Off-Topic Stock Market & Crypto Discussion

[90scane]

In short- the government is spending to prop up the economy while the FED is trying to cool it off. The FED's increased rates are driving up the cost of government spending to the tune of $1T of interest payments annually in 2023. The increased rates are causing a banking and liquidity crisis that hasn't trickled down to the middle and lower class outside of them not being able to buy homes and potentially new cars. We are now at 4 bank failures (Heartland Tri-state last week with $139M assets and $130M deposits).

Modern Monetary Theory ironically can still claim to be correct because the government hasn't done what it should (cut spending during a big expansion).

Who wins: Congress or the FED?

I see more bank failures coming. A bigger liquidity crunch in the fall. No idea when the real recession hits.

 

[mr.h]

S&P downgraded us years ago, Fitch was way overdue. We have +/-$32 Trillion in debt, and we keep spending. Dont be surprised at more credit downgrades.

I blame the Republicans holding the debt ceiling hostage and they will do it again.
I see more jobs and higher GDP
Appl and Amazon earnings tomorrow. In 2024 we will see rates dropping.

 

[SpikeUM]

I blame the Republicans holding the debt ceiling hostage and they will do it again.
I see more jobs and higher GDP
Appl and Amazon earnings tomorrow. In 2024 we will see rates dropping.

So the deficit and non stop spending dont bother you?

 

[561caneforever]

S&P downgraded us years ago, Fitch was way overdue. We have +/-$32 Trillion in debt, and we keep spending. Dont be surprised at more credit downgrades.

Exactly, this is just the beginning of credit downgrades.

$190 Trillion in unfunded liabilities, skyrocketing debts and deficits, destruction of the middle class, etc.

 

[mr.h]

So the deficit and non stop spending dont bother you?

The spending was needed..That’s another discussion. Look who added the debt

• $10.6 trillion when Barack Obama took over on January 20, 2009.
• $19.9 trillion when Trump took over on January 20, 2017.
• $ 27.8 trillion when Biden took over on January 20, 2021.
  Powell said that the debt is sustainable but the path was not. Spending goes out into the economy..Trump racked up the biggest debt, but we had a pandemic. According to the St.Louis Federal Reserve Bank “the federal government’s interest payments as a percentage of GDP are lower today than in the past”.
  Whenever we hold the debt hostage it is perceived that we will default. Republicans caused the S&P downgrade and the Republican House caused this one. We are not Japan, we have more assets than debt and can print money. More jobs means more taxpayers. Warren Buffet pays a lower tax rate than his secretary. There are corporations that pay zero in taxes. The government is broken and we will never agree.

 

[561caneforever]

The spending was needed..That’s another discussion. Look who added the debt

• $10.6 trillion when Barack Obama took over on January 20, 2009.
• $19.9 trillion when Trump took over on January 20, 2017.
• $ 27.8 trillion when Biden took over on January 20, 2021.
  Powell said that the debt is sustainable but the path was not. Spending goes out into the economy..Trump racked up the biggest debt, but we had a pandemic. According to the St.Louis Federal Reserve Bank “the federal government’s interest payments as a percentage of GDP are lower today than in the past”.
  Whenever we hold the debt hostage it is perceived that we will default. Trump caused the S&P downgrade and the Republican House caused this one. We are not Japan, we have more assets than debt and can print money. More jobs means more taxpayers. Warren Buffet pays a lower tax rate than his secretary. There are corporations that pay zero in taxes. The government is broken and we will never agree.

It's better to be thought a fool than to open your mouth and remove all doubt.

 

[SpikeUM]

The spending was needed..That’s another discussion. Look who added the debt

• $10.6 trillion when Barack Obama took over on January 20, 2009.
• $19.9 trillion when Trump took over on January 20, 2017.
• $ 27.8 trillion when Biden took over on January 20, 2021.
  Powell said that the debt is sustainable but the path was not. Spending goes out into the economy..Trump racked up the biggest debt, but we had a pandemic. According to the St.Louis Federal Reserve Bank “the federal government’s interest payments as a percentage of GDP are lower today than in the past”.
  Whenever we hold the debt hostage it is perceived that we will default. Trump caused the S&P downgrade and the Republican House caused this one. We are not Japan, we have more assets than debt and can print money. More jobs means more taxpayers. Warren Buffet pays a lower tax rate than his secretary. There are corporations that pay zero in taxes. The government is broken and we will never agree.

I have no idea if those numbers are correct, but it misses the point anyway. Our national debt is unsustainable, and needs to be under control. Between the higher interest rates (caused by the government spending) and the $ that have been approved but not yet spent, the deficit will only grow, unless actively managed down. You do realize that every American owes $90k EACH as it is.

 

[90scane]

In 2024 we will see rates dropping.

Only if we see a massive recession and most assets tank. Otherwise, I would expect them to hold it higher for longer until we see that crack. If they pivot at 3%, where does inflation go? 15%? We know the government will only increase spending if there is a recession so inflation should jump a ton until government spending is brought under control.

 

[SpikeUM]

Only if we see a massive recession and most assets tank. Otherwise, I would expect them to hold it higher for longer until we see that crack. If they pivot at 3%, where does inflation go? 15%? We know the government will only increase spending if there is a recession so inflation should jump a ton until government spending is brought under control.

There is always a first time, but its hard to envision a soft landing with tight labor and commodity markets, huge spending and deficits with more to come, a Fed late to the party and forced to hike aggressively to multi decade highs, and doing QT at the same time, China slowing down dramatically, etc. etc.

 

[mr.h]

There is always a first time, but its hard to envision a soft landing with tight labor and commodity markets, huge spending and deficits with more to come, a Fed late to the party and forced to hike aggressively to multi decade highs, and doing QT at the same time, China slowing down dramatically, etc. etc.

