star State out of high school. 2. Pennsylvania The penultimate spot on the list belongs to none other than Pennsylvania, where a graduate who is burdened by loans averages $29,959 in debt. There might be plenty of options to go to college in Pennsylvania including Temple, Lehigh, Carnegie Mellon, and the University of Pittsburgh but the sheer number of prestigious schools hasn’t helped debt levels of the outgoing students in the state. Another deadly statistic is the percent of graduates who have taken out student loans, which weighs in at 70%. 1. New Hampshire The surprising top of the list goes to New Hampshire, which, with a whopping average debt of $32,440 for graduates running a loan tab, comes in at nearly $2,500 more than its nearest competitor. Besides Dartmouth, there aren’t too many familiar colleges in the state to those outside of New England, but even the lack of notoriety for New Hampshire’s universities hasn’t prevented many graduates from tacking on over $30,000 of debt during their college years.

Indonesia Dollar Debt Gains as Rupiah Plummets: Southeast Asia

In an exclusive interview on ABCs This Week with George Stephanopoulos, Boehner said he does not know how and when the current standoffs will end. But he made clear that, in his view, President Obama and Democrats in Congress are to blame for both the government shutdown and the possibility that the United States will default on its debt. The speaker reiterated his demand for negotiations with the president to find a path forward on both fronts. RELATED: Shutdown Continues, But Furloughed Workers Will Likely Be Paid The American people expect in Washington when we have a crisis like this that the leaders will sit down and have a conversation. And I told my members the other day that there may be a back room somewhere, but theres nobody in it, said Boehner, R-Ohio. Were interested in having a conversation about how we open the government and how we begin to pay our bills. But it begins with a simple conversation. The president has said no talks are possible until government operations are fully funded again, and has ruled out entirely negotiations over the debt ceiling. If the government shutdown lasts longer, and if the nation defaults on its debt, Boehner said blame should fall on the president: Im willing to sit down and have a conversation with the president. But his refusal to negotiate is putting our country at risk. While a growing number of his colleagues have expressed frustration with the House GOP strategy, Boehner gave no ground in continuing his push for changes to the presidents health care law, as well as broader fiscal reforms, in the current fights. Some 21 House Republicans have said publicly that theyre willing to support a clean measure to extend all government funding without other conditions attached, according to ABC News count. Thats apparently enough, when added to Democratic votes, to pass a bill out of the House. But the speaker disputed that notion: There are not the votes in the house to pass a clean CR. Boehner also appeared to back off of private assurances hes offered colleagues that the nation would not default on its debt. Treasury Secretary Jack Lew has said the nation will run out of ways to continue to pay all of its bills Oct. 17, making an increase in the debt limit an urgent priority. RELATED: Obama Doesnt Rule Out Using 14th Amendment To Raise The Debt Limit Boehner said repeatedly that he does not intend to have the nation default on its debt. But he declined to guarantee that hed bring a debt-limit bill to the floor of the House without concessions from Democrats. The nations credit is at risk because of the administrations refusal to sit down and have a conversation, he said. The votes are not in the House to pass a clean debt limit. And the president is risking default by not having a conversation with us. Were not going down that path. It is time to deal with Americas problems. How can you raise the debt limit and do nothing about the underlying problem? Asked by Stephanopoulos whether that no negotiations means the country will default on its debt, Boehner responded: Thats the path were on. Listen, the president canceled his trip to Asia. I assumed, well, maybe he wants to have a conversation. I decided to stay here in Washington this weekend. He knows what my phone number is. All he has to do is call. RELATED: John Boehner Tells GOP Moderates to Trust Me Boehner acknowledged that the showdown over government funding, aimed at scaling back the Obama health care law, isnt a fight that he chose. He also appeared to confirm that, in conversations with Senate Majority Leader Harry Reid, he had previously sought to ensure full government funding, only to be convinced to take a different course after consulting with his fellow House Republicans. I and my members decided that the threat of Obamacare and what was happening was so important that it was time for us to take a stand. And we took a stand, he said. I thought the fight would be over the debt ceiling. But you know, working with my members, they decided, well, lets do it now. And the fact is, this fight was going to come, one way or the other. Were in the fight. Boehner suggested that hed like negotiations with the president to include entitlement reform. But he ruled out including new tax revenues as part of a deal. J. Scott Applewhite/AP Photo The president got $650 billion of new revenues on January the 1st. He got his revenues. Now, its time to talk about the spending problem, he said. Very simple. Were not raising taxes. Responding to Boehners appearance, Sen. Charles Schumer, D-N.Y., challenged Boehner to test his claim that the votes arent there to reopen the government. Let me issue him a friendly challenge: put it on the floor Monday or Tuesday, Schumer said on This Week. Speaker Boehner, just vote. He also rejected Boehners request for negotiations until or unless House leaders agree to end the shutdown and raise the debt limit. This is playing with fire. And we are happy to negotiate, but we want to negotiate without a gun to our head, Schumer said. Like This Week on Facebook here . You can also follow the show on Twitter here . Go here to find out when This Week is on in your area.

