The ceiling below

This week the US runs out of money. Sort of. As if we didn’t already have enough to worry about.

The headlines may soon turn scary on this story, so let’s dissect it a little. The Yanks have a weird system since politicians want to govern the volume of bonds and other securities the country uses to raise money (above tax revenue) to run the place. They started this back in 1939. So every time the accumulated debt bumps up against the approved limit, a new one must be established.

These days the USA has over $31 trillion in debt, or 120% of the economy (our federal debt is $1.5 trillion, or almost 75% of GDP. Notsobad, in comp). The pre-approved ceiling is being hit again, and so Congress must set a new one – which has happened dozens and dozens of times over the past eighty years.

Here’s the problem. Kevin McCarthy.

  Did you follow the tortuous process the guy went through to become US Speaker? Sheesh. Fifteen votes. Normally it’s a slam-dunk, but not this time. Republicans now narrowly control the House of Representatives (Dems control the Senate) and a small group of ultra-right-wing-Trumpers were able to seize the agenda. No support for Kevin, and no plumb job, until he gave in to their demands. That included powerful committee assignments, the right to dump the Speaker form his job and an agenda of destroying Joe Biden and his spendy pals.

This suggests a debt ceiling crisis is probably coming. The last one was 12 years ago when Republicans again tried to corral government expenditures. At one point during the fight the stock market careened lower by 7% in a single day. After all, if the States runs out of cash, we’re all screwed. The world runs on US dollars and those $31 billion in American securities are held by a lot of important entities. Like China. American bonds are considered ‘risk-free’. Except when America lacks the cash to pay interest.

So would the Trumpers and their puppet Speaker be bold and daring enough to force the USA into default?

Nah. Of course not. The debt ceiling will be raised as there is no viable alternative. But not before the Biden administration is forced into a Code Red situation, federal programs are put into jeopardy, Washington is (maybe) shut down for a while and markets go hot and wild. This is utterly political, and all about the 2024 presidential election (in which D. Trump is a candidate).

Where are we now?

The money runs out on Thursday. Just before the weekend Treasury Secretary Janet Yellen said “irreparable harm” would be caused if Congress did not open the purse strings more. The market meltdown of 2011 could happen again, she said. The global financial system could be badly rattled.

The Republicans gave a group shrug. No new borrowing, they say, unless the White House agrees to spending cuts. Sucks to your ceiling. Yellen responded by saying “extraordinary measures” would have to be taken to keep the lights on. That includes shifting money within government to buy some time before major programs like Social Security go dry.

McCarthy says his gang might temporarily support more borrowing if Biden agrees to a cap on federal spending. So far the president has refused. After all, this has been one of the spendiest administrations in history – for post-pandemic recovery, infrastructure, climate change and social programs. The odds of a showdown seem to be growing. The crisis will not happen this week, but it could be upon us in a few months.

What to expect?

Mr. Market thinks everyone in Washington, DC is a dink and this is a tedious distraction. After all, we’ve got higher interest rates, persistent inflation, war in Ukraine, weather bombs, Elon Musk and corporate profits to worry about. A partisan war with serious financial overtones in this environment is like inviting Megan Thee Stallion home to meet your religious mama. There’s no good outcome.

Don’t be surprised to see the Vix shoot higher in coming weeks, or for equity markets to swing widely on a daily basis. It could last a while. Goldman Sachs figures this could go on until (maybe) October, and also says it will be “a close call” as to whether or not Republicans agree to a compromise.

Why would the Trumpers – who have McCarthy by the shorts – risk a debt meltdown?

Because ‘let it burn’ is a sentiment thrown out by alt-right believers on both sides of the Canada-US border. The worse conditions get, the more voters blame the guys in power and look for change. The days of getting into public life for the welfare of the nation are long in the rear-view. Never forget that people vote against leaders, not for them.

Will America default? Not a chance. Will the media have a cow? Absolutely. Should you respond? Don’t even think about it.

About the picture: “You have impacted our lives and you don’t even know us,” wrote Jennifer. “Here is Shelby, our Hound/Collie Kijiji neurotic dog who is the best dog ever but very emotional. And Morgan, who is also the best dog ever of course!”

109 comments ↓

#1 Flop… on 01.16.23 at 3:24 pm

Flop Drops.

You just dig the lump of coal out of your stocking, and before you know it Blue Monday is slapping you in da face.

Lots a assessment talk lately, let’s see how this one faired at the bottom of the Surrey detached market.

The details…

14478 85A AVENUE

Surrey BC

Asked 999k

2023 Assessment 1.26

Just sold for 955k

So assessment weaved one way and the market is ducking the other, only got 75% of assessment value.

Two years, 2017 and 2022, account for a lot of the run up with roughly 40% increases both these years.

Flop’s Thought Of The Day.

Surrey should keep bothering the RCMP and the Surrey Police Department, that way with one cop for every 5 citizens it might actually be safe to walk the streets there…

M48BC

https://www.zealty.ca/mls-R2737612/14478-85A-AVENUE-Surrey-BC/

#2 Doug t on 01.16.23 at 3:25 pm

Bloody hell eh – can’t people just get along lol

#3 Ray Dalio on 01.16.23 at 3:26 pm

Only recently came across him. Anyone have any thoughts. I thought his NWO vid was quite insightful.

https://www.youtube.com/watch?v=xguam0TKMw8

#4 Rook on 01.16.23 at 3:28 pm

Why even bother trying to rein in or corral government spending? Take your foot off the brakes and let them go wild.

It’s not like anything BAD has ever happened when governments spend without restraint or limit, right?

Right?

#5 Gorn on 01.16.23 at 3:29 pm

Im beginning to get the impression that conservatives are Evil?

Probably agents of the Klingon Empire instructed to lead humanity to extinction.

#6 Alberta Ed on 01.16.23 at 3:31 pm

Canada could use some pointers on profligate spending.

#7 Buffet That Serves Only Right Wings on 01.16.23 at 3:31 pm

When you are in the hole, quit digging. When the cupboards are bare, quit spending.

#8 Pop quiz for a friend on 01.16.23 at 3:33 pm

If you had $250,000 in cash would you …

1) Buy some (real) gold?

2) Move it all into the markets (BD allocation) now?

