The Nation's Financial Condition

[Farfromgeneva]

News from earlier this am that is probably all in the local/national generic news- I could say a lot about First Citizens but won’t. They were lucky to get the CIT merger approved a year or so ago. Not what you’d call highly sophisticated for their size though they picked up some quality folks from CIT (which was a borderline failed institution in the financial crisis itself)

First–Citizens Bank & Trust Company, Raleigh, NC, to Assume All Deposits and Loans of Silicon Valley Bridge Bank, N.A., From the FDIC

For Release

WASHINGTON – The Federal Deposit Insurance Corporation (FDIC) entered into a purchase and assumption agreement for all deposits and loans of Silicon Valley Bridge Bank, National Association, by First–Citizens Bank & Trust Company, Raleigh, North Carolina.

The 17 former branches of Silicon Valley Bridge Bank, National Association, will open as First–Citizens Bank & Trust Company on Monday, March 27, 2023. Customers of Silicon Valley Bridge Bank, National Association, should continue to use their current branch until they receive notice from First–Citizens Bank & Trust Company that systems conversions have been completed to allow full–service banking at all of its other branch locations.

Depositors of Silicon Valley Bridge Bank, National Association, will automatically become depositors of First–Citizens Bank & Trust Company. All deposits assumed by First–Citizens Bank & Trust Company will continue to be insured by the FDIC up to the insurance limit.

As of March 10, 2023, Silicon Valley Bridge Bank, National Association, had approximately $167 billion in total assets and about $119 billion in total deposits. Today's transaction included the purchase of about $72 billion of Silicon Valley Bridge Bank, National Association's assets at a discount of $16.5 billion. Approximately $90 billion in securities and other assets will remain in the receivership for disposition by the FDIC. In addition, the FDIC received equity appreciation rights in First Citizens BancShares, Inc., Raleigh, North Carolina, common stock with a potential value of up to $500 million.

The FDIC and First–Citizens Bank & Trust Company entered into a loss–share transaction on the commercial loans it purchased of the former Silicon Valley Bridge Bank, National Association. The FDIC as receiver and First–Citizens Bank & Trust Company will share in the losses and potential recoveries on the loans covered by the loss–share agreement. The loss–share transaction is projected to maximize recoveries on the assets by keeping them in the private sector. The transaction is also expected to minimize disruptions for loan customers. In addition, First–Citizens Bank & Trust Company will assume all loan–related Qualified Financial Contracts.

The FDIC estimates the cost of the failure of Silicon Valley Bank to its Deposit Insurance Fund (DIF) to be approximately $20 billion. The exact cost will be determined when the FDIC terminates the receivership.

The FDIC created Silicon Valley Bridge Bank, National Association, following the closure of Silicon Valley Bank by the California Department of Financial Protection and Innovation. All of the deposits—both insured and uninsured—and substantially all assets and all Qualified Financial Contracts of Silicon Valley Bank were transferred to the bridge bank. The purpose of establishing Silicon Valley Bridge Bank, National Association, was to allow time for the FDIC to stabilize the institution and market the franchise.

Customers who would like more information about today’s transaction can visit the FDIC’s website at: https://www.fdic.gov/resources/resoluti ... alley.html.

FDIC: PR-23-2023

[Farfromgeneva]

NOTE: This press release is being resent with corrected links throughout.

Short-Term Home Price Expectations Drop Sharply; Rental Price Growth Expectations Remain Elevated

NEW YORK—The Federal Reserve Bank of New York today released results from its 2023 SCE Housing Survey, which is part of the broader Survey of Consumer Expectations (SCE) and provides information on consumers’ housing-related experiences and expectations. The results show that households expect home prices to increase over the coming twelve months at the slowest pace since the survey began in 2014. In contrast, home price expectations over the next five years increased relative to last year’s survey. Expectations about the one-year-ahead change in the cost of rent were considerably higher than home price expectations but declined relative to last year’s series high. Homeowners’ expectations about the likelihood of refinancing their mortgage over the next 12 months fell sharply to a new series low. The probability of buying a home conditional on a move over the next three years rose overall, driven by higher expectations among current owners. A large majority of households continue to view housing as a good financial investment, although the share characterizing housing as a “somewhat good” or “very good” investment declined slightly from February 2022.