Cruz: Use debt ceiling debate for leverage

By Bill Mears, CNN Supreme Court Producer updated 8:31 AM EDT, Fri October 4, 2013 STORY HIGHLIGHTS Little known legal provision could again provide opening for President Obama on debt ceiling Obama said that the stakes were stark if the government could not pay its bills Former President Bill Clinton said previously he would act unilaterally and test the courts But Obama had the chance in 2011 and wasn’t convinced it was the correct legal strategy Washington (CNN) — A little-known provision of the Constitution might provide a little-used way for President Barack Obama to unilaterally get around stalled efforts to prevent the country from defaulting on its debts. It is a legal audible that was considered two years ago in a similar crisis, and ultimately rejected by Obama, a former constitutional scholar. In remarks on Thursday, the president said the stakes were stark, if the debt ceiling were not raised, and the government unable to pay its bills. “As reckless as a government shutdown is, an economic shutdown that results from default would be dramatically worse,” he said, pointing the finger at Capitol Hill. Government shutdown vs. debt ceiling Why debt ceiling is so important to you What about the debt ceiling? Congressional Republicans who control the House insist they will not act until the administration commits to delaying implementation of key parts of the healthcare reform law, or to further spending cuts– ultimatums the White House rejects. The game of political chicken raises the potential of a recession and market meltdown if the Treasury is not replenished by mid-month. Some economists warn the debt ceiling impasse is a far greater threat than the ongoing government shutdown. That’s where Section 4 of the 14th Amendment comes in: “The validity of the public debt of the United States, authorized by law … shall not be questioned.” Does that mean the president could on own his raise the debt ceiling? Some congressional allies say yes. “It is an option that should seriously be considered,” said Senate Finance Committee Chairman Max Baucus of Montana. House Minority Leader Nancy Pelosi of California said it should have been done in 2011, the last time the two branches went through this. Back then it was former President Clinton who led the rhetorical charge. He said he would have raised the debt ceiling “without hesitation” and “force the courts to stop me.” Then-Treasury Secretary Timothy Geithner also suggested such a legal right was possible, and plausible. But Obama was not sure. “I have talked to my lawyers,” he said at the time. “They are not persuaded that that is a winning argument,” suggesting he believed the courts would not accept such a move — and more importantly, would the nation’s creditors. Fast forward to 2013. His spokesman Monday repeated the White House line Congress had the responsibility here. “The president can’t raise it by himself,” said White House spokesman Jay Carney. “This administration does not believe that the 14th Amendment gives the power to ignore the debt ceiling. And even if the president could ignore the debt ceiling, the fact that there is significant controversy around the president’s authority to act unilaterally means that it would not be a credible alternative to Congress raising the debt ceiling, and would not be taken seriously by the global economy and markets.” Legal and political scholars — and the federal courts — have debated just how relevant, and how far Section 4 was designed to go. The amendment was ratified in 1868, to ensure in part, the unified nation’s debts from the just-ended Civil War would be honored, and that Confederate claims would not. The unquoted part of the provision specifically mentions the public debt “incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion.” The U.S. Supreme Court in 1935– in Perry v. U.S.– suggested Section 4 could be applied in other circumstances. “While this provision was undoubtedly inspired by the desire to put beyond question the obligations of the government during the Civil War, its language indicates broader connotation,” said Chief Justice Charles Evans Hughes in the opinion, which concluded that voiding a U.S. government debt was beyond the power of Congress. Indeed other better-known parts of the 14th Amendment– the “due process,” “equal protection,” and “privileges or immunities” citizenship clauses– have been cited in a sweeping range of litigation beyond its original Reconstruction response to the rights of former slaves. Those cases include abortion, segregation, even the 2000 Bush v. Gore presidential ballot dispute. Despite Mr. Clinton’s bold challenge daring the courts to intervene, any unilateral action on the debt ceiling would be sure to prompt immediate lawsuits. Whether an “aggrieved party” such as a taxpayer or bondholder, could establish legal “standing”– allowing any legal action to proceed– would be the first legal hurdle, a process that could drag on for months, even years before the Supreme Court would be asked to offer the final word. But some politicians have said a default on the nation’s debt would constitute the kind of national emergency requiring of bold presidential action, something that would be politically acceptable to the public. Legal challenges, they say, would wither if the economy rebounds. Obama urged negotiations to continue, but on Thursday said the 2011 debt crisis hurt average Americans, and could do so again. “Our economy took a bad hit. Our country’s credit rating was downgraded for the first time, just like you would be downgraded if you didn’t pay your mortgage. This time, they are threatening to actually force the United States to default on its obligations for the very first time in history.” But some Republicans say a constitutional crisis is overblown and so is concern of what will happen if both sides fail to agree in coming days. “I don’t think the credit of the United States is going to be collapsed,” said Rep. Steve King (R-Iowa) on CNN Thursday. “I think that all this talk about a default has been a lot of demagoguery, a lot of false demagoguery. We have plenty of money coming in to service the debt. When we stop servicing the debt, that would be default. We’re a long, long ways from that.” So the dilemma here for the White House would appear more political, less legal. In invoking executive power to raise the debt ceiling, Obama might earn quick political points, by claiming to put the nation’s financial health above congressional inaction.

Constitution and the debt: Can the president go it alone?

Bush School of Logical Thought and Effective Governance. He pasted at the head of his class. He did not attend classes on syntax and grammar though. October 6, 2013 12:53 pm at 12:53 pm | tony The answer to criminal extortion is the 2nd Amendment and “stand your ground”. Why has the NRA gone quiet? October 6, 2013 12:53 pm at 12:53 pm | stevezeledon Crowley cut Lew off and yet let Cruz spout ad nauseam, and regretted not having more time to give him. Get her off the air! October 6, 2013 12:54 pm at 12:54 pm | al “would destroy the private health care system.” So increasing their customer base will destroy their business? said no executive, ever. October 6, 2013 12:54 pm at 12:54 pm | Just clarifying Why only one sided political affiliated people comment on this board. People should be non bias if possible when posting comments. October 6, 2013 12:55 pm at 12:55 pm | Tag9 This guy should be arrested for fraud ! October 6, 2013 12:55 pm at 12:55 pm | jon I know people think this guy is a puppet from Canada, but tbh over there people don’t go grandstanding to get what they want. I think he left Canada cause nobody wanted him in office XD October 6, 2013 12:55 pm at 12:55 pm | Terry in Florida This is the face of the Tea Party. This is the voice of Big-Business fueled extremism. This is the venom of the snake. October 6, 2013 12:55 pm at 12:55 pm | ED8_Cruz What an idiot this Cruz is. He wants to screw the country to save the country? And he’s doing all these because he THINKS the ACA is going to screw the country? Talk about a stupid dog chasing its own tail. October 6, 2013 12:55 pm at 12:55 pm | DMR Sen. Cruz once again prove the interests of the GOP\TP are not the citizens of the United States. Cruz has made it clear that he, nor the GOP \ Tea Party folks understand how the U.S. budgeting process works. Cruz and his Tea Party buddies would rather cripple the U.S. economy with their largely false and misleading rhetoric, than do their job. The ACA is settled law, end of story. If one does not want to be a part of the ACA, the solution is simple, pay the penalty tax. That said, if you get seriously ill or hurt, just who should step in to help you with the bills? There is a well-established process for repealing or changing a law and the GOP \ TP refuse to follow it. The entire Federal shut down and the looming debt ceiling mess are without question the fault of the GOP \ TP. The GOP has let a small number of right wing extremist take control of the party and this is the mess they create. The solution to the U.S. debt is actually very basic, roll back the tax rate to that prior to the G.W. Bush tax cuts. Those tax cuts did not benefit middle America, they benefited the wealthy. It is time for that extreme benefit to end. I would also take a long look at taxing off shore income, and closing other tax loopholes that only the very rich can use. That too needs to end. The Social Security issues that might be looming in several years can be nipped now. Remove the cap on the Social Security tax. (The Social Security tax rate is 6.2 percent on income under $113,700 through the end of 2013. The Medicare tax rate is 1.45 percent of all income.) October 6, 2013 12:55 pm at 12:55 pm | chris B Cruz is playing the game for personal political gain October 6, 2013 12:56 pm at 12:56 pm | L R W Anybody who listens to Cruz is listening to the DEVIL ! October 6, 2013 12:56 pm at 12:56 pm | Amazing Ted Cruz = Homer Simpson! Enough said although I have probably insulted Homer Simpson! October 6, 2013 12:56 pm at 12:56 pm | John Holroyd I would like to use the Debt Ceiling Debate to mitigate the harm caused by Senator Cruz and the Tea Party. October 6, 2013 12:56 pm at 12:56 pm | James I’m curious why the GOP doesn’t cut loose these Tea Party ultra conservatives. Clearly they don’t abide by their own Party’s dominant position. So why don’t they renounce them and cut off their funding and let them try to run under their own 3rd party instead of hiding within the Republican party. I’ll bet if they had to stand on their own they wouldn’t last be able to try this crap. October 6, 2013 12:57 pm at 12:57 pm | Mary No Cruz is not working or sent by the Canadian Government, in fact he was kicked out from them that’s why he left canada Now it’s up to us to do the same thing.

