Comments on: Felix Salmon smackdown watch, debt prioritization edition http://blogs.reuters.com/felix-salmon/2013/10/07/felix-salmon-smackdown-watch-debt-prioritization-edition/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: HamsterHerder http://blogs.reuters.com/felix-salmon/2013/10/07/felix-salmon-smackdown-watch-debt-prioritization-edition/comment-page-1/#comment-48304 Sun, 13 Oct 2013 13:32:42 +0000 https://blogs.reuters.com/felix-salmon/?p=22582#comment-48304 “Because Congress has never provided guidance to the contrary, Treasury’s systems are designed to make each payment in the order it comes due.”

Yup, we’re on total auto-pilot. The system cannot be stopped, re-booted, intervened – its all hard-coded. Its a doomsday machine. Its a like a shark – if it stops swimming we all die.

“…speaking as someone who covered federal civilian ADP — and who has a spouse who worked in federal civilian ADP for many years — the idea that Treasury would be able to improvise those procedures on the fly doesn’t even come close to passing the laugh out loud test.”

Really? Just how close to the mainframes did they let you get, anyway? Here’s the bottom line: We’re being told not to touch the “concentrated evil” because if we do the entire world will explode. If THAT is the case then the systems group at Treasury has been run by legions of incompetents for literally decades.

Nobody, but NOBODY, engineers systems that poorly. This is classic progressive hyperbole and I discount it in it’s entirety.

]]>
By: idapta http://blogs.reuters.com/felix-salmon/2013/10/07/felix-salmon-smackdown-watch-debt-prioritization-edition/comment-page-1/#comment-48277 Fri, 11 Oct 2013 13:59:59 +0000 https://blogs.reuters.com/felix-salmon/?p=22582#comment-48277 I’m trying to understand how prioritization, even if technically possible, will prevent a breach of the debt limit. By delaying SS benefits, wouldn’t Treasury be legally required to invest in the first month alone (this is a guess of withheld benefits + receipts) 150B extra in the SS trust fund? Since the buffer on the debt limit is currently only 25M, not only would you blow through the debt limit in SS Treasury bonds, but you’d do it really quickly. Of course, maybe this should be considered a feature, not a bug. Treasury could quickly announce that the debt limit had been breached in intragovernmental debt, and they are now legally required to resume ‘normal’ operations. Since the debt limit is no longer applicable, new debt issued as required by 31 U.S.C. § 3104(a) would again be backed by the full faith and credit of the US.

]]>
By: ptboy http://blogs.reuters.com/felix-salmon/2013/10/07/felix-salmon-smackdown-watch-debt-prioritization-edition/comment-page-1/#comment-48270 Wed, 09 Oct 2013 15:42:43 +0000 https://blogs.reuters.com/felix-salmon/?p=22582#comment-48270 Even if we stipulate the legal and technical ability to prioritize, Salmon’s conjecture only works until Nov. 1, 2013. That’s the day cash flow falls behind the lumpy payment schedule of interest obligations.

http://www.businessinsider.com/chart-of- the-day-this-chart-destroys-the-debt-cei ling-truthers-2013-10

]]>
By: ptboy http://blogs.reuters.com/felix-salmon/2013/10/07/felix-salmon-smackdown-watch-debt-prioritization-edition/comment-page-1/#comment-48266 Wed, 09 Oct 2013 00:52:12 +0000 https://blogs.reuters.com/felix-salmon/?p=22582#comment-48266 Let’s stipulate that prioritization is both technically feasible and legal. The problem is that though, on average days, the government brings in receipts in excess of outlays, payment schedules are lumpy. Look at the chart in this link and notice that interest obligations cannot be covered by cumulative cash flow at the beginning of November. On Salmon’s theory we buy no more than a couple of weeks. I also feel that a rational discussion about an event that is likely to be heavily freighted with intense emotionalism seems a bit out of touch.
http://www.businessinsider.com/chart-of- the-day-this-chart-destroys-the-debt-cei ling-truthers-2013-10

