U.S. government shutdown begins after Congress fails to break impasse - page 3
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Obama Rejects Latest Offer, Boehner Tells Republicans
House Speaker John Boehner told fellow Republicans today that President Barack Obama rejected his latest fiscal offer, shifting the focus for a potential agreement to the Senate.
The U.S. is in the 12th day of a partial government shutdown and the country’s borrowing authority will lapse Oct. 17 if Congress doesn’t act. The latest moves make the legislative path forward uncertain, because no plans appear to have enough support yet to move through either chamber of Congress.
Senate Majority Leader Harry Reid, a Nevada Democrat, said talks between the White House and House Republicans were “done” and that he expected Republicans to block an attempt today to allow a Senate vote on pushing the next debt-ceiling debate into 2015.
“What a sad day for America,” he said on the Senate floor today. “Each hour that goes by we are closer to a calamity for our country.” Senate Democrats plan to meet in private after today’s vote, according to a Senate Democratic aide.
Reid said he was glad that stock markets wouldn’t be open Oct. 14 because of the lack of progress in Congress. U.S. stock markets will be open, though, on Oct. 14, the federal holiday of Columbus Day.
The White House today declined to comment on the budget situation.
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U.S. fiscal negotiations sputter as deadline nears
Congressional negotiations to end a U.S. fiscal crisis gripping Washington and spooking financial markets hung by a thread on Saturday after bipartisan talks broke down in the House of Representatives and shifted to Senate leaders.
Senate Majority Leader Harry Reid, a Democrat, held an initial session with Senate Republican leader Mitch McConnell. But uncertainty remained about their ability to reach an agreement quickly to end a partial government shutdown and increase the nation's borrowing authority.
Thursday is the deadline for raising the debt ceiling, necessary to avoid a possible government default. The Senate was set to meet on Sunday, but the U.S. House of Representatives was not, so Congress will be cutting it close.
"Economists say it won't be long before financial markets react negatively to this continued uncertainty," Reid said on the Senate floor.
"The life savings of ordinary Americans are at risk."
Among the unresolved issues is the duration of the debt ceiling increase. House Republicans were pushing a boost that would last only six weeks, producing another potential showdown in the middle of the holiday season. Democrats want to push the next debt ceiling deadline at least well into the new year.
Also at issue were government spending levels and Republican concerns about President Barack Obama's signature healthcare law, popularly known as Obamacare. Republican demands for defunding Obamacare led to the shutdown on October 1.
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Buy The Tragicomedy, Sell The Soap Opera Season Finale
If there is anything the market has shown in the past 16 days of government shutdown, which is set to reopen this morning in grandiose fashion following last night's 10 pm'th hour vote in the House, is that it no longer needs Washington not only to function but to ramp higher. All it needs is the Fed, which in turn needs an unlimited debt issuance capacity by the US Treasury which it can monetize indefinitely, which is why the debt ceiling was always the far more pressing issue. In other words, the good news is that the can has been kicked, and now the government workers (who will need about a week to get up to speed), can resume releasing various government data showing just how much 5 years of now-open ended QE have impaired the US economy, and why as a result, even more years of unlimited QE are in stock (because in a Keynesian world, what caused the problem is obviously what will fix it). The bad news: the whole charade will be repeated in three months.
More importantly, with futures no longer having the hopium bogey on the horizon, namely the always last minute debt deal, they have finally sold off on the back of a weaker USD. It is unclear if the reason for this has more to do with climbing the wall of shorters which is now gone at least until February when the soap opera returns, or what for now, has been an absolutely abysmal Q3 earnings season. Luckily, in a centrally-planned world, plunging stocks is bullish for stocks, as it means even more Fed intervention, and so on ad inf.
And since a repeat of the whole soap opera in January is highly likely and the government will be shuttered once more, the only thing that will really be impaired - not government workers, they love the paid vacation with retroactive salaries - will be concurrent government data, so "very critical" for the Fed to decide on future policy, which simply means if the BLS' random number generators stop humming in early 2014, all that will happen is for the Taper, which is now expected to take place between March and June 2014, to be delayed once more in what is now the playbook: shut down government 2-3 months before taper is due, kick can, rinse, repeat.
Overnight news bulletin from Bloomberg and RanSquawk:
U.S. debt impasse ends, see more here; Chinese rating company downgrades U.S. credit rating
2014 to be the year of the boom; macro will be lifted by lower fiscal and banking drag, BofAML’s chief investment strategist says
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The government shutdown's toll by the numbers
The first government shutdown in nearly 20 years ended late Wednesday after Congress agreed on a deal to fund the government through Jan. 15. and raise the nation's debt limit through Feb. 7. The 16-day ordeal took a toll on the national economy, economists said.
Here's a by-the-numbers breakdown of the effects:
$24 billion: That's the overall impact to the U.S. economy, according to an estimate by Standard & Poor's.
2.4%:That's the new projection for annualized growth of the nation's gross domestic product in the fourth quarter, Standard & Poor's said Wednesday. Before the shutdown, the firm estimated annualized growth would be about 3%.
$152 million: The amount lost per day in travel spending, according to the U.S. Travel Assn.
$76 million:The amount lost in daily visitor spending in national parks in 12 states, according to the Coalition of National Park Service Retirees.
$160 million: The amount that federal government furloughs cost the economy each workday, according to market research firm IHS Inc.
$737.95:The amount the average consumer will spend this holiday season on gifts, decor and greeting cards, according to the National Retail Federation. That's 2% less than last year, it said. The government shutdown, a survey by the trade group found, caused consumer confidence to fall.
358,000: The number of initial unemployment claims last week, as reported by the Labor Department on Thursday. The number was skewed by the shutdown, the agency said, as thousands of furloughed government workers applied for unemployment to help tide them over.
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