Absolutely everything you need to know about the debt ceiling

Global notes gained 6.9 percent since the start of September, after losing 18 percent in August in the worst performance since 2008, according to indexes compiled by HSBC Holdings Plc. That exceeded the 4.1 percent advance in local securities, which snapped a four-month decline. The rupiah fell for a seventh month in September, losing 5.7 percent, the most among 24 emerging-market currencies tracked by Bloomberg. Kokusai Asset Management Co. says the dollar bonds will enable investors to cushion themselves against the rupiah, the most volatile currency in Asia , while UOB Asset Management Ltd. said it favors the foreign-currency notes. Inflation (IDCPIY) slowed last month from a three-year high in August and the countrys trade balance returned to surplus for the first time in five months following a record deficit in July, data showed last week. As the rupiah is still seeing high volatility, buying the dollar debt of Indonesia is one good option to expose yourself to the improving macroeconomic picture, Takahide Irimura, the Tokyo-based head of emerging-market research at Kokusai, Japan s biggest mutual fund, said in an Oct. 1 interview. Economic stabilization will bring the country back to a sustainable growth path and compress the credit-risk premium. Bounce Back The yield premium investors demand to own Indonesias dollar notes over U.S. Treasuries narrowed 83 basis points, or 0.83 percentage point, to 290 from a four-year high of 373 on Sept. 4, according to JPMorgan Chase & Co.s EMBI Plus Index. Indonesias government has a debt-to-gross domestic product ratio of 23 percent, the lowest in Asia, while its budget deficit of 1.14 percent matches that of China and is the smallest in the region after Taiwan s 0.1 percent, according to data compiled by Bloomberg. JPMorgan Asset Management is buying more Indonesian dollar bonds, while being underweight on the rupiah, Pierre-Yves Bareau, the London-based global head of emerging-market debt, said in an interview in Singapore last month. Indonesias economy has the capacity to bounce back, given its low debt-to-GDP figure, he said. Morgan Stanley prefers Indonesias dollar bonds over those of Turkey and South Africa and sees scope for the securities to outperform, London-based strategist Robert Tancsa wrote in a Sept. 26 report. Along with India and Brazil , the three countries have been dubbed the fragile five emerging-market economies by the U.S. lender because of their high current-account deficits. High Volatility Indonesias foreign debt is 29 percent of GDP compared with 43 percent for Turkey and 36 percent for South Africa, according to the Morgan Stanley report. The bank remains structurally bearish on the rupiah, although it says Indonesia needs to rebuild its foreign-exchange reserves , which decreased 18 percent this year to $93 billion, according to the report. The rupiahs Sharpe ratio, which measures returns adjusted for price fluctuations, was minus 1.6 over three months, the least among 23 emerging markets tracked by Bloomberg. Its three-month implied volatility, a measure of expected moves in the exchange rate used to price options, more than doubled to 15.64 percent this year. Thats the highest in Asia, followed by 14.07 percent for Indias rupee and 10.64 percent for Japans yen. We like Indonesias dollar bonds because they have better liquidity, while for rupiah-denominated bonds there is a need to consider the currency risks, Chia Tse Chern, head of Singapore and Asia fixed-income at UOB Asset Management, which oversees S$41.5 billion ($33 billion), said in a Oct. 1 interview. Policy Response Inflation in Southeast Asia s largest economy accelerated from 5.47 percent in May to 8.79 percent in August as the government raised the price of subsidized fuel in June and the weaker currency pushed up the cost of imported goods. Consumer-price gains eased to 8.4 percent last month. The August trade surplus was $132 million, following a $2.3 billion shortfall in July, official data show. The current-account deficit reached $9.8 billion in the three months through June, the largest in data compiled by Bloomberg going back to 1989, following shortfalls in the previous six quarters. Bank Indonesia raised its benchmark interest rate by 1.5 percentage points to 7.25 percent since mid-June in an attempt to slow the economy and reduce the deficits. It will increase the rate by 25 basis points tomorrow and another 25 basis points in November, according to a Goldman Sachs Inc. research note on Oct. 4. The government announced in August that it would allow more shipments of unprocessed mineral ores for the rest of this year and increase a tax on luxury imported goods. Potential Intact Amundi, a Paris-based asset manager that manages about $1 trillion, and BNP Paribas Investment Partners said they are increasing investments in both Indonesias dollar and local-currency bonds. The measures to improve the trade balance will have an effect in the coming months, Mark Capstick, a London-based portfolio manager at BNP Paribas, which oversees 478 billion euros ($651 billion), said in a Sept. 26 e-mail. The repricing of Indonesian assets has brought valuations much closer to where we see fundamental relative value, he said. We are however still very concerned over the fragility of the currency in the context of the external environment so are very slightly underweight. Indonesias economy will probably grow 5.78 percent this year, according to the median forecast in a Bloomberg survey. Gross domestic product increased 6.23 percent in 2012 and has risen by an average of 5.74 percent over the last 10 years. The cost to protect the countrys bonds from non-payment using five-year credit-default swaps fell 50 basis points to 253 basis points on Oct. 3 from a 22-month high of 303 on Aug. 27, according to CMA prices. Indonesias long-term economic potential remains intact with very low debt-to-GDP and conservative budget deficits, Raymond Lim, head of Asian bonds in Singapore at Amundi, said in a Oct. 1 e-mail. The challenges faced by Indonesia are cyclical in nature. To contact the reporters on this story: Lilian Karunungan in Singapore at ; Yumi Teso in Bangkok at To contact the editor responsible for this story: James Regan at More News:

Government Shutdown Heads For Collision With Debt Limit

Chuck Schumer (D-N.Y.) both said the debt limit and shutdown should be dealt with together. Still, the path forward remained unclear because Democrats were sticking by their vow to talk with the GOP only after Republicans open the shuttered government and take potential default off the table. “We’ll talk about anything,” Reid told reporters. “But open the government, get the debt ceiling out of here.” “We’ll negotiate on anything they want to talk about,” Reid emphasized. “But the government has to be open, we have to get the debt ceiling out of the way.” He was echoed by Schumer. “We’d like to move them both together,” Schumer said. “I think having them together is a good thing, because who wants to go through this again? With debt ceiling, it’s 20 times as dangerous.” While Democrats refuse to talk unless Republicans stop threatening shutdown and default, Schumer argued that was not the same as the GOP’s intransigence. “If one guy has a gun to your head, and you say please don’t shoot, you’re saying the two sides are the same?” Schumer told a reporter who asked why it wasn’t fair to say Democrats were just as dug-in as Republicans. However, Republicans have long signaled that they think the debt limit is their strongest bit of leverage to win concessions from the Democrats, either on spending or Obamacare. Boehner has said repeatedly in public that he would not let the nation default, but many members of his caucus have said they think they can avoid a technical default even if the $16.7 trillion debt limit is breached. They argue that the United States can pay principal and interest on its bonds, even if it doesn’t meet its other obligations. For Boehner to flatly pledge to moderates that he would avoid default in the way that most economists define it — by raising the limit to pay all the nation’s bills — he would likely have to violate the so-called Hastert rule, an informal practice of the GOP caucus of only moving bills that are supported by the majority of Republicans. Most of those Republicans believe that the debt limit should only be hiked in return for spending cuts, and Boehner spokesman Michael Steel said that remains the speaker’s position. “Speaker Boehner has always said that the United States will not default on its debt, but if we’re going to raise the debt limit, we need to deal with the drivers of our debt and deficits,” Steel said in a statement. “Thats why we need a bill with cuts and reforms to get our economy moving again.” At least one moderate Republican, however, said he would be willing to reopen the government and boost the borrowing limit with Democratic votes. “If there’s an arrangement or deal, then you don’t have to get 218 from one side or the other,” said Rep. Tom Cole (R-Okla.), a deputy whip of the GOP conference. Cole acknowledged that the battle lines were over more than restoring government funding. “I think we’re moving toward something a little bit bigger,” Cole said. Also on HuffPost: Loading Slideshow Into The Weekend Sunrise at the U.S. Capitol as the federal government shut down goes in to its fifth day on October 5, 2013 in Washington, D.C. (Photo by Chris Maddaloni/Getty Images) John Boehner House Speaker John Boehner (R-OH) walks to the House floor on October 5, 2013 in Washington, D.C. (Photo by Chris Maddaloni/Getty Images) Nancy Pelosi Rep. James Clyburn (D-SC); House Minority Leader Nancy Pelosi (D-CA); and Rep. Xavier Becerra (D-CA) speak to members of the media during a news conference in the Capitol on October 5, 2013 in Washington, D.C. (Photo by Chris Maddaloni/Getty Images) Kevin McCarthy House Majority Whip Kevin McCarthy, (R-CA) speaks to members of the media during a news conference in the Capitol on October 5, 2013 in Washington, D.C. (Photo by Chris Maddaloni/Getty Images) Capitol Tourists Tourists visit the U.S. Capitol in Washington on October 5, 2013, the fifth day of the government shutdown. The US government shut down for the first time in 17 years on October 1 after lawmakers failed to reach a budget deal by the end of the fiscal year. (NICHOLAS KAMM/AFP/Getty Images) Eric Cantor House Majority Leader Eric Cantor (R-VA) speaks to members of the media during a news conference in the Capitol on October 5, 2013 in Washington, D.C. (Photo by Chris Maddaloni/Getty Images) President Obama And Vice President Biden Walk To Lunch As Government Shutdown Continues WASHINGTON, DC – OCTOBER 4: U.S. President Barack Obama (R) and Vice President Joe Biden look over the menu at Taylor Gourmet on Pennsylvania Avenue after walking from the White House for a take-out lunch October 4, 2013 in Washington, DC. Democrats and Republicans are still at a stalemate on funding for the federal government as the shutdown goes into the fourth day. The deli, like many other eateries in Washington, is currently offering a discount for furloughed federal workers. (Photo by Pete Marovich-Pool/Getty Images) Government Shutdown Enters Fourth Day With No Resolution WASHINGTON, DC – OCTOBER 04: Senate Majority Leader Harry Reid (D-NV) speaks at a press conference on the government shutdown October 4, 2013 in Washington, DC. Today marks the fourth day of the government shutdown as Republicans and Democrats remain at an impasse over funding the federal government. Also pictured are Sen. Richard Durbin (D-IL) and Sen. Patty Murray (D-WA). (Photo by Win McNamee/Getty Images) Shutdown Protester A protestor holds a sign against the government shutdown in front of the U.S. Capitol in Washington on October 5, 2013. The U.S.

Boehner: No ‘Clean’ Votes on Reopening Government or Debt Ceiling Without Negotiations with President Obama

AP john boehner budget battle jt 131005 16x9 608 Boehner: No Clean Votes on Reopening Government or Debt Ceiling Without Negotiations with President Obama

“Anyone who says they know for sure whether this is legal is not telling the truth,” Steve Bell of the Bipartisan Policy Center told me. (See pages 8 and 9 of this Congressional Research Service report for more on the arguments here.) The legal questions could, in theory, be cleared up: Back in 2011, Toomey introduced a bill that would require Treasury to prioritize bondholders above everyone else. But that bill never passed Congress. The Obama administration, for its part, has maintained that it can’t and shouldn’t prioritize payments. “Any plan to prioritize some payments over others is simply default by another name,” Lew wrote in his letter to Congress. “There is no way of knowing the damage any prioritization plan would have on our economy and financial markets.” What would be the economic consequences of breaching the debt ceiling? A scene from HieronymousBosch’s famous painting, “Breaching the debt ceiling” (Wikipedia) Nothing good. A prolonged breach could result in a massive dose of fiscal austerity, putting a dent in economic growth. And a default on the debt would almost certainly roil financial markets. If Congress refused to lift the debt ceiling, then the federal government could only spend as much as it takes in taxes. Overall outlays would drop by 32 percent, or $106 billion over the coming month a much sharper drop than, say, the sequestration budget cuts or the furloughs caused by the government shutdown. The financial response is harder to forecast. The Treasury Department certainly thinks the prospect of missing a debt payment could be ruinous: “Credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negativespillovers could reverberate around the world,and there might be a financial crisis and recession that could echo the events of 2008 or worse.” Other analysts agree. Take Fedwire, the central clearing systemthat banks in America use to move cash, bonds, and other financial assets around. This system shuffles around trillions of dollars a day. But as a recent note by RBC Capital Markets notes, Fedwire isn’t set up to handle defaulted securities. The entire system would freeze. “Let us be perfectly clear,” the note says, “crossing the debt ceiling would be catastrophic.” (For more on other potential financial consequences of a default, most of them bad, see this post by Kevin Roose.) Has the United States ever defaulted on its debt before? Shakedown, 1979. Sort of. Back in 1979, the government inadvertently defaulted on about $122 million worth of Treasury bills, due to unexpectedly high demand and an error in word-processing equipment. This was only temporary, and Treasury quickly corrected the error. Still, the damage was long-lasting.A 1989 study in the Financial Review estimated that the incident raised the nation’s borrowing costs by about 0.6 percent, or $12 billion. And the damage lasted for months. That was after a brief, accidental default that was corrected quickly. A debt-ceiling breach today would almost certainly be far more consequential. (Technically, the United States also defaulted on some war debts in the late 18th century, thanks to a plan drawn up by Alexander Hamilton. And when Franklin Roosevelt ended the gold standard in 1933, that was a default of sorts. But those aren’t great analogues.) Come on. Surely the Obama administration can dosomethingto avoid financial Armageddon. Right? Dudes, don’t look at me. This ceiling is unstoppable. (AP) Well…there are a few other possibilities if we blow past the debt ceiling. Some are impractical. Others, like the platinum coin option, sound ludicrous. But it’s also a bit moot: The Obama administration has explicitly ruled them all out. First, Treasury could try to buy time by delaying payments agency officials deemed this the least-badapproach back in 2011.If Treasury was facing $10 billion in obligations on Monday, but only $7 billion in revenue came in, the agency could wait until it had the full $10 billion on hand before paying Mondays bills in full. The problem is that during the delay, Tuesdays bills are piling up. Then Wednesdays. This tactic would quickly become unsustainable. Alternatively, the Obama administration could try simply ignoring the debt ceiling. Last fall, two legal scholars, Neil Buchanan and Michael Dorf, wrote a paper arguing that Obama would be caught in a constitutional dilemma come Oct. 17. Congress has mandated that he spend money on certain programs, but they’ve also mandated that he can’t borrow any more to pay for it. The least bad constitutional option, say Buchanan and Dorf, is for Obama to ignore the debt ceiling and unilaterally issue new bonds.

