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Let's talk more about that debt ceiling Treasury Secretary Tim Geithner after yesterday's close of trading made a surprise announcement.
And not about the fiscal -- deal he said the US is gonna hit that debt ceiling Monday new years -- Of course there are certain things that the government can do to put that date off by a couple months listening Donald is here with much more on the fight and how well.
-- it won't you talk good morning and you know Treasury Secretary Tim Geithner has been warning that the US may hit its -- -- limit.
New years eve for months now so what are the extraordinary measures you know 'cause we've seen this before the US -- hit the debt ceiling 78 times since 1962.
Again they're talking about suspending sale of US securities for state local governments suspending payments to government pensions and tapping an exchange -- -- stabilization fund.
This is -- -- -- -- -- billion dollars now to avoid default and -- us talking about.
When that the US will default the big story isn't that right and then the bond markets is that the US will continue to pay its principal and interest -- ever.
The idea now is that will the bond market demand higher yields and that's a real problem -- say something.
We've seen that treasury -- and secretary of the treasury -- Look for more breathing room like this in the past you know under Reagan they tap the Social Security funds and in 1985 -- it wasn't a lockbox -- -- And you know back and then mid ninety's they basically made the same measure suspending payments -- government.
Pension funds that you know the -- threat -- default the threat of the debt ceiling fight in the mid ninety's.
What's thought what caused the government to shut down back then to under the Clinton administration -- a fight over an appropriations bill not a threat over default.
So you know to put this song prospective.
That this is going to be about the blame game hitting full swing this is about DC political theater being at its most erotic.
And -- some most of the interesting thing I think reviewers that there is what Treasury Secretary Tim Geithner said in his letter that the tax filing season.
Could be delayed.
Because of what's going on Washington DC so that's how it really affects.
Viewers -- -- it and an individual level.
Tax refunds can get delayed yet that's the important point as the IRS has to reprogram its computers if the filing season so I -- because if you owe money -- are not get anything back that would be.
I -- outside of that noise get an extension but muted despite Andy -- what does -- dysfunction and Liz that's what's so infuriating you know what.
That's it just and because it's at what point does the market care about DC political dysfunction right so.
I mean right now we're seeing the markets pretty quiescent and we're seeing the bond markets rather -- Bill Gross of Pimco has said.
Look at this won't last -- long we saw this in 9394.
Yeah this is the key point -- -- and this is when the when the economy was healing in 9394.
Bond yields started to rise right they went from we have three to 4% of the -- 5% 6%.
And that's when he had treasury sector Robert Rubin saying wait a second we need fiscal report we need welfare reform so really it's about the economy healing and the bond market -- -- and -- -- interested.
As the US as a safe haven.
Flooding into stocks I know the markets haven't you know what they would get they would get on the stick in DC fuels more rising but had not -- that that's the point on we don't see the bond vigilantes an action right now but we will.
Fiscal austerity will come in the bond markets demanded in the form of higher yields we're not seeing that NN says have been saying enough for a long time so have you played -- thank you -- -- flooding in China actually not good but I -- -- -- the scene where lucky.