The SCE Housing Survey has been fielded annually since 2014 and more detailed results are available in an interactive web feature, which presents trends of key variables by various demographics over time. In addition, an accompanying background report provides additional summary statistics and charts for a number of the Survey’s questions.

Key findings from the 2023 Survey, which was fielded in February 2023, are:

Home Prices/Rents

Average one-year-ahead home price growth expectations fell sharply to 2.6% from 7.0% in February 2022. This represents the lowest reading since the series’ inception in 2014. This decline is broadly consistent with data from the core SCE survey, which shows that home price growth expectations declined sharply between May 2022 and November 2022, before rebounding slightly in subsequent months. The previous record low for one-year-ahead home price growth expectations was 3.3%, recorded in 2016.
Households’ home price growth expectations for the five-year horizon were up from last year. Households expect prices to rise by 2.8% per year on average, for the next five years, slightly above their expectation for the next year.
While rent change expectations moderated, they remain high by historical standards and in comparison to home price growth expectations. On average, households expect the cost of rent to increase 8.2% over the next 12 months, compared to 11.5% in February 2022. Over the next five years, households expect average annual rent increases of 5.0%, down slightly from 5.2% a year ago. Households expect rent increases to substantially outpace home price increases over the next five years.
Housing Outlook

While attitudes toward housing as a financial investment remained strongly positive, they weakened slightly from the previous year, as 68.4% of all respondents characterized buying property in their zip code as a “very good” or “somewhat good” investment. This is slightly below the readings of the last three years, but still above the levels of optimism that prevailed in the pre-pandemic period. The share of respondents reporting that housing is a “bad” or “somewhat bad” investment fell to 7.9% from 9.9% a year ago.
Average expectations of residential mobility (the percent change of moving to a different primary residence) fell to new series lows at both the one-year (15.0%) and three-year (24.9%) horizons, continuing a declining mobility trend since 2014.
The average expected probability of buying a home if the household were to move within the next three years rose slightly to 62.2%, from 60.7% in 2022. Despite this increase, the probability of buying conditional on a move remains well below its 2021 peak of 68.5%.
Mortgage Rates

On average, households perceive that national mortgage rates are currently higher than pre-pandemic levels and expect them to rise further in the future. Households now expect mortgage rates to rise to 8.4% a year from now and 8.8% in three years’ time.
Still, households expect that there is a 49.1% chance that mortgage rates will fall over the next 12 months, rebounding from last year’s series low of 41.8%.
Homeowners

Homeowners reported another large decline in their expected probability of refinancing their mortgages in the next year; the average probability declined from 7.7% in 2022 to 4.1%, a series low, this year.
Renters and other non-owners

Renters reported a small increase in their probability of owning a home in the future, from 43.3% in 2022 to 44.4% this year. Nonetheless, this figure remains well below the 2015-2021 period, when it was generally over 50%.
About the SCE Housing Survey

The SCE Housing Survey, fielded annually as part of the Survey of Consumer Expectations (SCE), provides rich and high-quality information on consumers’ experiences, behaviors, and expectations related to housing. The survey collects data on households’ home price growth perceptions and expectations; intentions regarding moving and buying a home in the future; and perceptions of credit conditions, as well as climate risk. For homeowners, the survey collects detailed information on their mortgage debt, past actions and experiences such as foreclosure or refinancing, and expectations regarding future actions, such as taking out new debt or investing in the home. For renters, the survey elicits preferences for owning versus renting, and perceptions regarding the ease of obtaining mortgage credit, and expectations of evictions, among other things.

[Farfromgeneva]

For the CO guys plus youth and anyone else interested in data centers.

CO data center sub market report from CBRE

https://www.cbre.com/insights/local-res ... 022-denver

[youthathletics]

The dollar is stronger, not weaker under Biden. So, too the economy. As I said, facts

Do we have reason to worry? https://www.google.com/search?rlz=1C1CH ... 8&dpr=1.25

[PizzaSnake]

The dollar is stronger, not weaker under Biden. So, too the economy. As I said, facts

Do we have reason to worry? https://www.google.com/search?rlz=1C1CH ... 8&dpr=1.25

Yeah. Worry about the end of the petrodollar (and concomitant dollar demand and T-bill market). Now that would be very bad fcuking news. I guess we could default and dare countries not to trade with us...