3) Move it in over a few months to average?

4) Plan to buy additional real estate in a year’s time when it’s down another 25%?

5) Keep it all in cash until Trump is reelected?

#9 Timmy on 01.16.23 at 3:37 pm

The Republican (Conspiracy Theory) party is full of inbred idiots.

#10 Dave on 01.16.23 at 3:39 pm

For those of you who think buying property is such a good deal in the US and for Snowbirds, you may want to think twice about Arizona

“Hundreds of homes outside the boundaries of Scottsdale can no longer get water from the city, so their owners are living a worst-case scenario of drought in the West.”

They were stupid enough to allow developers to build, despite no water access. What else would you expect in a Republican state? lol

https://www.nytimes.com/2023/01/16/us/arizona-water-rio-verde-scottsdale.html

#11 Dave on 01.16.23 at 3:42 pm

How many of these chumps bought overvalued real estate in BC?

A similar survey by Sands & Associates, B.C.’s largest insolvency firm, showed 20 per cent of those who reached out for help with their debts had used credit last year to pay for normal living expenses, while 28 per cent blamed their own financial mismanagement.

Sixty-nine per cent said they knew they had debt trouble because of “overwhelming stress.” And nearly four in five, 79 per cent, said their debt levels were taking a toll on their mental health.

Garth, do you think this is mostly the pancake generation? You know, nothing between the ears…

https://vancouversun.com/news/local-news/bc-households-debt-inflation-worry

#12 chalkie on 01.16.23 at 3:43 pm

Next Wednesday January 25th 2023, you can prepare for another ¼% Interest rate rise, it is a given with the employment rate and cost of living in Canada, the COL is so far off the beaten track, it will require a couple of locomotives to pull it in a straight line.

I watched an economist interview regarding the 2% cost of living, it is as if they do not live on the same planet as us, not sure where they shop or what information they tap into, it was almost embarrassing to watch, an easy way to ruin one’s track record. Two percent cost of living, not happening this year, that’s a given.

One thing that jumps out over the past couple of years is Biden and Trudeau have things in common, they both love to spend and give things away, money they cannot afford to give, they were not in my class of understanding or I was not in theirs.
Volatility in the markets may give us a few sleepless nights while Washington crews gather up a few pacifiers in the coming weeks.

CREA and the Canadian Banks are so far apart for their predictions of where home prices will go in 2023, it is as if one sector goes against the other, just in case the other is wrong, you then would be right, “kids guessing game”.
As for interest rates, they will not go much higher in 2023, a good guess is around another ½% before they are finished climbing, but do not count on them coming back to earth anytime soon.

Quote of the day: Spending money to show people how much money you have is the fastest way to have less money.

#13 epic bear on 01.16.23 at 3:46 pm

don’t worry. they’ll print more. lots more. they’re good at that

#14 Linda on 01.16.23 at 3:46 pm

Given that the alt-right wing nuts favorite word is ‘No’ – or more like “NO!!” unless the motion being presented is something they like, like restricting women’s rights I’d say that predicted market bull run is going to see some serious bucking. Because these folks don’t care about the little guy. It is their way or the highway, all the way, too bad if some geezer on Social Security starves to death because the access to their monthly stipend is suspended while these folks posture. Cause you know they aren’t going hungry, or worrying about their monthly bill payments.

#15 Jim on 01.16.23 at 3:48 pm

Garth, What are you doing. This blog post is going to trigger hate mail from Freedumb convoy crowd.

#16 Will on 01.16.23 at 3:50 pm

DEFAULT NO- DERIVATIVE COLLAPSE- YES
They [DS] have already told us that they will be
– if you have been listening.

#17 dave on 01.16.23 at 3:50 pm

OMG…more red in my portfolio. Its already taking a beating….this will go on for months….FML

#18 The ceiling below on 01.16.23 at 3:50 pm

What is Canada’s exposure to this? For a yearly outlook, is the expectation for the TSX to outperform the S&P?

#19 Timmy on 01.16.23 at 3:51 pm

For those who think homes in the US are such a good deal and for Snowbirds thinking of buying in Arizona, think again:

“Hundreds of homes outside the boundaries of Scottsdale can no longer get water from the city, so their owners are living a worst-case scenario of drought in the West.”

So despite unsustainable water, the government let developers build subdivisions. What else would you expect from a Republican state? lol

https://www.nytimes.com/2023/01/16/us/arizona-water-rio-verde-scottsdale.html

#20 Terry on 01.16.23 at 3:53 pm

“Will America default? Not a chance. Will the media have a cow? Absolutely. Should you respond? Don’t even think about it.”

Good advice, spot on………….and I’m buying it. This will just be more market noise to be ignored.

Life is still good!

#21 Nonplused on 01.16.23 at 3:55 pm

Personally I appreciate the theatrics. And not just for entertainment value.

Government debt doesn’t matter, until it does. Then it matters a lot. An awful lot. There is sort of a line out there, nobody knows where it is exactly but it is inescapable that it does exist, where once you cross it there is no going back and the currency collapses, along with all the “paper” wealth. It’s sort of like feeling around for the edge of a cliff in the dark. You don’t want to just run at it. You’ll find it that way, sure enough, but it won’t help you much.

So what they’re doing isn’t so much different than the OSFI as discussed yesterday. They probably should have done it years ago. Infinite money, like all things infinite, is worthless. We really don’t want to go there. We know what happens. It’s not like the experiment hasn’t been done before. It’s not different this time.

It would be nice if we lived in a world where we didn’t have to think about what our leaders were up to because they were wise, selfless, and acting in the best interest of the public. But they aren’t so we do.

Power corrupts. Always. Maybe not every single person every single day, but if there is a nut in the tree eventually a squirrel will find it. Checks and balances are a necessary evil. Without them, we get an evil of a different sort, only worse.

Anyone who is depending on those in power to rule wisely based solely on their better spirits, doesn’t know much about human nature. And nothing about their own nature.

So yes, I can agree that the new house majority is probably a bunch of clowns. But that doesn’t mean Biden and his band of merry men, women, and “other” is therefore not also clowns. They are all clowns. But it is better to have imperfect people acting as police than no police at all. Unfortunately that is the only two choices we have; imperfect, or nothing.