]]>
By: willid3 http://blogs.reuters.com/felix-salmon/2013/10/07/felix-salmon-smackdown-watch-debt-prioritization-edition/comment-page-1/#comment-48262 Tue, 08 Oct 2013 20:40:20 +0000 https://blogs.reuters.com/felix-salmon/?p=22582#comment-48262 well, haven only been in It for a few decades. I am thinking that unless the system were designed to prioritize, they mostly likely need to be changed to do that. problem there isnt any one left to do that as they all go furloughed due to the shutdown. the other issue of course is that even if they were designed with that being possible, has it been tested? and shown to work (if a feature you never use doesnt work do you even know that?). and while it might have worked as originally set up, that could have been decades ago, and many 1000’s of changes ago. and it may no longer work. and i am not sure that all of us want the pain some want to push on us. that might not work out so well, as the last time there really was a lot of pain (like back in 1930s) we just about scrapped capitalism as we practiced back then (which looks a lot like it does now. hm. and people were a lot more patient back then than now). for those who think they want the pain, you have it,. the rest of us dont want. and dont force it on us. cause the change you might get, might not be what you want

]]>
By: thispaceforsale http://blogs.reuters.com/felix-salmon/2013/10/07/felix-salmon-smackdown-watch-debt-prioritization-edition/comment-page-1/#comment-48260 Tue, 08 Oct 2013 16:07:12 +0000 https://blogs.reuters.com/felix-salmon/?p=22582#comment-48260 How may extra days does partial default get us?
And if a party is unwilling to raise the debt ceiling prior or at that point, whatever shortterm benefit there might be of paying bondholders first is crushed by the long picture.

]]>
By: PeterPrinciple http://blogs.reuters.com/felix-salmon/2013/10/07/felix-salmon-smackdown-watch-debt-prioritization-edition/comment-page-1/#comment-48259 Tue, 08 Oct 2013 15:19:23 +0000 https://blogs.reuters.com/felix-salmon/?p=22582#comment-48259 “Could Treasury decide to prioritize Fedwire payments, and then turn on the ACH payments sporadically, only insofar as they didn’t eat up enough cash to endanger bond repayments? I don’t see why not.”

That’s a remarkably easy statement for someone on the outside to make, but speaking as someone who covered federal civilian ADP — and who has a spouse who worked in federal civilian ADP for many years — the idea that Treasury would be able to improvise those procedures on the fly doesn’t even come close to passing the laugh out loud test.

]]>
By: GRRR http://blogs.reuters.com/felix-salmon/2013/10/07/felix-salmon-smackdown-watch-debt-prioritization-edition/comment-page-1/#comment-48258 Tue, 08 Oct 2013 11:57:59 +0000 https://blogs.reuters.com/felix-salmon/?p=22582#comment-48258 Three things:

1. It’s not yet clear, how Fedwire satisfactorily buffers bond repayment. Is income one account and disbursements split between ACH and Fedwire?

2. I’d think that, as seen with 4-week bills, if effective yields creep up, we’re talking less cash available (more of the future debt is going towards repayment of bonds / bills), even if income stays the same.

3. Speaking of yield curves, I think the markets have begun to signal their expectation of another 2-year recession. All rates 2-years or shorter have gone up, while longer-term ones have gone down. Thus as I’ve started saying, a la Jerry Tarkanian: Boehner’s so mad at Obamacare, he’s going to send the US economy down a 2-year recession.

]]>
By: ktonine http://blogs.reuters.com/felix-salmon/2013/10/07/felix-salmon-smackdown-watch-debt-prioritization-edition/comment-page-1/#comment-48257 Tue, 08 Oct 2013 11:30:21 +0000 https://blogs.reuters.com/felix-salmon/?p=22582#comment-48257 If Treasury tried to prioritize payments I envision thousands of lawsuits from those that didn’t get paid on time.

]]>
By: MyLord http://blogs.reuters.com/felix-salmon/2013/10/07/felix-salmon-smackdown-watch-debt-prioritization-edition/comment-page-1/#comment-48256 Tue, 08 Oct 2013 02:14:26 +0000 https://blogs.reuters.com/felix-salmon/?p=22582#comment-48256 If one chooses not to pay, rather than use any other alternative, one is doing so for political impact. For that reason, not paying voters is much more potent than possibly non-voting bondholders, so you would want to prioritize debt payments to pressure Congress.

]]>