The feckless twats in the House seem to think it's a good plan. Oh, and Elon's and feckless jerk as well (and a fcuking weirdo to boot -- apple didn't fall to far from the tree).

[youthathletics]

The dollar is stronger, not weaker under Biden. So, too the economy. As I said, facts

Do we have reason to worry? https://www.google.com/search?rlz=1C1CH ... 8&dpr=1.25

Yeah. Worry about the end of the petrodollar (and concomitant dollar demand and T-bill market). Now that would be very bad fcuking news. I guess we could default and dare countries not to trade with us...

The feckless twats in the House seem to think it's a good plan. Oh, and Elon's and feckless jerk as well (and a fcuking weirdo to boot -- apple didn't fall to far from the tree).

Thx. Seems China, Brazil, SA, and others are working to expedite it. Not sure what your Musk comment has to do with anything.

[Typical Lax Dad]

The dollar is stronger, not weaker under Biden. So, too the economy. As I said, facts

Do we have reason to worry? https://www.google.com/search?rlz=1C1CH ... 8&dpr=1.25

Yeah. Worry about the end of the petrodollar (and concomitant dollar demand and T-bill market). Now that would be very bad fcuking news. I guess we could default and dare countries not to trade with us...

The feckless twats in the House seem to think it's a good plan. Oh, and Elon's and feckless jerk as well (and a fcuking weirdo to boot -- apple didn't fall to far from the tree).

Thx. Seems China, Brazil, SA, and others are working to expedite it. Not sure what your Musk comment has to do with anything.

What are they doing?

[youthathletics]

The dollar is stronger, not weaker under Biden. So, too the economy. As I said, facts

Do we have reason to worry? https://www.google.com/search?rlz=1C1CH ... 8&dpr=1.25

Yeah. Worry about the end of the petrodollar (and concomitant dollar demand and T-bill market). Now that would be very bad fcuking news. I guess we could default and dare countries not to trade with us...

The feckless twats in the House seem to think it's a good plan. Oh, and Elon's and feckless jerk as well (and a fcuking weirdo to boot -- apple didn't fall to far from the tree).

Thx. Seems China, Brazil, SA, and others are working to expedite it. Not sure what your Musk comment has to do with anything.

What are they doing?

https://www.newsweek.com/brazil-russia- ... ut-1757643

[Typical Lax Dad]

The dollar is stronger, not weaker under Biden. So, too the economy. As I said, facts

Do we have reason to worry? https://www.google.com/search?rlz=1C1CH ... 8&dpr=1.25

Yeah. Worry about the end of the petrodollar (and concomitant dollar demand and T-bill market). Now that would be very bad fcuking news. I guess we could default and dare countries not to trade with us...

The feckless twats in the House seem to think it's a good plan. Oh, and Elon's and feckless jerk as well (and a fcuking weirdo to boot -- apple didn't fall to far from the tree).

Thx. Seems China, Brazil, SA, and others are working to expedite it. Not sure what your Musk comment has to do with anything.

What are they doing?

https://www.newsweek.com/brazil-russia- ... ut-1757643

How does this expedite the decline of the US dollar and which currency is likely to replace it as a reserve currency based on that article you linked? How does this threat differ from the revamped TPP? Which is the bigger threat?

Happy Palm Sunday

[youthathletics]

The dollar is stronger, not weaker under Biden. So, too the economy. As I said, facts

Do we have reason to worry? https://www.google.com/search?rlz=1C1CH ... 8&dpr=1.25

Yeah. Worry about the end of the petrodollar (and concomitant dollar demand and T-bill market). Now that would be very bad fcuking news. I guess we could default and dare countries not to trade with us...

The feckless twats in the House seem to think it's a good plan. Oh, and Elon's and feckless jerk as well (and a fcuking weirdo to boot -- apple didn't fall to far from the tree).

Thx. Seems China, Brazil, SA, and others are working to expedite it. Not sure what your Musk comment has to do with anything.

What are they doing?

https://www.newsweek.com/brazil-russia- ... ut-1757643

How does this expedite the decline of the US dollar and which currency is likely to replace it as a reserve currency based on that article you linked? How does this threat differ from the revamped TPP? Which is the bigger threat?

Happy Palm Sunday

I am the one asking the question here ... I do not know the answer.

Likewise.

