As per Helicopter Ben the Bearded Clam…..
-Congress must raise the debt limit. Inaction will cause serious problems to economic activity.
– Weakness in the first half is in part due to temporary factors….Japan & Middle East, Aftermath of housing bubble,
-recoveries can be slow
-consumers are cautious
-confidence is low in terms of spending
-near term withdrawal of fiscal stimulus
-as jobs are lost and not replaced this weighs in on the economy
-we expect improvement on the economy, but not like what we have seen in the past
-On the European debt crisis: the three countries in crisis are a small part of Europe’s overall economy
-solutions can be dealt with austerity, fiscal reform, and economic assistance
-debt crisis causing anxiety in markets
-we are evaluating money markets
-the U.S. economy is at risk from debt crisis in Europe
-Senator Sheeple: Can we prioritize payments and not have the debt limit extended ?
-Clam: we can not simply prioritize payments. The Treasury does not think this is a workable solution. Medicade/care could see disruption and this would not create confidence.
-Senator sheeple- Recently we have been put on possible downgrade; what will this do in terms of interest rates ?
-Clam: this could raise interest rates quite significantly. Failure to raise the debt ceiling would be a self inflicted wound
-Senator sheeple: what about jobs ?
-Clam: If interest rates rise it will reduce confidence and investment and can only conclude this would be bad for jobs
On derivatives:
-Clam: knock on effects from default. CDS pressure on treasuries would not be that big. could be a problem, but would not be the biggest problem. Not raising the debt limit is not an option we should be considering.
-Senator sheeple #3: I have argued we should raise the debt ceiling. What is under your realm regarding sending a clear message? This is a dangerous place we have come too. Does negative low interest rates contribute too deficits ? Praises to the clam and the institution….yada, yada, yada, What will QE 3 fix if we were to extend it ?
-clam: sorry we had to cut to NYSE Deustche Boesre news….Bloomberg is also involved with nonsense from talking heads…..
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