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Will the Democrats Trigger Another 2011 Debt Ceiling Crisis Just to Stop the Wall?

Summary:
Do you remember when GOP Senators and Representatives were portrayed as literal monsters for forcing the Government to shut down? We were told back in 2013 that if GOP-lead Congress didn’t keep the Government open… we would face literal Armageddon. A few headlines from that time period: Republicans Shutdown the Government for Nothing (the Atlantic) Like Dr. Frankenstein, the GOP is trapped in a burning windmill with a monster of their own making (Charleston City Paper) Ted Cruz: the GOP’s Self-Made Monster (The Guardian) And of course… They actually did it. A group of Republicans in the House just forced a government shutdown over Obamacare instead of passing a real budget. ~tweeted by then-President Barack Obama We mention all of the above because in one of the greatest ironies of politics… Democrat leadership (Nancy Pelosi and Charles Schumer) is now advocating a Government shutdown in order to stop funding for a wall on the Mexico-US border. Yep, the same crowd that claimed a Government shutdown mean the end of the world and those who are would shut down the Government over budgetary differences are monsters… now wants to employ pursue that exact outcome in order to stop the US having a border wall. We don't particularly care for either side in this argument. But the irony is absurd.

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Do you remember when GOP Senators and Representatives were portrayed as literal monsters for forcing the Government to shut down?

We were told back in 2013 that if GOP-lead Congress didn’t keep the Government open… we would face literal Armageddon.

A few headlines from that time period:

Republicans Shutdown the Government for Nothing (the Atlantic)

Like Dr. Frankenstein, the GOP is trapped in a burning windmill with a monster of their own making (Charleston City Paper)

Ted Cruz: the GOP’s Self-Made Monster (The Guardian)

And of course…

They actually did it. A group of Republicans in the House just forced a government shutdown over Obamacare instead of passing a real budget.

~tweeted by then-President Barack Obama

We mention all of the above because in one of the greatest ironies of politics… Democrat leadership (Nancy Pelosi and Charles Schumer) is now advocating a Government shutdown in order to stop funding for a wall on the Mexico-US border.

Yep, the same crowd that claimed a Government shutdown mean the end of the world and those who are would shut down the Government over budgetary differences are monsters… now wants to employ pursue that exact outcome in order to stop the US having a border wall.

We don't particularly care for either side in this argument. But the irony is absurd.

Politics aside… Congress has returned from spring recess and now has four days to resolve a budget that features the border wall, funding for sanctuary cities, Obamacare subsidies at a time when it is clear various political factions will gladly torpedo legislation based on their agendas.

Good. Luck. With. That.

The reality is that a Government shutdown is not just likely but highly probable. And the fact that this is occurring when the US has already hit its debt ceiling and has implemented extraordinary measures doesn’t bode well.

The whole mess is quite similar to the Debt Ceiling crisis of mid-2011. That particular situation resulted in stocks plummeting 17% as the US lost its AAA credit rating.

Will the Democrats Trigger Another 2011 Debt Ceiling Crisis Just to Stop the Wall?

It was only through direct Fed intervention as well as the announcement of Operation Twist that stocks were able to regain their footing.

Will the Democrats Trigger Another 2011 Debt Ceiling Crisis Just to Stop the Wall?

This time around the Fed is TIGHTENING policy with plans for at least two more rate hikes and the shrinking of its balance sheet sometime later this year.

So the notion that the Fed will be able to “save the day” if Congress doesn’t get its act together isn’t anywhere near as high as it was in 2011.

This opens the door to a potential market “event.” And few if any are paying attention to it.

On that note we are already preparing our clients to make money from this with three simple investment strategies designed to pay out when the markets enter periods of heightened risk.

To learn them you can pick up a free Investment Report here:

http://phoenixcapitalmarketing.com/bondbubble2.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

 

 

 

 

 

Phoenix Capital Research
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