[Typical Lax Dad]

The dollar is stronger, not weaker under Biden. So, too the economy. As I said, facts

Do we have reason to worry? https://www.google.com/search?rlz=1C1CH ... 8&dpr=1.25

Yeah. Worry about the end of the petrodollar (and concomitant dollar demand and T-bill market). Now that would be very bad fcuking news. I guess we could default and dare countries not to trade with us...

The feckless twats in the House seem to think it's a good plan. Oh, and Elon's and feckless jerk as well (and a fcuking weirdo to boot -- apple didn't fall to far from the tree).

Thx. Seems China, Brazil, SA, and others are working to expedite it. Not sure what your Musk comment has to do with anything.

What are they doing?

https://www.newsweek.com/brazil-russia- ... ut-1757643

How does this expedite the decline of the US dollar and which currency is likely to replace it as a reserve currency based on that article you linked? How does this threat differ from the revamped TPP? Which is the bigger threat?

Happy Palm Sunday

I am the one asking the question here ... I do not know the answer.

Likewise.

So was I.

[Seacoaster(1)]

https://www.nytimes.com/2023/04/03/opin ... -2023.html

"It’s been obvious for months that Republicans in the House of Representatives intend to lead the country toward a calamitous debt ceiling crisis in order to get their way on spending. Only in the last few weeks, however, has it become clear just how truly chaotic that process will be.

Republicans, it turns out, don’t even know what they want in exchange for dropping their threat to cause a default, beyond a fuzzy shared goal of cutting federal spending. Even if President Biden and the Democrats were inclined to negotiate with them to lift the debt ceiling — which would be a serious mistake — it’s not clear who their negotiating partners would be. The House has become so factionalized that its leaders cannot speak in one voice, and Speaker Kevin McCarthy may not be able to assemble a majority to lift the debt ceiling at all.

“I don’t see how we get there,” said Patrick McHenry, a Republican of North Carolina and the chairman of the House Financial Services Committee, who is close to Mr. McCarthy. “And this is a marked change from where I’ve been. I don’t even see a path.”

The ceiling is a useless legislative construct that lets lawmakers refuse to borrow money to pay for the deficit spending they already approved. If Congress doesn’t raise it, the government goes into default and can’t make payments on its obligations, including interest on Treasury bonds, Social Security payments and other essential spending, which would quickly crash the U.S. economy. It generally comes up as an issue only when Republicans control at least one house of Congress while a Democrat is in the White House; Republicans are not known to express concern about deficits caused when a president of their own party cuts taxes for the rich.

When the G.O.P. took control of the House in January, Mr. McCarthy had to meet the demands of a handful of far-right members to get their votes to become speaker. One of his concessions was a promise not to raise the debt ceiling unless there was an agreement to balance the budget within 10 years by cutting the heart out of the federal government.

That extreme demand was so unrealistic that it is no longer being seriously discussed by House officials. Achieving balance that quickly without raising taxes would mean that all spending, including for defense, veterans, Social Security and Medicare, would have to be cut by 26 percent, as even the spending hawks at the Committee for a Responsible Federal Budget noted earlier this year. Exempting those four categories would require cutting everything else by 85 percent. Both levels are unimaginable.

But what will replace that ultimatum? So far, there has been a cacophony of proposals from the so-called five families representing different gradations of small government ideology in the House Republican conference, all vague and lacking details of what members really want to cut. The Republican Study Committee, a prominent group of House conservatives, issued a “playbook” full of tired ideas like cutting waste, fraud and abuse and rolling back recent spending approved by Democrats. The head of the slightly more centrist Main Street Caucus, Dusty Johnson of South Dakota, has talked about going back to spending levels from two years ago, without saying which federal programs will be forced to ignore record-setting inflation.

The worst, inevitably, was from the MAGA faction known as the House Freedom Caucus, which wants to go back to either 2019 or 2022 spending levels (it’s not clear which), allow 1 percent growth each year and cut $3 trillion from what it calls “the wasteful, woke and weaponized federal bureaucracy.” The proposal manages to invoke all the favorite phrases from the Trump era without telling people that it will mean drastic reductions to homeland security, defense, disaster response, law enforcement and environmental cleanup, among other vital categories.