Remember, the perfect is always the enemy of the good, even in politics. It arises from the fact that only Dog is perfect and no one and nothing else, and I am not even so sure about him/her/other.

#22 truefacts on 01.16.23 at 4:12 pm

The drama is not ideal, but the US system has the advantage of checks/balances – lowering spending is a good path if they can reach some sort of deal.

Biden is beholden to the left-wing lunatic fringe but Joe Manchin was able to keep spending from getting even more crazy than it’s been.

Wish we could limit Trudeau in some way…

#23 LeeBee on 01.16.23 at 4:15 pm

Hope the money doesn’t run out before I buy my next Cardi B /Megan Thee Stallion collaboration of wisdom.

#24 Frenzie on 01.16.23 at 4:33 pm

The all important question. What does this mean for the Fed rate hikes?

#25 Ronthecivil on 01.16.23 at 4:40 pm

What’s the point of having a debt ceiling if you don’t stick to it?

While the right wanting to cut spending is a good idea, the left should counter with wanting to raise taxes.

Then do both, and maybe you might balance the budget, and not have to raise the debt ceiling anymore.

Mind you that has as much of a chance as Garth’s idea to put capital gains on houses. Brilliant idea with no chance of sucsess.

#26 Alois on 01.16.23 at 4:45 pm

#9 Timmy on 01.16.23 at 3:37 pm

The Republican (Conspiracy Theory) party is full of inbred idiots.

==============

So…
…..The Dems are full of __________________

#27 Dave on 01.16.23 at 4:48 pm

Any impact on interest rates for BoC?

#28 Prince Polo on 01.16.23 at 4:52 pm

Both the extreme left and extreme right are a scourge. Go back to yelling at clouds, u dolts (like I just did here)!

#29 Senator Bluto on 01.16.23 at 4:52 pm

#9 Timmy on 01.16.23 at 3:37 pm
The Republican (Conspiracy Theory) party is full of inbred idiots.
+++++++++++++++++++++++++++++

Interesting how pneumocephalic comments such as the one above get through, but comments questioning whether there was money laundering by Hunter Biden are benched.

Maybe because Hunter Biden is unelected, unimportant, irrelevant and a total distraction. And why do you post under various names? Ashamed? – Garth

#30 Alois on 01.16.23 at 4:59 pm

BC NDP….

Looks like the farm team for Canuck Communism is gonna create another mushroom cloud over BC…

Plan is to have a provincial bureaucracy to over-ride Local Gov’t OCP and Urban planning under the auspices of creating more housing.

Almost anything the NDP touches turns to sh*te…

….as THE last thing these uncertain times need re: economy in general and specifically Real Estate is these NDP clowns interfering.

The NDP track record is almost a guaranteed disaster…..unless of course this is part of some greater plan.

#31 Tom from Mississauga on 01.16.23 at 5:02 pm

It’s US system is loud, messy and roundabout debate by a free people, creating absolute perfection. The Inflation Reduction Act aligned with the Trump tax cuts make no 1st world country competitive with them in any industry, particularly green tech. The debt ceiling debate will secure their top position in the end. Canada, we prefer the quiet despotism of an omnibus bill.

#32 Hugh Jass on 01.16.23 at 5:05 pm

The US republicans engaging in debate and disagreeing with each other is a sign of healthy debate and a functioning political process.

You prefer the Canadian liberal/ndp model, where somehow, on every issue, every mp votes in line with the party and 0 disagreement is allowed?

One is a healthy political party, the other is a cult. No need for the smearing and invective.

Actually you meant the “Canadian conservative/liberal/ndp model”, right? – Garth

#33 Sail Away on 01.16.23 at 5:07 pm

Just like the last emergency yesterday and the one just before that one… this too shall pass.

I’m just going to keep training my dogs, doing pullups, running up mountains and inking big government contracts. Life is good. Lucrative even.

#34 Quintilian on 01.16.23 at 5:07 pm

Because ‘let it burn’ is a sentiment thrown out by alt-right believers on both sides of the Canada-US border.

Because the majority of Canadian voters are intelligent and fair minded we relegate the Canadian Retrumplicans like Pepe and Danniele into perpetual opposition.

Sure we aren’t totally rational, and we like a bit of political theater, but collectively we know not to breech the confines of morality or sanity.

#35 Victor Llearna on 01.16.23 at 5:13 pm

It only could have a debt ceiling in canada and reign in Trudeau’s spending. Everytime that guy takes a trip he gives away a few billion in canadian tax payer dollars to foreign countries, meanwhile healthcare and less advantages people in canada suffer

If you post, try to be accurate. – Garth

#36 Faron on 01.16.23 at 5:17 pm

#29 Senator Bluto on 01.16.23 at 4:52 pm
#9 Timmy on 01.16.23 at 3:37 pm
The Republican (Conspiracy Theory) party is full of inbred idiots.
+++++++++++++++++++++++++++++

…pneumocephalic…

Maybe because Hunter Biden is unelected, unimportant, irrelevant and a total distraction. And why do you post under various names? Ashamed? – Garth

Oh, snap! Garth dishes harder than Will Smith!

Perhaps Bluto could be thought of as a pneumosphinctoris?

#37 Run on Moving Boxes on 01.16.23 at 5:20 pm

Hurry Hurry the Insolvency Trustee and Listing Agent were given your file by the banks. Game over buckos.
NNext time – no avacado toast or breakfast champagne for you.
Pack it up and turn over your keys.
Back to Mommy’s basement now.

#38 Snowbird on 01.16.23 at 5:26 pm

So what’s this mean for the CAD vis a vis the USD? Asking for a friend.

#39 Faron on 01.16.23 at 5:26 pm

Anyhow, great post. Given that the elephants in the House have no real power other than the debt ceiling, and that a small but BSC and dumb as stumps (Gaetz, MTG, Boebert, Santos) portion of them calls the shots, I’d wager the brinkmanship will reach a new, higher level than previous iterations.

NB: Megan Thee Stallion and your religious ma may have more to chat about than you might think. Megan’s philanthropic efforts in her home city are rightly admirable.