Poll: Debt Ceiling Increase Favored By Most Americans

Shutdown, debt fight highlight Republican distance from ‘big business’

That goes double, of course, for something which they have very little knowledge about in the first place.” The CNN/ORC poll surveyed 803 adults by phone between Sept. 27 and Sept. 29. Also on HuffPost: Loading Slideshow Barack Obama President Barack Obama pauses while speaking in the Rose Garden of the White House in Washington, Tuesday, Oct. 1, 2013, about the government shutdown. Congress plunged the nation into a partial government shutdown Tuesday as a protracted dispute over Obama’s signature health care law reached a boiling point, forcing some 800,000 federal workers off the job. (AP Photo/ Evan Vucci) Senate Republicans Senate Minority Leader Mitch McConnell (R-KY) (2ndR), speaks while flanked by Sen. John Cornyn (R-TX) (R), Sen. John Thune (R-SD) (2nd-L) and Sen. John Barrasso (R-WY) (L) after the Senate Republican policy luncheon, on Capitol Hill, October 1, 2013 in Washington D.C. (Photo by Mark Wilson/Getty Images) House Republicans House Majority Leader Rep. Eric Cantor, R-Va., left, looks on as Speaker of the House Rep. John Boehner, R-Ohio, pauses during a news conference on Capitol Hill on Tuesday, Oct. 1, 2013 in Washington. Congress was unable to reach a midnight deadline to keep the government funded, triggering the first government shutdown in more than 17 years. (AP Photo/Evan Vucci) Capitol Protesters A protester covers his mouth with a dollar bill as he joins others in a demonstration in front of the U.S. Capitol in Washington, D.C. on October 1, 2013 urging congress to pass the budget bill. (JEWEL SAMAD/AFP/Getty Images) Lincoln Memorial A US Park Police officer watches at left as a National Park Service employee posts a sign on a barricade closing access to the Lincoln Memorial in Washington, Tuesday, Oct. 1, 2013. (AP Photo/Carolyn Kaster) Chuck Hagel U.S. Secretary of Defense Chuck Hagel listens on speaker phone during a conversation with Deputy Secretary of Defense Ashton Carter and other senior Defense Department officials about the U.S. government shutdown, at his hotel in Seoul, South Korea on Tuesday Oct. 1, 2013. (AP Photo/Jacquelyn Martin, Pool) American Cemetery A notice advising visitors that the American Cemetery is closed due to the partial shutdown of the U.S. federal government hangs from the gates of the cemetery in Suresnes, west of Paris, Tuesday Oct. 1, 2013. (AP Photo/Remy de la Mauviniere) President Barack Obama U.S. President Barack Obama delivers remarks about the launch of the Affordable Care Act’s health insurance marketplaces and the first federal government shutdown in 17 years as he’s joined by U.S. Health and Human Services Secretary Kathleen Sebelius (R) and Americans who will benefit from the Affordable Care Act in the Rose Garden of the White House October 1, 2013 in Washington, D.C. (Photo by Win McNamee/Getty Images) National Parks Park Ranger Scott Rolfes locks a gate closing a road over the dam at Saylorville Lake, Tuesday, Oct. 1, 2013, in Saylorville, Iowa. About 800,000 federal workers are being forced off the job in the first government shutdown in 17 years, suspending most nonessential federal programs and services. (AP Photo/Charlie Neibergall) MLK Jr. Monument A U.S. Park Service worker hammers a iron stake into the ground to install a fence around the Martin Luther King Monument in Washington, D.C., October 1, 2013, as the first U.S. Federal government shutdown since 1995 begins. (PAUL J. RICHARDS/AFP/Getty Images) Smithsonian Museums Fay Wagstaff, right, and her mother Fernanda Wagstaff of El Paso, Texas., sit outside the closed Smithsonian National Air and Space Museum in Washington, Tuesday, Oct. 1, 2013. (AP Photo/Carolyn Kaster) Everglades National Park Park Ranger Christine MacKarvich mans the Shark Valley entrance booth in Everglades National Park, early Tuesday, Oct. 1, 2013. She was told to report to work but had been warned that a call from the park service would shut the park down. The partial government shutdown that began Tuesday left many federal workers uncertain of their financial future, with many facing unpaid furloughs or delays in paychecks. (AP Photo/J Pat Carter) Rep. Louie Gohmert (R-Texas) U.S. Rep. Louie Gohmert (R-TX) (R) talks to a military veteran at the World War II Memorial during a government shutdown October 1, 2013 in Washington, D.C. The memorial was temporary opened to veteran groups arrived on Honor Flights on a day trip to visit the nation’s capital. (Photo by Alex Wong/Getty Images) Denis McDonough White House Chief of Staff Denis McDonough listens to President Barack Obama deliver remarks about the launch of the Affordable Care Act’s health insurance marketplaces and the first federal government shutdown in 17 years in the Rose Garden of the White House October 1, 2013 in Washington, D.C. (Photo by Chip Somodevilla/Getty Images) Liberty Bell Visitors to Independence National Historical Park are reflected in the window of the closed building housing the Liberty Bell, Tuesday, Oct.