This is the endless failure of the modern Republican Party. Cutting spending as a concept might sound attractive to many voters until you explain what you’re actually cutting and what effect it would have. They cut taxes so they can then rail about the resulting deficits, but don’t want to discuss how many veterans won’t get care or whose damaged homes won’t get rebuilt or which dangerous products won’t get recalled. That’s why there is still no official budget statement from the House G.O.P., because its different factions can’t agree on how open they should be about the results. The details of austerity are unpopular, and it’s easier to just issue fiery news releases.

In early March, the Biden administration issued a 2024 budget that forthrightly declared how it planned to reduce the deficit: With $5 trillion in tax increases on the rich and on large corporations over the next decade. It would spend more money on health care for the poor and uninsured, child care, Pell grants and free community college, climate resilience, the military and alliances like NATO. The White House proposal hasn’t a chance, of course, as long as Republicans control the House, but at least it represented a clear statement of principles and priorities, unlike the mush trickling out of the G.O.P. caucus.

To mask his chamber’s dysfunction, Mr. McCarthy issued a letter on Tuesday that tried to put the blame on Mr. Biden. The speaker accused the president of being “completely missing in action” on debt ceiling negotiation and said he remained willing to talk about raising the ceiling in exchange for cuts like reducing “excessive” nondefense spending (no details) and strengthening work requirements for unspecified federal benefits. (He undoubtedly meant Medicaid and food stamps, but he didn’t choose to put that in writing.) He also put his party’s energy and border policies on the table, knowing he cannot achieve them through any tactic other than hostage taking.

But Mr. Biden says he won’t let the government and the economy be blackmailed, and he has adamantly rejected the demand that he discuss terms for raising the ceiling. He says it has to be raised cleanly, with no conditions, just as it was three times during the Trump administration. The last time a Democrat negotiated with Republicans over the ceiling was in 2011, when President Barack Obama capitulated and agreed to a deal that created the notorious “supercommittee” to agree on cuts and imposed a stark sequester of spending when the committee couldn’t agree. Almost everyone hated that deal, and Mr. Obama vowed never to negotiate again, an important principle adopted by his vice president.

That doesn’t mean Mr. Biden shouldn’t negotiate about the budget and spending, a separate process that is part of the normal give and take between the White House and Congress. But he can’t do that under a threat of economic catastrophe, and even Republicans are starting to wonder how they will avert it. Tom Cole of Oklahoma, chairman of the House Rules Committee, said a few days ago that several House members will never vote for any debt ceiling increase, “even if we gave them everything they wanted.” Mr. McHenry said he had never been more pessimistic about reaching an agreement.

Democrats say privately that with the debt ceiling deadline probably arriving this summer, they are counting on mounting pressure from financial markets, already jittery from the recent banking crisis, as well as business lobbyists, to persuade enough Republicans to join Democrats in ending the threat at the last minute. Maybe, but with the radical mind-set that now pervades the House, it’s hard to count on that.

In the end, the best solution is to eliminate the debt ceiling charade once and for all. There are bills in Congress to do so, though few Republicans would support them. And there was a strong argument during the Obama years to test the constitutionality of the ceiling in court, since it appears to violate the 14th Amendment, a tactic still worth trying. Mr. Biden, however, has shown no interest in pursuing that path, and seems to be hoping that this year, Republicans will finally learn that the debt ceiling is not a tool for leverage, because the cost for using it is too high. The country can only brace itself and hope he’s right."

[PizzaSnake]

Going mainstream:

“Edwards added that he fears the “super-normal profit margins” of corporations in the U.S. and abroad could eventually “inflame social unrest” if consumers continue to struggle with inflation.”

https://fortune.com/2023/04/05/end-of-c ... ofits/amp/

[OCanada]

For decades one of the GOP mantras has been “starve the beast” to get their way on spending hence tax cuts. They never were going to pay for themselves but have kicked the can down the road on needed national level investments line infrastructure.

The great widening of wealth disparity will eventually lead to social unrest

[PizzaSnake]

For decades one of the GOP mantras has been “starve the beast” to get their way on spending hence tax cuts. They never were going to pay for themselves but have kicked the can down the road on needed national level investments line infrastructure.

The great widening of wealth disparity will eventually lead to social unrest

“Will eventually lead to”?

I think we are there.

[OCanada]

For decades one of the GOP mantras has been “starve the beast” to get their way on spending hence tax cuts. They never were going to pay for themselves but have kicked the can down the road on needed national level investments line infrastructure.

The great widening of wealth disparity will eventually lead to social unrest

“Will eventually lead to”?

