What a field day for the heat
A thousand people in the street
Singing songs and carrying signs
Mostly saying, "hooray for our side"

Wednesday, July 27, 2011

Do you hear what I hear?

That sound like unto a thousand yard coil of steel collapsing on cement? That's the other shoe dropping.

Okay, for those of you playing the at home game, I've moved my bets into the "We're going to default for the first time in history, probably for at least a week or more (not more than a month). Cover your asses," column. If I could move my 401k into a cash position, I would (YMMV, talk with your own financial adviser, yadda, yadda, yadda).

See, to avoid default we have two scenarios.

First up is that Boehner's plan passes the House tomorrow (good luck with that), Harry Reid brings it to the well of the Senate, then survives 3 "without objection" procedural votes (if not, we have to go through the whole rules procedure which is an 8 day process, as long as it's not filibustered), and then passes the Senate without amendment (amendment would mandate a joint committee to hash out the differences, and then we have to pass that amended bill in both the House and Senate without further amendment). And then the President needs to sign it.

Chances of all that happening = 0%. (I don't see it getting past the procedural votes without objection from either the left or the right, and then I also don't see it passing without having a score of amendments being made. Oh, and the President, making good on his promise from April, will veto that sucker if it by some miracle makes it to his desk).

Next is Harry Reid's bill which is winding it's way through the normal process in the Senate, the House would need to take it up immediately (less than a day) for a floor vote (well, 3 votes at least) without amendment and then send it on to the President for his signature.

Chances of all that happening = < 5% (The President would more than likely sign that bill, but I don't think it has much of a chance to pass the House let alone without amendments, although when they're staring into the harry abyss come next Tuesday, they might, which is why I won't say 0%).

So, IMHO, we now have a greater than 95% chance of defaulting. More than likely for about 3 days to a week (I don't think it'll go much longer than 10 days). I expect to see major negative movements on the markets today as investors come to grips with this reality.

Still like your revolution, TPers? Get ready for this albatross neckless. I don't think it'll look nice on you. But then, it never does.

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