#40 Reality check on 01.16.23 at 5:29 pm

26 Alois
#9 Timmy on 01.16.23 at 3:37 pm

The Republican (Conspiracy Theory) party is full of inbred idiots.

==============

So…
…..The Dems are full of
—————

The thing is…….there are nutty Dems, that’s for sure.

But they just don’t get as much media attention as the nutty Republicans. Sure blame the media but What’s more fun, some hot nutty blonde woman saying she would have armed the Jan 6 rioters, or some pasty, dreadlocked, damp wool clad enviro nut protesting drilling.

I am as economically right wing as anyone I know but if I was American I would have a hard time voting for the current fruitcake social conservative Republican.

And I don’t even like calling them social conservatives. Conservativeism is not about ultra religious values, delusional conspiracy theories, and a general Trump inspired nastiness towards others.

Hopefully canada’s Conservative Party doesn’t go down the same highway to nuttiness under PP.

#41 Chalkie on 01.16.23 at 5:31 pm

Canada with a Federal Debt of 1.5 Trillion, if we were lucky enough just to pay off 10 Billion per year without adding anymore debt, it would take 150 years for Canada to pay off what it currently owes.
Another way to look at it is, for every living Canadian today, Canada owes $42,000.00 ( based on 35 Million Canadians). Who wants to write their first cheque to clear their name.

#42 Alois on 01.16.23 at 5:46 pm

Re: Health Care

Intriguing is Ontario is partnering with private clinics to assist in clearing backlog of surgeries etc….. while here in BC we must capitulate on bended knee to the Public system.

We are in the battle between old idealogical NDP dogma vs. new evolving practicalities.

If it ain’t broke don’t fix it…but if can’t fix it….

FYI:
It was PM John Diefenbaker that set the table for a National Health Care system.

https://www.historymuseum.ca/cmc/exhibitions/hist/medicare/medic-4k03e.html

#43 Albertaguy in AB on 01.16.23 at 5:58 pm

#10 Dave ….AZ running out of water…

Its one of the reasons i sold both of my AZ properties in the last 3 years. I had a pool in one of them and had to dump the water to do some maintenance and then refill. I calculated based on the next months water bill that it only cost $50 to refill it. Would have been over $400 in Calgary to do same. How in the world could it be 8 times (ok 5 times USD:CAD) cheaper for water IN A DESERT than in Canada with the Bow River running past Calgary??

#44 Brian on 01.16.23 at 5:59 pm

Actually you meant the “Canadian conservative/liberal/ndp model”, right? – Garth

How true Garth. The Canadian system is broken. MP’s have to vote along the party line on most issues whether they agree or not. The British system allows MP’s to openly criticize their party when debating policy. As far as Question Period goes, what a joke. The opposition has to inform the governing party the questions that will be asked in the house.

#45 Elon Fanboy on 01.16.23 at 6:00 pm

So how does one pay off a $31 Trillion overdraft?

Explain it to me like I’m 5.

#46 Reality is stark on 01.16.23 at 6:04 pm

America has never been stronger.
They NEED to quell the value of the US dollar.
They can fund the war in Ukraine forever.
They need to train Ukrainian pilots on F-18’s, send some more Bradley’s and start sending ATACM rockets and the latest drone technology (the ones that fire missiles and drop real bombs). This playing around is only costing Ukrainian lives.
Zelensky is right, they can end this thing in a few months with proper NATO firepower rather than the leftover Soviet garbage we force them to struggle with.
The mighty US dollar is already too high as it is.
Everyone wants US military equipment and US oil and LNG.
The debt ceiling is a nothing burger for the USA.
In this country, it’s a different story. Declining oil prices and a dead housing market will push an agenda of higher taxes. As you incorrectly focus on our Fed you will pay higher taxes through the back door on your property.
Taxes will be crushing you and you are too blind to see it.
This is a major reason the young can’t afford housing.
Do you honestly believe your water bill will recede even after all the infrastructure has been improved?
Not too bloody likely, it will become another cash cow like the double transfer tax.
That’s how you finance those big pensions. Matching shouldn’t exist in the public sector, they get paid enough.

#47 Yukon Elvis on 01.16.23 at 6:08 pm

DELETED

#48 American House Buyer on 01.16.23 at 6:15 pm

By the time the dust settles, my bets are early to mid 1990s pricing across Canada or lower as the rate increases, crypto losses, stock losses, job losses, death rates families all start moving in together, dropping demand, all start to magnify and fear sets into buyer’s minds.

#49 kommykim on 01.16.23 at 6:17 pm

RE: So would the Trumpers and their puppet Speaker be bold and daring enough to force the USA into default?
Nah. Of course not.

=======================================

But they’d be stupid enough. Don’t under estimate the stupidity of true Trump loyalists.

#50 DON on 01.16.23 at 6:26 pm

#26 Alois on 01.16.23 at 4:45 pm
#9 Timmy on 01.16.23 at 3:37 pm

The Republican (Conspiracy Theory) party is full of inbred idiots.

==============

So…
…..The Dems are full of __________________

**********

Dumb and Dumb!

#51 Brian on 01.16.23 at 6:27 pm

Justin Trudeau has to skip going to Davos because Pierre Poilievre has been touring around rural Canadian ridings.

Trudeau is so unpopular he snuck into Saskatchewan without telling the Premier in advance.

#52 Adam on 01.16.23 at 6:33 pm

Summary of this post

Garth: “Diamond hands”

#53 DON on 01.16.23 at 6:47 pm

#45 Elon Fanboy on 01.16.23 at 6:00 pm
So how does one pay off a $31 Trillion overdraft?

Explain it to me like I’m 5.

*******
WAR!

#54 Catalyst on 01.16.23 at 6:53 pm

The flaw is in assuming these are one time events. Like the companies that adjust ebitda every year for 5 straight years for restructuring expenses. At some point, a recurring risk (like political risk) shouldn’t be discounted. Snappy suspenders just pointed out the premium at all time highs for US markets, a give back is overdue and won’t be easily regained.

#55 Faron on 01.16.23 at 7:00 pm

#45 Elon Fanboy on 01.16.23 at 6:00 pm
So how does one pay off a $31 Trillion overdraft?

ELY5: Your question has no merit. Now, go to your room and wipe the drool off of your Tesla posters; it’s unbecoming of someone who propends to be an adult.

