[not to be confused with ex-date regarding dividends]
We have heard some much about the debt ceiling.
It is that present in every trader's life that it doesn't matter if you are in the US. If they default they will create a domino effect that will impact on every single market around the world.
White House details: https://www.whitehouse.gov/cea/written-materials/2023/05/03/debt-ceiling-scenarios/
They talk eloquently about three scenarios:
- A brief default, a Covid-19 market style, where they let markets collapse and take advantage of cheap prices to buy everything at a discount.
- A protracted default, whatever the hell that means. A painful crisis that will slowly slowly take everything from the most vulnerable.
- Clean Debt Ceiling increase. That clean that no one can argue about it. Everything will continue like nothing happended until the next Clean Debt Ceiling increase. Remember to use that word ("Clean") every time you talk about it, show that you are educated on the subject.
Key notes to take from the text:
"A crisis, characterized by spiking interest rates and plunging equity prices, would be ignited. Short-term funding markets, which are essential to the flow of credit that helps finance the economy’s day-to-day activities, likely would shut down as well."
"The costs would be even greater under a protracted default. A CEA simulation of the effect of a protracted default shows an immediate, sharp recession on the order of the Great Recession"
Do you guys remember the Big Short? What is Mr Burry up to these days?
We have heard some much about the debt ceiling.
It is that present in every trader's life that it doesn't matter if you are in the US. If they default they will create a domino effect that will impact on every single market around the world.
White House details: https://www.whitehouse.gov/cea/written-materials/2023/05/03/debt-ceiling-scenarios/
They talk eloquently about three scenarios:
- A brief default, a Covid-19 market style, where they let markets collapse and take advantage of cheap prices to buy everything at a discount.
- A protracted default, whatever the hell that means. A painful crisis that will slowly slowly take everything from the most vulnerable.
- Clean Debt Ceiling increase. That clean that no one can argue about it. Everything will continue like nothing happended until the next Clean Debt Ceiling increase. Remember to use that word ("Clean") every time you talk about it, show that you are educated on the subject.
Key notes to take from the text:
"A crisis, characterized by spiking interest rates and plunging equity prices, would be ignited. Short-term funding markets, which are essential to the flow of credit that helps finance the economy’s day-to-day activities, likely would shut down as well."
"The costs would be even greater under a protracted default. A CEA simulation of the effect of a protracted default shows an immediate, sharp recession on the order of the Great Recession"
Do you guys remember the Big Short? What is Mr Burry up to these days?
