[not to be confused with ex-date regarding dividends] We have heard some much about the debt ceiling. It is that present in every trader's life that it doesn't matter if you are in the US. If they default they will create a domino effect that will impact on every single market around the world. White House details: https://www.whitehouse.gov/cea/written-materials/2023/05/03/debt-ceiling-scenarios/ They talk eloquently about three scenarios: - A brief default, a Covid-19 market style, where they let markets collapse and take advantage of cheap prices to buy everything at a discount. - A protracted default, whatever the hell that means. A painful crisis that will slowly slowly take everything from the most vulnerable. - Clean Debt Ceiling increase. That clean that no one can argue about it. Everything will continue like nothing happended until the next Clean Debt Ceiling increase. Remember to use that word ("Clean") every time you talk about it, show that you are educated on the subject. Key notes to take from the text: "A crisis, characterized by spiking interest rates and plunging equity prices, would be ignited. Short-term funding markets, which are essential to the flow of credit that helps finance the economy’s day-to-day activities, likely would shut down as well." "The costs would be even greater under a protracted default. A CEA simulation of the effect of a protracted default shows an immediate, sharp recession on the order of the Great Recession" Do you guys remember the Big Short? What is Mr Burry up to these days?
There will be no default. The "debt ceiling" is a purely political construct. It has no meaning in any other context. Of course a "debt ceiling" could acquire meaning if the administrative branch of government was dumb enough to intentionally stop paying the government bills. But that won't happen.
Non-issue. No real impact on anything other than a chance for inexperienced, short term emotional traders to lose some money.
A default will be great for the traders as there will be many trading opportunities. A default will be a nightmare for politicians.
I wouldn't call it a 'non-issue' https://www.scmp.com/economy/china-...owngrade-us-credit-rating-after-fitch-warning Countries around the world are starting to downgrade the US credit rating. They are not going to let it pass that easily. https://www.afr.com/world/north-ame...bs-growth-trumps-debt-worries-20230530-p5dcbl Interest rates are getting a rise again. Someone has to pay for it, likely to increase consumer prices in the US again. I know you guys want to call it a political issue, but other countries around the world think differently.
I am pretty sure you would not bet your life on this belief. I let my then current t-bill positions mature and did not roll into new issues until the raise was approved by the house. Are you seriously suggesting with either Biden or Trump at the helm that the rest of the world should have trust and faith in the rest of leadership in the US to make wise and intelligent decisions?
Not with Trump. No of course not. He's serial liar and a criminal. As a last resort , the Treasury has multiple ways around this absurd political charade. No country that issues ts own fiat money and has not issued debt instruments denominated in another country's currency has any real debt. The debt of country's like Japan and the U.S. is all "ersatz debt". This does not mean, however, that deficits do not matter. Of course they matter, but not in the way that politicians have led people to believe. The U.S. problem right now is not so much deficit spending as it is a breakdown in the tax system.