I think we are there.

Perhaps i should have added “more”. We sure have a lot of threads adding to it. My goal was more to highlight it because it is happening.

[PizzaSnake]

Happy Auto-Lite Strike anniversary!!

"The Toledo Auto-Lite strike was a strike by a federal labor union of the American Federation of Labor (AFL) against the Electric Auto-Lite company of Toledo, Ohio, from April 12 to June 3, 1934.

The strike is notable for a five-day running battle between nearly 10,000 strikers and 1,300 members of the Ohio National Guard. Known as the "Battle of Toledo," the clash left two strikers dead and more than 200 injured.[1][2][page needed][3] The strike is regarded by many labor historians as one of the three most important strikes in U.S. history."

But not quite a mass-shooting by our current standards, so I guess it was all good...

[Brooklyn]

https://www.youtube.com/shorts/rv-amtsbRkk



but, as usual, such ideas are not binding on the republiCONs

[Seacoaster(1)]

In the Times today:

https://www.nytimes.com/2023/04/24/opin ... ticleShare

“Speaker of the House Kevin McCarthy is making a ransom demand. His hostages are the economy and America’s credibility. Mr. McCarthy has threatened that House Republicans will refuse to raise the federal government’s debt ceiling, potentially triggering a global financial crisis, unless President Biden agrees to deep cuts to education, health care, food assistance for poor children and other services.

Mr. McCarthy repeatedly invoked the threat of Chinese competition as justification. The speaker is right that this debate has significant national security implications — just not the way he says.

With Russia’s brutal invasion of Ukraine in its second year, tensions with China continuing to rise and global threats looming, from future pandemics to climate change, the world is looking to the United States for strong, steady leadership. Congressional brinkmanship on the debt ceiling sends the opposite message to our allies and our adversaries: that America is divided, distracted and can’t be counted on.

Let’s start by dispelling a myth. The debt ceiling debate is not about authorizing new spending. It’s about Congress paying debts it has already incurred. Refusing to pay would be like skipping out on your mortgage, except with global consequences. Because of the central role of the United States — and the dollar — in the international economy, defaulting on our debts could spark a worldwide financial meltdown.

Republicans in Congress have consistently voted to raise the debt ceiling with little drama when a fellow Republican is in the White House — including three times under President Donald Trump. But during Democratic administrations, they have weaponized the debt ceiling to extort concessions, despite the danger of default.

I was secretary of state during the debt ceiling crisis of 2011, so I saw firsthand how this partisan posturing damaged our nation’s credibility around the world.

I vividly remember walking into a Hong Kong ballroom that July for a conference organized by the local American Chamber of Commerce. Congressional Republicans were refusing to raise the debt ceiling, and the prospect of a default was getting closer by the day. I was swarmed by nervous businessmen from across Asia. They peppered me with questions about the fight back home over the debt ceiling and what it would mean for the international economy. The regional and global stability that America had guaranteed for decades was the foundation on which they had built companies and fortunes. But could they still trust the United States? Were we really going to spark another worldwide financial crisis? And the question that no one wanted to ask out loud: If America faltered, would China swoop in to fill the vacuum?

I tried to reassure those businessmen the same way I did when I spoke with anxious foreign diplomats throughout that summer, confidently promising that Congress would eventually reach a deal. I repeated a quip sometimes apocryphally attributed to Winston Churchill: You can always count on Americans to do the right thing, after they’ve tried everything else. Privately, I crossed my fingers and hoped it was true.

Later that day, I headed to a villa in mainland China for a meeting with my counterpart, State Councilor Dai Bingguo. Over the years, I had heard monologues from Mr. Dai about America’s many supposed misdeeds, his criticisms at times bitingly sardonic but usually delivered with a smile. So I was not surprised when he, too, turned the conversation to the debt ceiling, barely containing his glee at our self-inflicted wound. I was not in the mood for lectures. “We could spend the next six hours talking about China’s domestic challenges,” I told Mr. Dai.

Fortunately, Congress and President Barack Obama finally reached an agreement to raise the debt ceiling before careening into the fiscal abyss. But the S&P still fell 17 percent, consumer and business confidence nose-dived, and the government’s credit rating was downgraded for the first time ever. After another crisis in 2013, the lesson was clear: Negotiating with hostage-takers will only embolden them to do it again.

