Financial News

[Balta1701]

Bernanke is stepping away from QE3 in front of Congress, saying it might not even be effective.

The fact that it's now being floated, when what, 30 days ago they seemed insistent that it was time to pull out the supports, says a lot.

 

He also says that cutbacks in federal spending would be particularly bad, I note.

[NorthSideSox72]

Much of this is about confidence. While government cuts will have a short term negative effect... it will not be huge, and more importantly, the cuts mean a deal, and a deal will be a salve for the markets. If they can then get back to clarifying regulations and requirements in the finance sector, those things combined would go a long way right now to loosening up some funding to allow for more growth.

 

[StrangeSox]

Washington Post summary of the "Gang of Six" debt proposal

 

Off the bat I notice it calls for repeal of the CLASS act, which of course the CBO scored as budget-reducing. Oh, and lowering marginal tax rates, abolishing the AMT and fixing in the "doc fix" for at least 10 more years. Glad we're concerned about deficits and not just ideological positions, right?

 

They're proposing to cut taxes by $1.5 trillion. That'll really close some budget gaps!

Edited July 19, 2011 by StrangeSox

[StrangeSox]

I don't get it. What's "bi-partisan" about that proposal?

 

We've got a Democrat in the White House and a Democrat Senate, and we're going to get a hard-right austerity plan so that the GOP will allow the country to pay its bills.

Edited July 19, 2011 by StrangeSox

[BigSqwert]

I don't get it. What's "bi-partisan" about that proposal?

We've got a Democrat in the White House and a Democrat Senate, and we're going to get a hard-right austerity plan so that the GOP will allow the country to pay its bills.

I'm starting to question that.

[StrangeSox]

Democrats can be neoliberals.

 

Edited July 19, 2011 by StrangeSox

[Cknolls]

Well we could pass the farse the White House is calling spending cuts. They do not take place for several years, future Congresses can ignore them. Now that is the way to cut the deficit. Sounds like the healthcare bill. A big ole pile of the stinky stuff. But it comes from the mouth of the man who voted against raising the debt ceiling while he was in the Senate in 2007, so it must be Gospel.

[Balta1701]

Well we could pass the farse the White House is calling spending cuts. They do not take place for several years, future Congresses can ignore them. Now that is the way to cut the deficit. Sounds like the healthcare bill. A big ole pile of the stinky stuff. But it comes from the mouth of the man who voted against raising the debt ceiling while he was in the Senate in 2007, so it must be Gospel.

So do you favor defaulting on the debt?

[StrangeSox]

Democrats can be neoliberals.

 

 

 

Well we could pass the farse the White House is calling spending cuts. They do not take place for several years, future Congresses can ignore them. Now that is the way to cut the deficit. Sounds like the healthcare bill. A big ole pile of the stinky stuff. But it comes from the mouth of the man who voted against raising the debt ceiling while he was in the Senate in 2007, so it must be Gospel.

 

This is bizarre coming after a post deriding Obama and mocking support for his reelection.

[Cknolls]

So do you favor defaulting on the debt?

 

 

The gov't will be able to service its debt. So they will not default.

[kapkomet]

The gov't will be able to service its debt. So they will not default.

 

Shhhhh. Don't tell anyone that, so we can slap through a massive tax increase while screaming about killing grandma. 18 months ago all over again.

[mr_genius]

The gov't will be able to service its debt. So they will not default.

 

true. my preference is the House bill. but no cap increase is second.

[Balta1701]

The gov't will be able to service its debt. So they will not default.

Really CK.

 

Let me ask you this...if the U.S. government stops sending out social security and military paychecks because it's at the debt limit but maneuvers to pay off the bonds that are due...

 

If you were a bond investor, would you want to buy into the bond issue that came out at that time? Or would you judge that there was a much higher risk associated with those bonds because of the fact that the Congress is already considering a bill saying "Fund Social Security first" and demand a much higher risk premium on those bonds?

[jasonxctf]

The gov't will be able to service its debt. So they will not default.

 

if a deal isn't passed, what do you think the drop in the Dow will be? It dropped 700 points when TARP failed.

 

How much will that loss mean for US investors? (401k's, etc)

[southsider2k5]

if a deal isn't passed, what do you think the drop in the Dow will be? It dropped 700 points when TARP failed.

 

How much will that loss mean for US investors? (401k's, etc)

 

If we default the Dow will set a record for one day drop.

[jasonxctf]

If we default the Dow will set a record for one day drop.

 

thus costing nearly everyone a ton of $, personally.

[jasonxctf]

Go American Airlines!!!

 

 

FORT WORTH, Texas — American Airlines is buying at least 460 new planes over the next five years and splitting the order between Chicago-based Boeing and Airbus.

 

American said Wednesday it will buy 260 planes from Airbus and 200 from Boeing Co. It's a major coup for Europe's Airbus because American currently flies an all-Boeing fleet.

 

Advertisement American will also take options and purchase rights for up to 465 additional planes through 2025.

 

 

 

Read more: http://www.dailyherald.com/article/2011072.../#ixzz1SewRi29Z

[southsider2k5]

thus costing nearly everyone a ton of $, personally.