Don’t wait on the debt limit

Canceling the shutdown, playing by the rules

Congressional Republicans remain divided on how to structure legislation to raise the government’s borrowing level. And an aide to the House speaker downplayed the development, saying, “Boehner has always said the United States will not default on its debt, so that’s not news.” Still, at least one Democrat — Sen. Charles Schumer of New York — cheered the prospect of the GOP leader refusing to block at least this measure that President Barack Obama and his fellow Democrats strongly support. “This could be the beginnings of a significant breakthrough,” Schumer said in a statement. “Even coming close to the edge of default is very dangerous, and putting this issue to rest significantly ahead of the default date would allow everyone in the country to breathe a huge sigh of relief.” GOP Rep.: You’re beautiful but be honest Sen. Reid: I will not pick and choose GOP ‘lemming caucus’ blocking leadership The Ohio Republican’s vow comes exactly two weeks before the government is set to run out of money to cover its roughly $16.7 trillion debt, unless Congress agrees to lift the so-called debt ceiling. That had long been routine in Washington — until recently, that is, when conservative Republicans have pushed not to allow more borrowing without significant cuts. Boehner himself wrote earlier this week in USA Today that “there is no way Congress can or should pass (a debt ceiling hike) without spending cuts and reforms to deal with the debt and deficit and help get our economy moving again.” He accused President Barack Obama of refusing to negotiate; Obama and fellow Democratic leaders have since said they are open to talks on any and all budgetary matters, but only after the government is reopened. Yet Boehner’s comments signal that, at least on the debt ceiling issue, he’s willing to allow a vote on a measure backed by top Democrats but not most Republicans in his chamber — something he’s refused to do with a Senate-passed measure to reopen the federal government, without any add-ons. Chief among those Democrats is Obama who, for all his strong rhetoric on ending the government shutdown, has said that avoiding a federal debt default is an even bigger necessity. He’s insisted Congress pass such a measure, as is, without tying it to anything else. “As reckless as a government shutdown is, an economic shutdown that results from default would be dramatically worse,” the president said in a speech Thursday in Rockville, Maryland. “There will be no negotiations over this.” Obama challenges Boehner to allow ‘yes-or-no vote’ on shutdown While Boehner’s comments suggest hope toward some common resolution on the debt ceiling, the government shutdown is another matter entirely. The two sides appeared no closer to an agreement Thursday, the third day of the shutdown that comes because Congress failed to agree on a budget plan to send to President Barack Obama. In fact, they appeared to dig in — insisting their approach is best and that the other was to blame for the 800,000 workers at risk of furloughs, shuttering of national parks, loss of funding for various programs and other effects of the shutdown. A conservative GOP wing has demanded that any spending measure include provisions to dismantle or defund Obamacare, which became law in 2010 and was upheld by the Supreme Court last year. As he’s done before, Obama on Thursday challenged Boehner to stop what he called Republicans “reckless” strategy of refusing to pass the “clean” spending bill — which doesn’t have provisions targeting the president’s signature health care reform, the Affordable Care Act, like several passed by the GOP-led House — and instead pushing measures to fund popular programs on a one-by-one basis. The shutdown: Personal stories from Americans on the edge The president said the spending initiative passed by the Democratic-led Senate would pass the House with support from Democrats and some Republicans, except that Boehner won’t allow the vote. “The only thing that is keeping the government shut down, the only thing preventing people from going back to work, and basic research starting back up, and farmers and small-business owners getting their loans — the only thing that’s preventing all that from happening right now today, in the next five minutes, is that Speaker John Boehner won’t even let the bill get a yes-or-no vote because he doesn’t want to anger the extremists in his party,” Obama said. Senate Majority Leader Harry Reid was part of the Democratic chorus Thursday, accusing Boehner of reneging on an agreement to let the House vote on a “clean” spending package of $988 billion, $70 billion less than Democrats wanted). Boehner went back on that deal, Reid surmised in an interview with CNN’s Dana Bash, because he feared fellow Republicans would turn on him and oust him from his position as House speaker. “His job is not as important as our country,” Reid said. “… He has to have some courage.” Reid jabs Boehner, says he reneged on deal Cantor: GOP should stand its ground GOP Rep. Michael Grimm said Thursday night that “very, very arrogant and very obstinate” remarks by Reid and what he calls a lack of needed leadership from Obama undermines the chances of reaching a deal. “If you’re going to be insulted …, and if you’re going to be spoken down to, and there’s going to be this air of arrogance, you’re only going to make things worse,” Grimm, of New York, told CNN’s Anderson Cooper. While Grimm and a few other moderate Republicans have backed a “clean” spending bill without anti-Obamacare provisions, some of his colleagues in the House say the party won’t budge from their strategy. Rep. Tim Huelskamp of Kansas, for one, described his caucus as “very unified” and said Reid and Obama are “confused” if they think “we’re going to fold and let them win on everything.” In fact, House Majority Leader Eric Cantor wrote in a memo that it’s the positions of Obama and other Democrats that are “untenable.” House Republicans would continue passing piecemeal funding measures for popular programs such as veterans affairs, national parks and medical research to keep up pressure on Senate Democrats who refuse to consider such measures in the ongoing stalemate, Cantor’s memo said. “While no one can predict with certainty how the current shutdown will be resolved, I am confident that if we keep advancing common-sense solutions to the problems created by the shutdown that Senate Democrats and President Obama will eventually agree to meaningful discussions that would allow us to ultimately resolve this impasse,” Cantor said in the memo that a GOP source made available to CNN. A conversation between two conservative GOP senators showed Republicans think they can win the debate. In the comments caught by live microphone, tea party-backed Sen. Rand Paul told his Kentucky Republican colleague, Minority Leader Mitch McConnell, that continuing to hammer Democrats for refusing to consider GOP proposals would eventually succeed. Proposal from moderates Meanwhile, two moderate House members — one Republican and one Democrat — proposed a compromise Thursday that would fund the government for six months while eliminating a tax on medical devices in the health care reforms. Senate Democrats quickly rejected the idea because it would link the health care reform provision to the need to fund the government now while extending deep mandatory budget cuts they oppose for half of the new fiscal year. GOP moderates huddle as conservatives set agenda Instead, Obama — who canceled a trip to Brunei and Indonesia for this weekend’s Asia-Pacific Economic Cooperation summit because of the ongoing shutdown — and other Democrats have said they want to negotiate a broad budget deal that could include tax reforms and other matters. But they’re only willing to engage in such talks after the government reopens. This already slogging debate over what to do about the crisis ground to a halt Thursday because of something that, at first glance, did not directly involve any of the legislators on Capitol Hill, even if it did hit very close to home. A chase that began at a White House security checkpoint ended near the U.S. Capitol Hill when authorities opened fire on a car containing a woman and a child, an intelligence source told CNN. Two police officers suffered injuries in the ordeal, according to D.C. Police Chief Cathy Lanier. The female driver — who didn’t fire any shots herself, according to multiple sources — died of gunshot wounds. The House and Senate were both put on lockdown, with no one allowed to leave or enter Capitol Hill buildings and everyone urged to steer clear of windows and doorways, for about an hour.