#56 the jaguar on 01.16.23 at 7:01 pm

What follows the pursuit of illusion is the price of illusion. It will be costly, but not in a monetary sense.

#57 crowdedelevatorfartz on 01.16.23 at 7:02 pm

@#109 Faron
“Luckily, here in Canada, our (okay, right of center men’s) big thot leader says stuff like this:”
++++

I’m still trying to get past the (Left of center gender people’s Leader ) that says stuff like this:

“The budget will balance it’s self….”

#58 Chaddywack on 01.16.23 at 7:09 pm

The biggest surprise here is I just found out McCarthy is from California!

I’m shocked a Republican would even get elected from that state, let alone become speaker?

I thought that you could put a mailbox up for election in California, call it a Democrat, and it would win in a landslide.

Must be his nice hair…..

#59 The Original Jake on 01.16.23 at 7:10 pm

The threat of the US cutting off the purse strings is an opportunity for investors to open theirs and vulch like before.

#60 Diharv on 01.16.23 at 7:13 pm

Republicans trying to corral expenditures seems like a laughable concept. I don’t think the last several R presidents ever met a deficit they didn’t like. The fiscal conservative is totally out of vogue.

#61 BC Renovator on 01.16.23 at 7:13 pm

“Weather bomb” you would Lol. Pump that fear

#62 fishman on 01.16.23 at 7:23 pm

Why would the Freedumb Convoy crowd write hate mail about Garths column? I’m an unabashed Freedumb Convoy supporter. I used to be a Trumpista too. But a new guy has stolen my heart. Should have known never to trust a Manhattan rich guy grifter. I like this George Santos from Long Island (where all NYPD & NYFD go when they retire). A broke low life street hustler, closer to my style & class. Im following Garth’s advise & not responding to anything Georgie Boy & the rest of his brother legislators do about our reserve currency.
I got a question for you Jim #15, as a self appointed expert on Freedumb Convoy types. What do you think of the 100 km convoy of Uzbeks, Kazaks, Chechens, Punjabis, Afghanis, Syrians, Turks & Iraqi with their semis loaded to the axles, lined up at the Georgian/Russian border. Freedumb Convoy or Dum truck drivers?

#63 You've been blue haired! on 01.16.23 at 7:35 pm

#21 Nonplused on 01.16.23 at 3:55 pm

Remember, the perfect is always the enemy of the good, even in politics. It arises from the fact that only Dog is perfect and no one and nothing else, and I am not even so sure about him/her/other.
____________________________

That’s so 20th century. Please acknowledge the errors of your way.
It is xe/xem, ze/zim, sie/hir.

#64 Nonplused on 01.16.23 at 7:43 pm

#41 Chalkie on 01.16.23 at 5:31 pm
Canada with a Federal Debt of 1.5 Trillion, if we were lucky enough just to pay off 10 Billion per year without adding anymore debt, it would take 150 years for Canada to pay off what it currently owes.
Another way to look at it is, for every living Canadian today, Canada owes $42,000.00 ( based on 35 Million Canadians). Who wants to write their first cheque to clear their name.

————————————–

All debts get resolved eventually, either by the borrower, or by the lender.

Nobody is ever going to pay the $42,000 off. It is impossible. Therefore, we must allow for the possible, no matter how far off in the future the possible comes to fruition. It will come.

————————————–

Another thing we seem to be having a lot of trouble with on this blog is evidence and what can be proven from it.

A absence of evidence is not evidence of absence. But on the other hand it is not evidence either. It is simply a lack of evidence. Pretty unhelpful really. It doesn’t rule anything out or in.

But the burden of proof lies with the party making the claim.

Sometimes you have to be content with just not having an answer, or perhaps saying “I don’t know”. But no detective stops there. They formulate theories and then see if they can find evidence.

Why do they formulate theories? Because it saves time. Pursuing every possibility takes too long, so you start with the likely ones, even if “likely” still means “pretty remote”. If it’s the best idea among a bunch of low probability ideas that’s where you start looking.

For example, if you have an unsolved murder, you don’t assume every person in the world is equally likely to have done it. You start with people nearby, people who knew the victim, and people who might have had a motive. Everyone knows that.

Also if you have a theft occur and people that are known to be thieves a in the area, also a good place to start.

But the detective still has to find evidence.

The question of whether God exists is often cited as an example. You can’t prove it either way, at least not yet. Maybe one day we will. But until that day, the person making the claim (either one) is the one who has to provide the evidence. So far neither one can.

But that does not mean that all that is unknown is unimportant. There could be many things we don’t know that are very important. But I guess we won’t know until we find out.

Government debt is much the same way. Nothing bad has happened so far. But that proves nothing.

However, in the case of government debt, we do have a lot of examples we can look at, both at the personal, corporate, and state levels, from around the world. Uncontrolled borrowing always precedes a great calamity. There have been no exceptions. And neither the borrower nor the lender walks away unharmed.

#65 West New West on 01.16.23 at 7:55 pm

Thanks to you Garth I don’t give a damn. This is the first I even heard about the latest debt ceiling farce. Won’t follow it, won’t even take a cursory look at what the numbers are. Yes, it is just more noise, took a while to get it. Going skiing…..

#66 kommykim on 01.16.23 at 8:10 pm

RE: #57 crowdedelevatorfartz on 01.16.23 at 7:02 pm
I’m still trying to get past the (Left of center gender people’s Leader ) that says stuff like this:
“The budget will balance it’s self….”

=======================================

That line the CONs love to half-quote is really not much different than their own line of, “The tax cuts will pay for themselves”…

Because if you quote it in context:
“the commitment needs to be a commitment to grow the economy and the budget will balance itself.”

vs

The CON argument that if you cut taxes, the economy will grow, which will result in more tax revenue.

Both are lazy arguments, but they make good sound bites and rally the base.

#67 Faron on 01.16.23 at 8:13 pm

#57 crowdedelevatorfartz on 01.16.23 at 7:02 pm

Disingenuous! Non sequitur!

Now go check on Elon Fanboy and make sure he’s… Never mind. Best not go in there.