 

No doubt. But then again there is zero chance of default.

[southsider2k5]

Go American Airlines!!!

 

 

FORT WORTH, Texas — American Airlines is buying at least 460 new planes over the next five years and splitting the order between Chicago-based Boeing and Airbus.

 

American said Wednesday it will buy 260 planes from Airbus and 200 from Boeing Co. It's a major coup for Europe's Airbus because American currently flies an all-Boeing fleet.

 

Advertisement American will also take options and purchase rights for up to 465 additional planes through 2025.

 

 

 

Read more: http://www.dailyherald.com/article/2011072.../#ixzz1SewRi29Z

 

Wait, you are cheering for an American company making the choice to essentially send more jobs overseas?

[jasonxctf]

im cheering that an American company is taking money off the sidelines and making a capital investment in its business. Now granted, 1/2 of the order will be to an overseas company, with the other 1/2 to a US company. But its a good sign for corporate America as a whole. Hoping the trend continues. Maybe United, Delta, Southwest, etc will want to upgrade their fleets too?

[Rex Kickass]

im cheering that an American company is taking money off the sidelines and making a capital investment in its business. Now granted, 1/2 of the order will be to an overseas company, with the other 1/2 to a US company. But its a good sign for corporate America as a whole. Hoping the trend continues. Maybe United, Delta, Southwest, etc will want to upgrade their fleets too?

 

Rumor is Delta is shopping and will need to refleet eventually. Especially for international service as those 757s and 767s are rapidly aging.

 

United's refleeting needs aren't as acute, especially with the absorption of Continental since Continental has a much newer fleet on average than United did.

 

Southwest probably won't need to make a huge order at any time as they seem to continually refleet their 737. However, because in order to save half the deal that they were about to lose to AMR, Boeing essentially promised a 737neo, a new engine option for the 737 which would reduce fuel consumption by 15-20%.

 

The reason Airbus has had such a great year with the new A320 is that the NEO option will go a long way to reducing fuel costs. In a world of $100/barrel oil, it makes so much more sense to take a plane designed with that in mind rather than a plane with an engine design from the days of $25/barrel.

[Cknolls]

Really CK.

 

Let me ask you this...if the U.S. government stops sending out social security and military paychecks because it's at the debt limit but maneuvers to pay off the bonds that are due...

 

If you were a bond investor, would you want to buy into the bond issue that came out at that time? Or would you judge that there was a much higher risk associated with those bonds because of the fact that the Congress is already considering a bill saying "Fund Social Security first" and demand a much higher risk premium on those bonds?

 

Paying the interest on our bonds is servicing the debt. Will they be able to pay the interest, Yes. Hence no default on the debt. Deciding what to pay after that is another story.

[Balta1701]

Congress Continues Debate Over Whether Or Not Nation Should Be Economically Ruined

Sigh

[NorthSideSox72]

Paying the interest on our bonds is servicing the debt. Will they be able to pay the interest, Yes. Hence no default on the debt. Deciding what to pay after that is another story.

Nice trick of words. Defaulting on DEBT you say. But if you default on OBLIGATIONS, that is also a default, just of a different kind.

 

[Balta1701]

It's worth noting the cascade of failing to pay some of those "obligations." The top tier from this list would almost certainly go immediately; they don't get a payment and then everything relying on that payment defaults. The lower levels of the pyramid are trickier and might well depend on how nimble Geithner is regarding what gets shut down.

The first to fall will be “directly linked” debt. These are bonds that rely on payments from the federal government. Naomi Richman, a managing director in Moody’s Public Finance division, puts it bluntly: “There are certain kinds of municipal bonds that are directly reliant on Treasury paying or some other direct payment,” she says. “If those bonds don't receive their payment, they have no other source of revenue.” So down they go.

 

Then there’s the “indirectly linked” debt. That’s debt from state government, local governments, hospitals, universities and other institutions that rely, in some way or another, on payments from the federal government. If Medicaid stops paying its bills, all the hospitals that rely on Medicaid’s payments become less creditworthy. If we stop funding Pell grants, then all the universities that enroll students who pay using financial aid become less creditworthy. And since the federal government passes one-fifth of its revenues through to the states, and the states pass those revenues through to cities, if the federal government stops paying its bills, all states and all cities are suddenly in worse financial shape, which will make it harder for them to get loans.

 

And then there’s everything else. Mortgages. Credit cards. Loans that businesses take out to expand. Much of the debt in the American economy, and in fact globally, is “benchmarked” to Treasury debt. When your bank quotes you a mortgage rate, the calculation begins with the rate on 10-year treasuries and then adds premiums for various types of risk specific to you and your area on top of that. “There’s a whole credit structure,” says Pete Davis, president of Davis Capital Investment Ideas. “Think of it as roads and bridges, but it’s finance, it’s all connected, and it’s all on top of treasuries. Your CD at a bank, your credit card interest rates, your car loans, your mortgages — that’s all built on Treasury rates. So when you shake the basis of it, everything on top of it shakes, too.”