That’s the breaking news today from the Senate. As I understand this, there will need to be some sort of reconciliation vote in the House. I have little to say about this, beyond that I doubt that many conservatives voted for this. Especially not for the $1T+ for the military.
Currently the amount of the budget that’s going to debt service is ballooning out of control. Yesterday I suggested that the one thing that might slow down Trump’s rush to war might be a financial crisis flowing from that situation, threatening King Dollar hegemony. I said that having in mind the fact that very few of Trump’s initiatives that were supposed to fix our debt crisis have had much success—acquiring Greenland and/or Canada, the Tariff Shock and Awe, the Ukraine Resource Grab, and now the Abraham Scam. I’m not financial analyst, but the usual levers don’t seem to be working:
Trump is pushing for a lower Fed interest rate - partly to lower the cost of government borrowing. But the last time the Fed lowered rates yields on the 10y Treasury went up. American capital markets are undergoing big changes.
Anyone with actual knowledge of these matters should feel free to correct me. What I think I’m seeing here is real skepticism that Trump can get the US fiscal house in order of some sort—even whether he’s trying. The initial plans don’t appear to be working. Does Trump have a plan B? How will continuing the war on Russia help this? The war on Iran? The war on China?
The bottom line I continue to see is that MAGA means propping up the Anglo-Zionist Empire by squeezing the rest of the world to pay down our debts. By hook or by crook, by economic or kinetic warfare. There is no other plan, no off ramp from Empire. But does Trump have the leverage? We may be finding out sooner than expected.
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On the repos piece, the basic explanation that I got from my sister (a NYC-based reporter on bonds and treasuries for the last 3-4 decades) when this happened last fall was roughly this:
Repo purchases by the Fed are a routine liquidity function targeted at rate (particularly, the federal funds rate) stabilization. Tide of cash goes out to the big banks temporarily offloading their securities, tide comes back in to Fed when they're repo'd by big banks. Quarter-end spike purchases by the Fed, however, are clear signs of market disfunction. Apparently, there is unusually scattershot demand across varying repo-market sectors, meaning there are now too few market players to intermediate between the excessively-liquid dealers and the bone-dry ones. Hypersensitivity to market events is now the order of the day.
Dealers are leery of expanding balance sheets as of FQ or FY end because that results in higher leverage changes and/or additional required capital, so the Fed is, effectively, swooping in to rescue them and muffle the screams of a fundamentally-misaligned market. The theory is that basis trades, taking advantage of what is an unusually-variable difference between treasuries and futures, are driving all this need to cover.
The underlying theme is that our entire economy, through hyper-financialization and Fed/regulatory tinkering in favor of the financial behemoths, is no longer functioning per market principles as understood by economists and bankers for ages. No longer responsive to the usual levers, rules or corrections. Essentially, everything is really broken, probably beyond repair.
David Stockman wrote a book that came out in January 20 24 on Trump in his first term and what it happened since.
The shocking fact was that Trump and Biden added $16 trillion to the national debt in eight years. Let that sink in. At the Pace we are going now. Trump could easily add another $8 trillion. so in 12 years we would’ve added $24 trillion to the national debt between two presidents.
Every president in the 21st century, starting with George W. Bush have collectively bankrupted this country financially with their foreign wars, no budget whatsoever and nothing but deficit spending compounded annually.
What little I have read of this current reconciliation, Bill is nothing but a disaster .
What has happened to the House of Representatives derelict in their duty to create a budget, a detailed budget so that it could be debated on for the country to see.
Not what we have evolved to with these absurd and obscene reconciliation bills that are running 900 pages or more packed with all manner of bad legislation to the point that nobody knows exactly what they are voting on.
This bill is an abomination just like all the previous reconciliation bills and should be vetoed, and Congress made to go back to the table and come up with a budget for everyone to see .
The simple truth is healthcare. Spending has to be cut specifically Medicaid spending.
The defense budget literally needs to be cut in half and we need to close at least 400 overseas military bases that we don’t need . We no longer can afford all of this.
Finally, we have to find a way to face the national debt and find a way to start paying it down or we are going to end up defaulting on that debt either partially or totally because we will no longer be able to even afford paying the interest on the debt Which is exactly the reason Trump wants an interest rate cut.
I think what may end up happening as the de dollarization spreads is we will become like Japan. The Bank of Japan has become the market they buy stocks Bonds whatever.
Can that happen here with the federal reserve will that be the final act of our downfall the fed reserve buying our own debt that they are helping to create and expanding their balance sheet to the moon and back . Those are the real serious questions.
On the repos piece, the basic explanation that I got from my sister (a NYC-based reporter on bonds and treasuries for the last 3-4 decades) when this happened last fall was roughly this:
Repo purchases by the Fed are a routine liquidity function targeted at rate (particularly, the federal funds rate) stabilization. Tide of cash goes out to the big banks temporarily offloading their securities, tide comes back in to Fed when they're repo'd by big banks. Quarter-end spike purchases by the Fed, however, are clear signs of market disfunction. Apparently, there is unusually scattershot demand across varying repo-market sectors, meaning there are now too few market players to intermediate between the excessively-liquid dealers and the bone-dry ones. Hypersensitivity to market events is now the order of the day.
Dealers are leery of expanding balance sheets as of FQ or FY end because that results in higher leverage changes and/or additional required capital, so the Fed is, effectively, swooping in to rescue them and muffle the screams of a fundamentally-misaligned market. The theory is that basis trades, taking advantage of what is an unusually-variable difference between treasuries and futures, are driving all this need to cover.
The underlying theme is that our entire economy, through hyper-financialization and Fed/regulatory tinkering in favor of the financial behemoths, is no longer functioning per market principles as understood by economists and bankers for ages. No longer responsive to the usual levers, rules or corrections. Essentially, everything is really broken, probably beyond repair.
David Stockman wrote a book that came out in January 20 24 on Trump in his first term and what it happened since.
The shocking fact was that Trump and Biden added $16 trillion to the national debt in eight years. Let that sink in. At the Pace we are going now. Trump could easily add another $8 trillion. so in 12 years we would’ve added $24 trillion to the national debt between two presidents.
Every president in the 21st century, starting with George W. Bush have collectively bankrupted this country financially with their foreign wars, no budget whatsoever and nothing but deficit spending compounded annually.
What little I have read of this current reconciliation, Bill is nothing but a disaster .
What has happened to the House of Representatives derelict in their duty to create a budget, a detailed budget so that it could be debated on for the country to see.
Not what we have evolved to with these absurd and obscene reconciliation bills that are running 900 pages or more packed with all manner of bad legislation to the point that nobody knows exactly what they are voting on.
This bill is an abomination just like all the previous reconciliation bills and should be vetoed, and Congress made to go back to the table and come up with a budget for everyone to see .
The simple truth is healthcare. Spending has to be cut specifically Medicaid spending.
The defense budget literally needs to be cut in half and we need to close at least 400 overseas military bases that we don’t need . We no longer can afford all of this.
Finally, we have to find a way to face the national debt and find a way to start paying it down or we are going to end up defaulting on that debt either partially or totally because we will no longer be able to even afford paying the interest on the debt Which is exactly the reason Trump wants an interest rate cut.
I think what may end up happening as the de dollarization spreads is we will become like Japan. The Bank of Japan has become the market they buy stocks Bonds whatever.
Can that happen here with the federal reserve will that be the final act of our downfall the fed reserve buying our own debt that they are helping to create and expanding their balance sheet to the moon and back . Those are the real serious questions.