#68 Know your bias on 01.16.23 at 8:19 pm

Dave #10
“What else would you expect in a Republican state? lol”

Maricopa County in Arizona is run by Democrats.
Arizona is a swing state.

When analyzing American politics, it’s not appropriate to paint with with broad brush strokes.

Much that happens in specific states, and counties is due to local politicians (mayors, prosecuting attorney, etc).

Look at some cities that are long term Democrats and their crime rates (L.A., Chicago, N.Y., Detroit).

It’s not that simple, but for local politics look at local governance.

#69 Faron on 01.16.23 at 8:19 pm

#61 BC Renovator on 01.16.23 at 7:13 pm

“Weather bomb” you would Lol. Pump that fear

Term has been used by meteorologists for a looong time. Just like polar vortex and atmospheric river and hurricane and yadda yadda yadda. Try not to be such a triggered snowflake.

#70 dosouth on 01.16.23 at 8:24 pm

I just had to post this as we see Gen xer’s and Mill’s want fries with their Wahburgers….

I recall a time or two where this was subject of a blog post or two.

As public servants return to office, some decry lack of clarity, long commutes

#71 Regjeg on 01.16.23 at 8:24 pm

Kevin McCarthy worked as a firefighter while attending California State University, where he attained his BS degree.

The recent 15 round voting marathon to elect a Speaker strongly suggests he’s lost whatever firefighting skills he may have once had.

#72 Fiendish Thingy on 01.16.23 at 8:34 pm

Garth- Social Security won’t “run dry” if the debt ceiling isn’t lifted, as it’s funding comes from a different pot of money.
However, the money that runs the Social Security Administration, it’s staff and computers would dry up, so checks would stop going out.
The Insurrectionist Caucus in congress thinks it would be clever to hold the world economy hostage to force cuts in SS and Medicare benefits, because cruelty is their raison d’être.

Let’s hope Biden refuses to negotiate with these economic terrorists.

#73 Doug t on 01.16.23 at 8:34 pm

#48 AHB

Me likes this train of thought

#74 Amok on 01.16.23 at 8:52 pm

@ #58 Chaddywack

Nixon was famously from California.
Download Wikipedia on your smart phone.

#75 crowdedelevatorfartz on 01.16.23 at 8:59 pm

Here’s an interesting speech.

https://www.youtube.com/watch?v=JKIOSnKX96E

#76 Quintilian on 01.16.23 at 9:25 pm

#57 crowdedelevatorfartz on 01.16.23 at 7:02 pm

I’m still trying to get past the (Left of center gender people’s Leader ) that says stuff like this:

“The budget will balance it’s self….”

CRAZY TALK

The federal deficit is nothing to worry about, it’s a necessary evil, which prevented a greater evil.

And yes, it will right itself.

The real problem that will eventually cause mayhem is the private debt accumulated to finance the asset bubbles.

Private citizens cannot tax themselves out it, nor can they grow their income to diminish the debt relative to their income.

You really need to take some evening courses Grandpa.

#77 Irish Stew on 01.16.23 at 9:49 pm

Tax the Rich – more?

This is what you will pay on $1,000,000 salary in Ontario, Canada:

Gross income: $1,000,000

Federal tax: $307,320
Provincial tax: $190,919
Canada Pension Plan: $3,500
Employment Insurance: $953
Total Tax: $502,692

Net pay: $497,308

** And then there is HST on every single purchase, property tax, healthcare supplement, user fees, carbon tax and all the other hidden taxes.

#78 crowdedelevatorfartz on 01.16.23 at 9:51 pm

@#69 Faron
“Try not to be such a triggered snowflake.”
++++

We’ve learned from the best.

+++++++++
@#74 Amok
“Nixon was famously from California.”
+++

As was Ronald Regan…

#79 Doug t on 01.16.23 at 9:53 pm

#75 fartz

BINGO BANGO BONGO and IRVING – nice

#80 BC Renovator on 01.16.23 at 10:05 pm

#67 Faron

You’re an idiot and the biggest Troll on the Blog

#81 Oblio on 01.16.23 at 10:08 pm

“Everyone…knew the system was failing, but no one could imagine an alternative to the status quo, and politicians and citizens alike were resigned to maintaining the pretense of a functioning society. Over time the delusion became a self-fulfilling prophecy and the fakeness was accepted by everyone as real, an effect Yurchat termed hyper-normalization.
Does this sound familiar?

#82 crowdedelevatorfartz on 01.16.23 at 10:25 pm

@#76 Quintillians deeper in debt
“You really need to take some evening courses Grandpa.”

++++
Ok Millenial.
Enjoy paying ever higher taxes and user fees decades after I retire and die.
Thank Trudeau for that.
Boomers didn’t double the National debt in 5 years.
Your brown shoe’ed wonder boy did that….alllll on his ownsome.
Good job!

#83 Faron on 01.16.23 at 10:37 pm

#78 crowdedelevatorfartz on 01.16.23 at 9:51 pm
@#69 Faron
“Try not to be such a triggered snowflake.”
++++

We’ve learned from the best.

IHCTD9?

#84 V. Putin on 01.16.23 at 10:47 pm

@#56 Well said.

It is even better when you can get the young & lost to pay the price of your pursuit of illusion. At least I am helping young russians realize a good death.

Well, and the innocent, but Ukraine is also an illusion right?

#85 Maureen on 01.16.23 at 10:55 pm

#75 crowdedelevatorfartz on 01.16.23 at 8:59 pm
Here’s an interesting speech.
______________

Omg, are you serious?

Overplaying the coded dogwhistle in that rant to a conservative and racist bigoted audience negates any possible worthwhile ideas presented in that diatribe. Your speaker, a second rate Joe Rogan comedian wannabe realizes he does this for clicks and likes, but with a dumb short-term perspective. Long term this will only alienate more people, leaving only an echo chamber behind.

#86 Doug in London on 01.16.23 at 10:59 pm

Should you respond?
————————————————————-
The fact is there’s NOTHING I can do about what could happen soon. Zip, zero, zilch, the null set, the square root of F.A. and I don’t mean fire alarm. The only way I might respond is to buy more equities if all this turmoil shakes up markets like it did in 2011. Say, have you heard that new song by Seether, Country Song?

