Whom do you trust when it comes to the debt ceiling?
The debt ceiling is real.
No, it’s not.
The debt ceiling mess is a recipe for a catastrophe.
The debt ceiling is nothing more than a negotiating tool.
Depending on whom you’re listening to, the potential raising of the debt ceiling — the monetary threshold at which a government can borrow money — is either the biggest potential financial crisis we’ll ever see or just another way to force some governmental cost-cutting. Treasury Secretary Jack Lew has said Congress has until Thursday to raise the debt ceiling or risk defaulting on many of its financial obligations, a move that could send the stock market into a tizzy and torpedo the country right back into recession mode.
So whom can we trust?
It’s pretty safe to say believing anyone with any kind of political affiliation in this argument is tough.
Wait, tough? Try impossible. It’s a complete party-line issue, as Democrats will say the sky is falling without a raise of the debt ceiling, and Republicans will say it won’t be as bad as anyone thinks.
U.S. Rep. Glenn “GT” Thompson, whose Pennsylvania district abuts the midstate, tweeted this Wednesday: “Fact of the Day: 27 times over the last 40 years, the debt limit has been used (to) negotiate for spending reductions.” Which kind of sounds like this.
And Sen. Pat Toomey, R-Pa., joined a growing list of Republicans trying to ease the minds of those who think the country will immediately default on its obligations Thursday when it can’t borrow anymore money. Ahhhhhhhh, that’s better.
Democratic leaders haven’t yet gone on the offensive about the debt ceiling; they’re still chipping away at the federal government shutdown. (Whoops, sorry. The #shutdown. That’s better.) But Lew — an appointee of President Obama and his former chief of staff — made the TV panel rounds Sunday morning and said Congress is being “reckless” and “dangerous” in not raising the debt ceiling. He added that Congress is “playing with fire.”
So it’s really, really bad. Or it’s not that big a deal, depending on whether there is a “D” or an “R” after your name.
Me? I’m going with people in the investment world like this guy, from a Bloomberg report this week:
“The U.S. situation is clearly abnormal and the uncertainty doesn’t make things easier for investors in risk assets,” said Masaru Hamasaki, a senior strategist at Tokyo-based Sumitomo Mitsui Asset Management Co., which oversees about 11.2 trillion yen ($115 billion) in assets. “If the U.S. defaults and misses paying its bills even just for a few days, the market will turn chaotic.”
So that’s something to look forward to.
“It could well be that what is now a recovery would turn into a recession or even worse.”
Then there’s Neil MacKinnon, global macro strategist at VTB Capital, as quoted by the Associated Press:
“Investors are on the sidelines until there is greater clarity or a last-minute resolution between the White House and the Republicans ahead of the debt ceiling deadline.”
In this day and age, investment industry people can work from just about anywhere. One place they can’t work from? The sidelines.
People with the most money are the ones who stand to lose the most from a debt ceiling stalemate. It’s been my experience that people with the most money don’t like losing money one bit. So if they’re worried, I’m worried.
No matter what my local congressman might tell me.