Even the Fed is not calling for a recession in 2023.
Powell said that the debt is sustainable but the path was not..

 

[SpikeUM]

Even the Fed is not calling for a recession in 2023.
Powell said that the debt is sustainable but the path was not..

Powell: U.S. debt is 'on unsustainable path,' crimping ability to respond to recession

Fed chief Powell tells Congress federal debt is on 'unsustainable path,' limiting ability to support economy in a downturn

www.usatoday.com

Fed Chair Powell warns government debt is on 'unsustainable path'

Powell's remarks came in testimony before the House Financial Services Committee on Thursday, as the powerful Fed chair wrapped up a second day of appearances on Capitol Hill.

www.dailymail.co.uk

 

[SpikeUM]

Even the Fed is not calling for a recession in 2023.
Powell said that the debt is sustainable but the path was not..

What @90scane is saying is that the Fed wont have room to drop until there is a deep recession, if not this year then next.

 

[mr.h]

Powell: U.S. debt is 'on unsustainable path,' crimping ability to respond to recession

Fed chief Powell tells Congress federal debt is on 'unsustainable path,' limiting ability to support economy in a downturn

www.usatoday.com

Fed Chair Powell warns government debt is on 'unsustainable path'

Powell's remarks came in testimony before the House Financial Services Committee on Thursday, as the powerful Fed chair wrapped up a second day of appearances on Capitol Hill.

www.dailymail.co.uk

The first one is a 2019 article. The second article say the path is unsustainable, which I agree.
I believe we will see interest rates lower in mid 2004, especially if we have more rate hikes In 2023 and I believe the economy can handle it. I don’t believe the Fed will drive us into a recession and it’s an election year.

 

[90scane]

I don’t believe the Fed will drive us into a recession and it’s an election year.

So what you are saying is the FED will hold while the government keeps spending to avoid a recession because it is an election year. Talk about a bad 2025!

 

[JD08]

I blame the Republicans holding the debt ceiling hostage and they will do it again.
I see more jobs and higher GDP
Appl and Amazon earnings tomorrow. In 2024 we will see rates dropping.

The debt ceiling is suspended until 2025 but somehow the GOP's actions two months ago are responsible? Not the out of control spending?

 

[mr.h]

The debt ceiling is suspended until 2025 but somehow the GOP's actions two months ago are responsible? Not the out of control spending?

Fitch Ratings Agency downgraded the U.S. debt rating from AAA to AA+p

High-profile economists including former U.S. Treasury Secretary Larry Summers and Allianz Chief Economic Advisor Mohamed El-Erian lambasted the Fitch decision, with Summers calling it “bizarre and inept” and El-Erian “perplexed” by the timing and reasoning. Current Treasury Secretary Janet Yellen described the downgrade as “outdated.”

Goldman Sachs Chief Political Economist Alec Phillips was also quick to point out that the decision did not rely on new fiscal information and is therefore not expected to have a lasting impact on market sentiment beyond immediate shock selling on Wednesday.

 

[JD08]

Fitch Ratings Agency downgraded the U.S. debt rating from AAA to AA+ after a congressional standoff this year threatened a debt default.

High-profile economists including former U.S. Treasury Secretary Larry Summers and Allianz Chief Economic Advisor Mohamed El-Erian lambasted the Fitch decision, with Summers calling it “bizarre and inept” and El-Erian “perplexed” by the timing and reasoning. Current Treasury Secretary Janet Yellen described the downgrade as “outdated.”

Goldman Sachs Chief Political Economist Alec Phillips was also quick to point out that the decision did not rely on new fiscal information and is therefore not expected to have a lasting impact on market sentiment beyond immediate shock selling on Wednesday.

And?

 

[JD08]

Fitch Ratings late Tuesday made good on recent concerns about the U.S. credit profile and downgraded its rating on the nation’s debt one notch to AA+ from AAA, saying that it reflects “expected fiscal deterioration,” a “high and growing” government debt burden and an “erosion of governance” in face of repeated debt-limit standoffs and other ills.

U.S. AAA debt rating gets a downgrade by Fitch; White House says move 'defies reality'

Fitch Ratings cut its top credit ratings for the U.S. to AA+ from AAA on Tuesday, pointing to 'erosion' of governance and the nation’s expected fiscal...

www.marketwatch.com

 

[mr.h]

Fitch Ratings late Tuesday made good on recent concerns about the U.S. credit profile and downgraded its rating on the nation’s debt one notch to AA+ from AAA, saying that it reflects “expected fiscal deterioration,” a “high and growing” government debt burden and an “erosion of governance” in face of repeated debt-limit standoffs and other ills.

U.S. AAA debt rating gets a downgrade by Fitch; White House says move 'defies reality'

Fitch Ratings cut its top credit ratings for the U.S. to AA+ from AAA on Tuesday, pointing to 'erosion' of governance and the nation’s expected fiscal...

www.marketwatch.com

What do you think they meant by “erosion of governance”?

 

[JD08]

What do you think they meant by “erosion of governance”?

Let them explain it.

Erosion of Governance: In Fitch's view, there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025. The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management. In addition, the government lacks a medium-term fiscal framework, unlike most peers, and has a complex budgeting process. These factors, along with several economic shocks as well as tax cuts and new spending initiatives, have contributed to successive debt increases over the last decade. Additionally, there has been only limited progress in tackling medium-term challenges related to rising social security and Medicare costs due to an aging population.

https://www.fitchratings.com/research/sovereigns/fitch-downgrades-united-states-long-term-ratings-to-aa-from-aaa-outlook-stable-01-08-2023?utm_source=substack&utm_medium=email