#87 Nonplused on 01.16.23 at 11:43 pm

#77 Irish Stew on 01.16.23 at 9:49 pm
Tax the Rich – more?

This is what you will pay on $1,000,000 salary in Ontario, Canada:

Gross income: $1,000,000

Federal tax: $307,320
Provincial tax: $190,919
Canada Pension Plan: $3,500
Employment Insurance: $953
Total Tax: $502,692

Net pay: $497,308

———————————

My dear Stew, what you fail to see is that there is still $497,308 left to tax. To the liberal mind, that represents an outrageous loss of revenue. And depending on the interest rates, that $497,308 could support perhaps 20 times as much borrowing! Think of all the spending possibilities! That’s nearly $10,000,000 dollars right there! Forgone! Because we let this evil rich person keep some 48% of their income.

These selfish people must be taxed, taxed, and taxed again.

Of course this is where the contention that sovereign states cannot go bankrupt because they have the power to tax runs short of logic and/or math. Sooner or later there is nothing left to tax. At that point collapse is inevitable.

The only time government borrowing makes sense is the same as for any borrowing; when the dollars used will produce a rate of return above the financing costs. Otherwise you are on the path to perdition. Inevitable perdition.

Of course there is also war. Borrowing for war is a keen way the state tries to ensure its survival. But after the war, win or lose, they stiff the creditors.

But don’t be too hard on the morality of the state. You’d do it too for medical expenses if you had to. Or sometimes just to get the girl.

When they say “life sucks”, it’s because it does. It isn’t that there is no such thing as right or wrong, it is that we don’t naturally prefer one over the other. This is what is meant by “knowing both good and evil”.

The enlightened xe/xem, ze/zim, sie/hir understands that “good” morality leads to better outcomes for society and thus all members of society, including themselves, in the long run. But the average xe/xem, ze/zim, sie/hir don’t give a crap about society.

But we elect the average xe/xem, ze/zim, sie/hir. Meritocracy is gone, a distant memory. Xe/xem, ze/zim, sie/hir is no longer valued for their betterment. Instead, we vote for those most like ourselves. In other words, the lowest common denominator has the best chance of winning. The baser the better.

You don’t get to the top of the mob by being a better man. Sorry, better “xe/xem, ze/zim, sie/hir”. You get there by being the most ruthless and cunning. Helps if you also have a nice suit and haircut, and can lie well in both official languages.

#88 Ham and Eggs on 01.16.23 at 11:44 pm

Democrats just ‘passed’ a 1.3 trillion dollar spending bill stuffed with so much pork the live pig population has gone hog wild. The ‘ collapse’ being puked up in apocalyptic spasms by leftist media talking heads is a fear of the Democrat UFO budget maybe getting clawed back. It’s not a serious default. There’s as much chance of a default as Trudeau agreeing to supply Japan or Germany with our abundant LNG or REM. Any movement of the market will be either misperception or a goon like Larry Fink pretending his hedge fund has world shaking short sale power . There’s no default, it’s politics, and these days politics can’t be relied on to produce investable outcomes. If that were the case Canada would be an economic basket case…. Oh wait….? It’s back to those balance sheets folks.

#89 Joe Lalonde on 01.16.23 at 11:55 pm

Soooo.
Why is debt different today than past years and countries are souring to letting their investments tank?

Purchasing power baby!
Purchasing power has totally tanked its value.
A billion isn’t worth what it’s value used to be.

#90 Peter in AB on 01.17.23 at 1:15 am

By what means can this stalemate carry on to October?
What is the mechanism by which the Republicans can hold this over Biden’s head for so long?

#91 Axehead on 01.17.23 at 2:10 am

Debt is a necessary instrument in a monetary system based on central banking (no default) and fiat currency (no backing for psper promissary notes). In this system, no debt = no money. Therefore debt must never be extinguised and will always increase until it becomes so exponential that the whole system implodes (soon). Therefore, as Garth presumes, the debt ceiling must increase and must be approved or collapse is nigh. This is classic ‘kick the can – of doom – down the road’.

#64. Actually, one can easily prove the existence of God. Creation (the existence of the natural earth and universe) requires a creator. Design demands a designer. Even a process that denies an intelligent creator of that process (evolution) paradoxically requires an intelligent creator of that process (Darwin).

#92 PeterfromCalgary on 01.17.23 at 3:43 am

#19 Timmy on 01.16.23 at 3:51 pm

” So despite unsustainable water, the government let developers build subdivisions. What else would you expect from a Republican state? lol”

I wouldn’t laugh too much Timmy. That US Southwest water shortage may soon impact our grocery bills. The same river that supplies Arizona helps irrigate California’s Central Valley. This is the source of many of the fruits and vegetables Canadian’s eat.

“Whiskey if for drinking water is for fighting.” (Quote often attributed to Mark Twain)

#93 BeenthereBrad on 01.17.23 at 6:14 am

The debt ceiling will be resolved, it always is. This time however, Kevin has the Dem by the short ones, because there has been too much one-sided investigations corrupted by the combination of the F.B.I. and the Dems working together, especially around election times. The Dems hate being called out on this, because quite frankly they know it is happening. As far as Janet Yellen is concerned, Garth, isn’t she the one that told us the inflation was “just transitory”???

#94 crowdedelevatorfartz on 01.17.23 at 8:36 am

@#85 Maureen McTears

“Overplaying the coded dogwhistle in that rant to a conservative and racist bigoted audience negates any possible worthwhile ideas presented in that diatribe. ”

++++
You left out
“Ok Boomer”

Just curious.
Have you paid off your university student loan yet?

WOKE :

Witnessing
Offensive
Koan
Everywhere.

Haiku over.

#95 crowdedelevatorfartz on 01.17.23 at 8:43 am

@#93 Brad’s buddies

Goodness gracious.
Is this how Republicans overturn elections?

https://www.reuters.com/world/us/republican-candidate-arrested-shootings-democrats-homes-new-mexico-2023-01-17/

#96 A Dollar is a Dollar is a Dollar on 01.17.23 at 10:00 am

#77 Irish Stew on 01.16.23 at 9:49 pm
Tax the Rich – more?

——————

Under the right wing, conservative Republican Dwight Eisenhower, USA taxes were 91% on the rich. (Even more, about 94% during the war)

What were the results?

