DEBT CEILING - DC ALREADY HAS A DEAL WEEKS AGO

LINK TO TWITTER THREAD HERE


DEBT CEILING

okay, here's how DC works.

thread

1/


We are talking about the largest empire in the history of the world, the United States of America. Such empires don't function on "last minute deals". Everything is decided upon on consensus way in advance.

2/


DC politics, is 95% performance acting, and 5% Consensus Politics behind closed doors.

In 2011, McConnell and Biden had made the deal weeks in advance, but the Performance Show went to the last minutes, even causing S&P to drop USA from Triple A to AA+ rating.

3/


But, and that is a beautiful 'but' which is related to the current situation as well. S&P dropping USA to AA+ caused a de facto Technical Default in Shadow Banking.

You ought to understand the entire financial game is in shadow banking.

4/


This is a short and sweet easy explanation of Technical Default, not to be confused with Financial Default.

Financial Default is when payment of interest is not made. Self evidently US will make payments, nobody doubts that.

5/


corporatefinanceinstitute.com

Technical Default

A technical default occurs when one (or more) non-financial terms of a loan agreement is violated by a borrower. Learn more!

Technical Default is triggered in Shadow Banking which operates under United Kingdom common law when some conditions of derivative gambling are not met. Delayed payment is one of them, as the main collateral in shadow banking are the US Treasuries.

6/


So, we can be absolutely sure that:

1) There is a deal.

2) This is performance acting until the last moments.

What we don't know, is what is the deal about.

The deal can include Technical Default ON PURPOSE via delay of payment.

7/


Why would they allow that?

Not that difficult to understand. 

DC is in full consensus that PRODUCTION is now what matters, and that Finance is unimportant. That was made clear by Biden's NSC chief Jake Sullivan few days ago at Brookings.

8/


Jerome Powell is raising rates (on full DC consensus) in order to implode shadow banking. 

The issue is that nobody wants to be blamed for it, neither the WH, nor Powell, the repubs or dems.

9/


Let's go back to what happened in 2008. George W. Bush and repubs played by the rules. They cleaned up the system by letting Lehman die.

But, that cost them the Presidency in 2008, when McCain who was ahead in the polls vs the irrelevant Obama, lost to Obama.

10/


So, I speculate that they might have already reached a consensus to allow for a technical default via delay of payment, thus triggering faster implosion of shadow banking.

That would spread the blame on everyone for the 2024 presidential campaign, all equal.

11/


So, we shall continue to see performance acting from DC, knowing full well they have already made a decision not just days, but weeks ago, whatever the "deal" would come up being.  ENJOY THE THEATER, GREAT ACTING!  #krisonomics   

12/ end


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