Fast-forward a decade, and Republicans are playing the same game. Except now, the risks are even higher.

Today the competition between democracies and autocracies has grown more intense. And by undermining America’s credibility and the pre-eminence of the dollar, the fight over the debt ceiling plays right into the hands of Xi Jinping of China and Vladimir Putin of Russia.

America’s leadership around the world depends on our economic strength at home. Defaulting on our debts could cost the United States seven million jobs and throw our economy into a deep recession. Instead of the “arsenal of democracy” capable of outcompeting our rivals, dominating the industries of the future such as microchips and clean energy and modernizing our military, America would be hobbled.

Even setting aside this economic carnage, brinkmanship over the debt ceiling reinforces autocrats’ narrative that American democracy is in terminal decline and can’t be trusted.

Trust matters in international affairs. We frequently ask other nations to put their faith in the United States. Our military will be there to protect allies, our financial system is secure, and when we warn about compromised Chinese telecom equipment or an impending Russian invasion, we’re telling the truth. Threatening to break America’s promise to pay our debts calls all that into question.

When I was secretary of state, a big part of my job was rebuilding confidence in the United States after the George W. Bush administration. It wasn’t easy. Senior Chinese officials rarely missed an opportunity to argue that the United States was to blame for the 2008 global financial crisis, and they enjoyed highlighting our troubles in Iraq and Afghanistan. The more dysfunctional or untrustworthy America looked, the easier it was for Chinese propagandists to bad-mouth democracy and brag about their own authoritarian system.

Today America’s credibility will help determine whether nervous Europeans continue to stand with us and support Ukraine or seek an accommodation with an emboldened Russia. It could determine whether more Asian nations welcome American military bases and troops to deter Chinese aggression, as the Philippines recently did, or buckle to Beijing’s bullying.

There’s more. Playing games with the debt ceiling imperils the dollar’s pre-eminent position in the global economy and the power that gives the United States.

All over the world, people, companies and governments conduct international transactions in dollars, invest in U.S. Treasury bonds and rely on U.S. banks because they trust that America pays its debts, upholds the rule of law and guarantees stability. The centrality of the dollar gives the United States far-reaching influence. It allows us to impose crippling sanctions, like those I negotiated against Iran during the Obama administration and those the Biden administration has used to respond to Russia’s invasion of Ukraine. This is why Fareed Zakaria recently declared in a Washington Post op-ed that “the dollar is America’s superpower.”

It’s no surprise that Mr. Xi and Mr. Putin are eager to disrupt the dollar’s dominance and defang American sanctions. At their recent summit in Moscow, Mr. Putin suggested Russia may start selling oil around the world using Chinese yuan rather than dollars, which it is already doing for shipments to China. The two countries are also trying to build cross-border financial systems to allow them to bypass U.S. banks and are holding fewer reserves in dollars.

If Congress keeps flirting with default, calls for dethroning the dollar as the world’s reserve currency will grow much louder — and not just in Beijing and Moscow. Countries all over the world will start hedging their bets.

It’s a sad irony that Mr. McCarthy and many of the same congressional Republicans seemingly intent on sabotaging America’s global leadership by refusing to pay our debts are also positioning themselves as tougher-than-thou China hawks. They talk a good game about standing up to Beijing, yet they are handing a major win to the Chinese Communist Party.

Republicans should stop holding America’s credit hostage, shoulder their responsibilities as leaders and raise the debt ceiling.“

[CU88a]

r's finally getting real about waste


https://taskandpurpose.com/news/veteran ... t-ceiling/


Speaker McCarthy’s plan to raise the debt ceiling would cut the VA’s budget by 22% next fiscal year, Young said. That would force the Veterans Health Administration to eliminate 81,000 jobs, meaning that veterans would be unable to make appointments for wellness visits, cancer screenings, mental health services, substance abuse disorder treatment, and other healthcare services, according to Young. These cuts would translate into 30 million fewer veteran outpatient visits.

The VA has also issued a statement saying that cutting the department’s budget by 22% would limit the VA’s ability to provide telehealth services by reducing funding for the necessary information technology and support.

Speaker McCarthy’s proposal to raise the debt ceiling would also force the Veterans Benefits Administration to cut its staff by more than 6,000 people, and that would worsen the wait time for benefits by adding an estimated 134,000 claims to the disability claims backlog, the VA’s statement says.