GOP legislator: Boehner won’t let government default on its debt

debt ceiling must be raised. Shaken faith in T-bills could trigger a credit crunch, drive up interest rates dramatically, degrade equity markets and lead to bank failures. Comments 62 President Obama gestures during a statement on the government shutdown in the Rose Garden of the White House in Washington. (Evan Vucci / Associated Press / October 1, 2013) Also See more stories X By Michael R. Strain and Stan A. Veuger October 3, 2013 Much is in flux in Washington this week. But two important realities have remained constant, whether certain elements in the GOP accept them or not: We must not default on the federal debt, and we shouldn’t wait until we’re on the brink of default to raise the debt ceiling. Here’s why. As measured by economists Scott R. Baker, Nicholas Bloom and Steven J. Davis, policy uncertainty was more severe during the previous debt ceiling fight in the summer of 2011 than at any time since the terrorist attacks of Sept. 11, 2001. If the possibility of default produces such turmoil, imagine what actually defaulting would do. As Republicans have so often pointed out in the fight over Obamacare , the ability of firms to make plans is severely hindered when government policies that affect them are in a state of extreme uncertainty. Raising the debt limit before the eleventh hour will help firms plan their activities, hire new workers and keep the (too weak) economic recovery going. Consumer confidence plunged during 2011’s debt ceiling fight to a low not seen since the dark days of the recession, and it took a long time for confidence to recover. In a report released last week, Gallup found that economic confidence is already much worse now than it was in May and June, and attributes it to the current budget and debt ceiling battles. Many economists believe that consumer confidence measures serve as an indicator of how households will spend money in the future. If households are rattled by Washington shenanigans, they are likely to rein in spending, which would negatively affect the country’s already fragile economy. And even the threat of a default would likely raise the interest rate on Treasuries by increasing their riskiness. This would bring higher borrowing costs for businesses and tighter credit for consumers. As we know from the last debt ceiling fight, the squabbling also costs taxpayers money. The Bipartisan Policy Center estimates that the cost to taxpayers of the delayed debt limit increase in 2011 will total almost $20 billion over 10 years. The United States actually defaulted on its debt once, in spring 1979. Then, as now, the debt ceiling was a source of partisan bickering, and an agreement was reached only at the last moment. The late passage, along with computer problems, meant the Treasury Department was late in making payments on maturing securities to individual investors and in redeeming T-bills. The moral of that story is clear: If Congress waits too long to raise the debt ceiling, the slightest error can throw the country into default on its obligations. Economists Terry L. Zivney and Richard D. Marcus, who studied the incident, concluded that this temporary default on a tiny share of the debt increased T-bill yields by six-tenths of a percentage point and resulted in $12 billion in additional interest payments. If the near-default of 2011 and a very minor default in 1979 cost so much money, imagine how much an actual default would cost taxpayers. After we ran up to the brink of default in 2011, Standard & Poor’s lowered the country’s credit rating for the first time. The response to that downgrade was not overwhelming, but a second downgrade would in all likelihood be more serious. A wide variety of institutions face restrictions on the risk profile of the assets they hold, and a second downgrade could make it harder for many of them to hold Treasury securities. As if all that isn’t bad enough, default could harm the economy in much more destructive ways as well. As the risk-free asset par excellence, Treasury bills are used as collateral in many transactions, including in repo markets, which were a central player in the 2008 financial crisis. Shaken faith in their reliability would potentially trigger a credit crunch, Fedwire could seize up, a generalized flight from risk would drive down equity markets, banks could collapse. In other words, many of the pieces would be in place for a repeat of the 2008 financial meltdown. Federal Reserve Chairman Ben Bernanke probably wasn’t exaggerating when he said in July 2011 that default “would throw the financial system into chaos.” Of course, no one knows for sure what would happen if the U.S. were to default. (Interest rates could fall in a flight to safety, for example, or the Fed could try to stop the panic by stepping in as the bond buyer of last resort, maintaining the liquidity of Treasuries.) But we shouldn’t wait to find out, and we shouldn’t charge up to the brink. The GOP’s laundry list of demands in exchange for a debt ceiling increase is ridiculous. But President Obama ‘s position that he won’t negotiate on the debt ceiling is also outrageous: Previous presidents have done so, and he should too. Shut down the government if you must, but don’t shut down the entire economy. Washington needs to get serious about the debt ceiling. Quickly. Michael R. Strain and Stan A. Veuger are resident scholars at the American Enterprise Institute .

As government shutdown persists, focus shifts to debt limit

Protest against government shutdown

Protesters outside the Capitol in Washington urge Congress to end the federal government shutdown. (Jewel Samad / AFP/Getty Images / October 4, 2013) Related By Lisa Mascaro and Michael A. Memoli 7:44 p.m. CDT, October 3, 2013 WASHINGTON With the federal government shutdown in its third day, both sides of the dispute that started with a Republican drive to end Obamacare shifted their focus Thursday to the next fiscal deadline: the need to raise the debt limit by mid-October to avoid a default. House Speaker John A. Boehner (R-Ohio) has made it clear he cannot muster enough votes from his Republican majority to reopen government with a no-strings-attached funding bill, as President Obama wants, or to raise the nation’s debt ceiling to continue paying the nation’s bills beyond Oct. 17. Rather than buck the tea party flank and reach across the aisle for Democratic votes to pass both measures, House Republicans have decided to change their focus to the debt limit deadline in hopes of reaching a compromise with Democrats on rolling back the size and scope of the federal government. Democrats are skeptical that Boehner can make a big budget deal after past attempts at a “grand bargain” failed, and have publicly said they would not negotiate any substantive changes until after Republicans agree to reopen federal agencies and raise the government’s debt limit. That all but ensures there will be no quick resolution to the federal government shutdown, which has furloughed 800,000 workers and closed all nonessential government operations, including popular national parks and museums. In the last major standoff over the debt ceiling, in 2011, the two sides agreed to paper over their inability to agree by creating a new committee to debate budget changes. Whether they can find a similar mechanism that would save face for both sides may determine whether the government can avoid an economically damaging default on its debt. One point was clear, though, after Boehner gathered a lunchtime meeting Thursday of his kitchen cabinet: The Republicans have sidelined their demand to end the Affordable Care Act in favor of other long-standing GOP priorities, including cuts debt settlement to Medicare and Social Security. “The speaker’s trying to get to a broad budget deal,” said Rep. Charles Boustany Jr. (R-La.). “Obamacare’s just part of it. We’re going to try to get what we can, but we understand that’s the president’s legacy. The bigger problem facing the country, in my mind, is the debt, and the fact that we have entitlement programs that are still growing without end in sight. And we need tax reform.” The debt deadline creates a pressure point that provides the type of governmental crisis that has produced bipartisan agreements in the past. But trust between the parties has deteriorated to such an extent that neither side has great optimism a major deal could be reached before the debt ceiling must be lifted. Thursday, the Treasury Department warned that a default could trigger a worse financial crisis than in 2008. “A default would be unprecedented and has the potential to be catastrophic: credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008 or worse,” it said in the six-page report on the potential effects on the economy of a debt ceiling impasse. The report also noted that private economists have estimated a weeklong government shutdown could reduce economic output by about 0.25 of a percentage point, with a longer shutdown having a greater effect. The federal government has never defaulted on its payments, so the closest historical comparison is the debt limit fight in 2011, the Treasury report said. That was resolved at the last minute but led to a sharp drop in the financial markets, as well as a loss in consumer and business confidence. “As we saw two years ago, prolonged uncertainty over whether our nation will pay its bills in full and on time hurts our economy,” Treasury Secretary Jacob J. Lew said. Obama told congressional leaders at a 90-minute meeting Wednesday night that he would not negotiate over the shutdown or the debt limit, but would enter into broader budget negotiations after those threats were put to rest. “Open the government, and we’ll negotiate with you on anything you want to negotiate,” Senate Majority Leader Harry Reid (D-Nev.) said Thursday. Earlier in the week, Boehner sought to calm some moderate-minded Republicans who appeared ready to end the shutdown by forcing a vote on a government-funding measure that did not repeal any elements of Obama’s healthcare law. On Thursday, Democrats seized on news reports that the speaker had assured some of the moderates that he would not allow the government to default and would rely on Democratic votes if needed to raise the debt ceiling. Boehner’s spokesman, however, said that while the speaker had conceded he would need Democratic votes, he had not promised to do anything that a majority of his caucus would not support. Top House Republicans are working on the demands the GOP will make in exchange for raising the debt limit and reopening government, according to those familiar with the internal strategy. Still smarting from Boehner’s past failed efforts to negotiate a budget deal with the White House, Republicans have shied away from calling any new deal a “grand bargain.” Rather, they see it as a “big down payment” toward trimming the nation’s deficits, preferring the language of Rep. Paul D. Ryan (R-Wis.), the GOP’s leader on budget issues and the former vice presidential nominee. Following Ryan’s lead, Republicans are expected to revisit the components of past budget battles: cuts to Medicare, Social Security and other entitlement programs, as well as reforming the tax code, a long-standing interest. They may also seek to gain the Obama administration’s approval of the Keystone XL oil pipeline between Canada and the United States, as well as pursue smaller changes to the healthcare law, including repeal of the tax on medical-device makers and an end to the individual patient advisory board. “To me this is much more about the debt ceiling and a larger budget agreement than it is about Obamacare that almost gets in the way of the debate,” said Rep. Tom Cole (R-Okla.). Cole noted that some Republicans would vote to raise the debt limit, but at a price. “If you’re a Republican member, you can’t raise the debt ceiling and go home without having done something on the deficit,” he said. “I won’t do it just for nothing.” But Obama has rejected past GOP efforts to cut spending on Medicare and other popular government programs unless Republicans offer new tax revenues as well a stalemate that remains unresolved.