***The creation of the greatest democratic society and economy in human history. A flourishing middle class. Affordable housing. Jobs for anyone ready to work. A societal success envied around the world. Innovations that took us to the Moon and beyond, and created the computer revolution. More equality for everyone. ***

Not bad, eh?

And how have we done since the 1980s, with the rich getting richer and everyone else stagnating?

What have you got against that Eisenhower common sense now?

Duuhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhh….

#97 Quintilian on 01.17.23 at 10:14 am

#85 Maureen on 01.16.23 at 10:55 pm

#75 crowdedelevatorfartz on 01.16.23 at 8:59 pm
Here’s an interesting speech.
______________

Omg, are you serious?

Hey Maureen, I think the next step for Crowdie is to impress us with a link to an interview of Judge Jeanine , or maybe he’ll bring in the big guns like Dan Bongino.

But now to your question to him:

Omg, are you serious?

Yes, as unbelievable as it may seem, he is serious.
He actually believes the stuff he says, I don’t think it’s a case of malice.

#98 Hmm on 01.17.23 at 10:29 am

@#57 crowdedelevatorfartz on 01.16.23 at 7:02 pm
@#109 Faron
“Luckily, here in Canada, our (okay, right of center men’s) big thot leader says stuff like this:”
++++

I’m still trying to get past the (Left of center gender people’s Leader ) that says stuff like this:

“The budget will balance it’s self….”

++++++++++++++++++++++++

come on man, give us the full statement
with context at least.

#99 Dharma Bum on 01.17.23 at 10:41 am

Does this mean that I have to again listen to the MSM talking heads blather on endlessly about “the so called fiscal cliff”?

Say it ain’t so!

https://www.youtube.com/watch?v=59NvqpInybY&t=2s

#100 Ponzius Pilatus on 01.17.23 at 10:50 am

#92 PeterfromCalgary on 01.17.23 at 3:43 am
#19 Timmy on 01.16.23 at 3:51 pm

” So despite unsustainable water, the government let developers build subdivisions. What else would you expect from a Republican state? lol”

I wouldn’t laugh too much Timmy. That US Southwest water shortage may soon impact our grocery bills. The same river that supplies Arizona helps irrigate California’s Central Valley. This is the source of many of the fruits and vegetables Canadian’s eat.
————————
Time for us to wean ourselves from American farm products.
Just like the Germans weaned themselves from Russian oil and gas.
Diversify!
And grow your own.
As much as you can.
Minimalism is the new “ism”.

#101 Tony on 01.17.23 at 11:47 am

The annual inflation rate for December dropped to 6.3 percent in Canada. The core inflation rate fell from 5.41 percent to 5.34 percent month over month.

https://ycharts.com/indicators/canada_core_inflation_rate

#102 epic bear on 01.17.23 at 12:10 pm

say it aint’ so TSLA…

with just a few more days until expiry, friday’s 130 C with an open interest of 33200 contracts, have traded an amazing 140,000 contracts, and it’s just 10 min after noon today.

i wonder where TSLA will end up on friday. lol. who can ever know.

#103 Oblio on 01.17.23 at 12:25 pm

#100 PP
“Just like the Germans weaned themselves from Russian oil and gas.”?
More like someone cut the pipeline to Germany, and now that someone is making a killing shipping them LNG.

#104 Hugh Jorgan on 01.17.23 at 1:05 pm

“These days the USA has over $31 trillion in debt, or 120% of the economy (our federal debt is $1.5 trillion, or almost 75% of GDP. Notsobad, in comp).”

It is bad when Canada’s federal debt is nearly 5% of US federal debt, and Canada’s population is only 1% of the US.

#105 Ponzius Pilatus on 01.17.23 at 1:19 pm

#103 Oblio on 01.17.23 at 12:25 pm
#100 PP
“Just like the Germans weaned themselves from Russian oil and gas.”?
More like someone cut the pipeline to Germany, and now that someone is making a killing shipping them LNG.
———————
The same thing would happen, if Canada weaned itself from American farm products.
Higher prices at first.
And adjustment will be made.
To reduce consumption of over priced products.
Just basic economics.

#106 DON on 01.17.23 at 1:22 pm

#100 Ponzius Pilatus on 01.17.23 at 10:50 am
#92 PeterfromCalgary on 01.17.23 at 3:43 am
#19 Timmy on 01.16.23 at 3:51 pm

” So despite unsustainable water, the government let developers build subdivisions. What else would you expect from a Republican state? lol”

I wouldn’t laugh too much Timmy. That US Southwest water shortage may soon impact our grocery bills. The same river that supplies Arizona helps irrigate California’s Central Valley. This is the source of many of the fruits and vegetables Canadian’s eat.
————————
Time for us to wean ourselves from American farm products.
Just like the Germans weaned themselves from Russian oil and gas.
Diversify!
And grow your own.
As much as you can.
Minimalism is the new “ism”.

***********

Spot on!

May I suggest. Seussisms by Dr. Suess.

“A guide to life for those just starting out and those already on their way”

#107 Ponzius Pilatus on 01.17.23 at 1:23 pm

#104 Hugh Jorgan on 01.17.23 at 1:05 pm
“These days the USA has over $31 trillion in debt, or 120% of the economy (our federal debt is $1.5 trillion, or almost 75% of GDP. Notsobad, in comp).”

It is bad when Canada’s federal debt is nearly 5% of US federal debt, and Canada’s population is only 1% of the US.

————————————-
Hughy.
Check your population math.

#108 Love_The_Cottage on 01.17.23 at 1:40 pm

#104 Hugh Jorgan on 01.17.23 at 1:05 pm
It is bad when Canada’s federal debt is nearly 5% of US federal debt, and Canada’s population is only 1% of the US.

________
We have about 10% of the population of the U.S, not 1%. I’m shocked to find something on the internet that is wrong.

#109 Hugh Jorgan on 01.19.23 at 11:01 am

#107 – “Hughy. Check your population math.”
#108 – “We have about 10% of the population of the U.S, not 1%. I’m shocked to find something on the internet that is wrong.”

Actually, it’s 11% Missed a zero. Good thing you Number Karens were on the case.