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Its always something.
Posted on: February 9, 2017 at 19:49:43 CT
GA Tiger MU
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David Stockman might know.
What will be coming soon, however, is the mother of all debt ceiling crises -- an eruption of beltway dysfunction that will finally demolish the notion that Trump is good for the economy and the stock market.
The debt ceiling holiday ends on March 15, and it appears that the rudderless Treasury Department -- Mnuchin has not yet been approved as Treasury Secretary and there are no Trump deputies, either -- may be engaging in a bit of sabotage. That is, the cash balance has run down from a peak of about $450 billion to just $304 billion as of last Friday.
Unless reversed soon, this means that the Treasury will run out of cash by perhaps July 4th rather than Labor Day. After that, all hell will break loose.
Washington has been obviously dysfunctional for years, but the virtue of the Great Disrupter is that his tweets, tangents, inconsistencies and unpredictabilities guarantee that the system will soon shut down entirely.
Consequently, the first half of the year will be consumed in nasty partisan battles over cabinet appointments, the Gorsuch nomination, interminable maneuvers over the travel ban and follow-on measures of extreme vetting and the Obamacare repeal/replace battle.
Then, the second half of 2017 will degenerate into a non-stop battle over raising the debt ceiling and continuing resolutions for fiscal year (FY) 2018 which begins October 1.
Then, the second half of 2017 will degenerate into a non-stop battle over raising the debt ceiling and continuing resolutions for fiscal year (FY) 2018 which begins October 1. That will mean, in turn, that there is no budget resolution embodying the Trump/GOP fiscal agenda, and therefore no basis for filibuster-proof "reconciliation instructions" on the tax cut.
This latter point, in fact, needs special emphasis. The frail GOP majorities now in place will be too battered and fractured by the interim battles to coalesce around a ten-year budget resolution that embodies the $10 trillion of incremental deficits already built into the CBO baseline — plus trillions more for defense, veterans, border control, the Mexican Wall, an infrastructure bonanza and big tax cuts, too.
It will never happen. There is not remotely a GOP majority for such a resolution.
But without an FY 2018 budget resolution, inertia and the K-Street lobbies will rule. Without a 51-vote majority rule in the Senate, a material, deficit-neutral cut in the corporate tax rate would be absolutely impossible to pass. Yet that's exactly what the casino is currently pricing-in.
In short, it is only a matter of time before the robo-machines start re-programming themselves for the fact that the Great Trump Stimulus has gone missing.
When that happens, the stock market will not be a pretty sight.The S&P 500 has now reached the highest ratio to worker earnings in recorded history. It will descend into a bidless free fall when eight years of buying the dip finally unwinds.
But here's the thing...
The historic mission of the Whirling Dervish in the Oval Office is to bring the "big fat ugly bubble" that has resulted from 30 years of exploding debt and rampant money printing to a thundering halt.
That much the Donald will certainly accomplish.
What will be coming soon, however, is the mother of all debt ceiling crises -- an eruption of beltway dysfunction that will finally demolish the notion that Trump is good for the economy and the stock market.
The debt ceiling holiday ends on March 15, and it appears that the rudderless Treasury Department -- Mnuchin has not yet been approved as Treasury Secretary and there are no Trump deputies, either -- may be engaging in a bit of sabotage. That is, the cash balance has run down from a peak of about $450 billion to just $304 billion as of last Friday.
Unless reversed soon, this means that the Treasury will run out of cash by perhaps July 4th rather than Labor Day. After that, all hell will break loose.
Washington has been obviously dysfunctional for years, but the virtue of the Great Disrupter is that his tweets, tangents, inconsistencies and unpredictabilities guarantee that the system will soon shut down entirely.
Consequently, the first half of the year will be consumed in nasty partisan battles over cabinet appointments, the Gorsuch nomination, interminable maneuvers over the travel ban and follow-on measures of extreme vetting and the Obamacare repeal/replace battle.
Then, the second half of 2017 will degenerate into a non-stop battle over raising the debt ceiling and continuing resolutions for fiscal year (FY) 2018 which begins October 1.
Then, the second half of 2017 will degenerate into a non-stop battle over raising the debt ceiling and continuing resolutions for fiscal year (FY) 2018 which begins October 1. That will mean, in turn, that there is no budget resolution embodying the Trump/GOP fiscal agenda, and therefore no basis for filibuster-proof "reconciliation instructions" on the tax cut.
This latter point, in fact, needs special emphasis. The frail GOP majorities now in place will be too battered and fractured by the interim battles to coalesce around a ten-year budget resolution that embodies the $10 trillion of incremental deficits already built into the CBO baseline — plus trillions more for defense, veterans, border control, the Mexican Wall, an infrastructure bonanza and big tax cuts, too.
It will never happen. There is not remotely a GOP majority for such a resolution.
But without an FY 2018 budget resolution, inertia and the K-Street lobbies will rule. Without a 51-vote majority rule in the Senate, a material, deficit-neutral cut in the corporate tax rate would be absolutely impossible to pass. Yet that's exactly what the casino is currently pricing-in.
In short, it is only a matter of time before the robo-machines start re-programming themselves for the fact that the Great Trump Stimulus has gone missing.
When that happens, the stock market will not be a pretty sight.The S&P 500 has now reached the highest ratio to worker earnings in recorded history. It will descend into a bidless free fall when eight years of buying the dip finally unwinds.
But here's the thing...
The historic mission of the Whirling Dervish in the Oval Office is to bring the "big fat ugly bubble" that has resulted from 30 years of exploding debt and rampant money printing to a thundering halt.
That much the Donald will certainly accomplish.
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Its always something. - GA Tiger MU - 2/9 19:49:43