The Chamber, which has long opposed Obama’s health insurance reforms, on Monday sent a letter to lawmakers from over 250 business groups, urging them to fund the government and raise the debt limit while cutting entitlement spending. While the letter was addressed to all lawmakers, the message was clearly directed more at Republicans, with whom the Chamber has historically had far more influence. Despite the letter, the impasse continues, with both sides blaming each other for intransigence. The shutdown began on Tuesday after Democrats rejected Republican efforts to undercut the Affordable Care Act. Also known as Obamacare, a key piece of the program went ahead on Tuesday as people enrolled in new online insurance marketplaces. The Republican Party is traditionally seen as supporting business interests while maintaining strong ties to leading industry groups such as the U.S. Chamber of Commerce, which helps fund candidates’ campaigns and lobbies for corporate-friendly measures in Congress. In the 2012 election cycle the Chamber spent nearly $28 million campaigning against Democrats, out of $32 million overall, according to Washington research group the Center for Responsive Politics. In the budget dispute, the House Republican leadership has aligned with lawmakers sympathetic to the Tea Party in opposing a deal to end the shutdown, despite the pleas of business groups like the Chamber and Fix the Debt to avoid actions that would damage the economy. With many Capitol Hill staff members off work because of the shutdown and Boehner meeting with Obama in the White House on Wednesday evening, the speaker’s office did not immediately respond to questions about the Chamber’s letter or the speaker’s relationship with the business community. Former House Republican leadership spokesman Kevin Madden said party chairmen and big donors used to have a more exclusive level of access to persuading legislators. “It’s become a much more competitive market for (leadership’s) attention.” UNEASE AND FRUSTRATION Paul Stebbins, executive chairman of the board at World Fuel Services Corp in Miami, said the Republican willingness to allow a shutdown created “a very deep unease” among his fellow business leaders as they look ahead to the debt ceiling fight. Honeywell International Chief Executive Dave Cote, a self-proclaimed “lifelong Republican,” said he was frustrated with the party’s unwillingness to agree to a deal. Major bank executives including Goldman Sachs’ Lloyd Blankfein and JP Morgan Chase’s Jamie Dimon met with Obama at the White House on Wednesday to discuss the budget impasse and the debt ceiling, but they did not go as a group to Capitol Hill, and none were scheduled to meet with Boehner or Republican Senate Minority Leader Mitch McConnell of Kentucky. After the White House meeting, Blankfein said the executives, in Washington as part of the Financial Services Forum, wanted lawmakers to understand “the long-term consequences of a shutdown – we’re already in the short-term consequences of a shutdown – but certainly the consequences of a debt ceiling (not being raised), and we all agree that those are extremely adverse.” Blankfein implicitly criticized Republicans for using Obamacare as a weapon. “You can litigate these policy issues. You can re-litigate these policy issues in a political forum, but they shouldn’t use the threat of causing the U.S. to fail on its … obligations to repay on its debt as a cudgel,” he said. A short-term shutdown would slow U.S. economic growth by about 0.2 percentage points, Goldman Sachs said on Wednesday, and a weeks-long disruption could weigh more heavily, at 0.4 percentage points. If Congress fails later this month to raise the $16.7 trillion borrowing cap, the United States would go into default, likely sending financial shockwaves around the world. United Technologies Corp, which makes Sikorsky helicopters and other items for the military, said it would be forced to furlough as many as 4,000 employees, if the U.S. government shutdown continues through next week, due to the absence of government quality inspectors. RISE OF CONSERVATIVE GROUPS Much of the far-right antipathy for big business began in 2008, with the passage of the Troubled Asset Relief Program that critics equated to a bailout of major banks and corporations. While long-standing industry groups like the Chamber have lost some of their sway over House Republicans, conservative organizations like Heritage Action have taken their place, some observers said. Heritage Action is the political wing of the Heritage Foundation, a conservative think tank run by former Tea Party Republican Senator Jim DeMint of South Carolina since January. Stebbins, of World Fuel Services, said single-issue groups like Club for Growth, an anti-tax advocacy group with a political action committee, were playing an outsized role in driving the politics behind the impasse. “I think that one of the things that pragmatic businesspeople resent is that these absolutist imperatives become the litmus test whether you get to succeed politically,” Stebbins said. Led by former Indiana congressman Chris Chocola, Club for Growth has heavily supported Texas Senator Ted Cruz, whose 21-hour speech on the Senate floor last week helped set the stage for the budget fight. In addition to lobbying members of Congress, Heritage Action also puts out a scorecard ranking lawmakers and funds aggressive advertising and publicity campaigns for its favored issues and officials. Club for Growth is a juggernaut campaign funder of fiscally conservative Republicans. Leaders from both Heritage Action and Club for Growth acknowledged that the Republican Party was indeed distancing itself from traditional business interests. “The nature of the (House Republicans) has changed, and we think we have had something to do with that, with our support of some of the candidates we’ve endorsed,” Chocola told Reuters, noting that “our goal is to be cheerleaders rather than obstructionists,” and that he no longer speaks with Republican leadership. Heritage Action spokesman Dan Holler said his group is in “constant communication” with leading Republicans, and that the lawmaker movement away from big business interests showed more attention is being paid to constituents. Both Holler and Chocola pointed to their opposition to authorizing the Export-Import Bank as an example of their disagreement with the Chamber. “There’s an awakening in the Republican Party that being in favor of free markets and less government doesn’t mean that you’re going to be pro-big business,” Holler said. “Now you’re getting to the point where (members of Congress) are saying, ‘I don’t care if groups like the Chamber of Commerce are lobbying for a tax credit,’ or something like that.” @yahoofinance on Twitter, become a fan on Facebook Related Content Chart Your most recently viewed tickers will automatically show up here if you type a ticker in the “Enter symbol/company” at the bottom of this module. 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