Blood, The Debt Limit and Discretionary Spending

In this morning’s NY Times Opinion Pages, Op-Ed columnist and economist Paul Krugman brings up the topic of newly appointed co-chairman of the deficit commission and former Republican Senator Alan Simpson’s oddly sadistic remarks regarding the pending spring showdown over the debt limit.

So here’s what the very serious Mr. Simpson said on Friday: “I can’t wait for the blood bath in April. … When debt limit time comes, they’re going to look around and say, ‘What in the hell do we do now? We’ve got guys who will not approve the debt limit extension unless we give ’em a piece of meat, real meat,’ ” meaning spending cuts. “And boy, the blood bath will be extraordinary,” he continued.

If you close your eyes you can see the exchange playing out like that scene from Pulp Fiction:

Simpson: Bring out the Gimp.
House Republicans: Gimp’s sleeping.
Simpson: Well, I guess you’re gonna have to go wake him up now, won’t you?

Krugman goes on to explain what it is that has Mr. Simpson readying the ball-gag.

There’s a legal limit to federal debt, which must be raised periodically if the government keeps running deficits; the limit will be reached again this spring. And since nobody, not even the hawkiest of deficit hawks, thinks the budget can be balanced immediately, the debt limit must be raised to avoid a government shutdown. But Republicans will probably try to blackmail the president into policy concessions by, in effect, holding the government hostage; they’ve done it before.

Now, you might think that the prospect of this kind of standoff, which might deny many Americans essential services, wreak havoc in financial markets and undermine America’s role in the world, would worry all men of good will. But no, Mr. Simpson “can’t wait.” And he’s what passes, these days, for a reasonable Republican.

All kidding aside, this is a real impending dilemma that threatens to shut down the Federal Government and it is clear that House Republicans are not willing to look at seriously. For example, the night of the 2010 midterm elections as Chris Matthews faced on after another glowing Republican looking to spin their victory as a mandate to cut Federal spending. Each was asked specifically what Discretionary spending they were willing to cut and each to the letter refused to be clear on the matter.

[youtube]http://www.youtube.com/watch?v=3Z-TGYWx5PE&feature=player_embedded[/youtube]

So what does qualify as discretionary spending? David Sirota has a recent post up at Open Left that put forth this clarifying infographic:

Discretionary Spending, Courtesy of ThinkProgress.org

So the question remains; when the impending show-down occurs what discretionary spending will the Republicans be willing to cut? From the looks of the above infographic, nothing will matter unless they are either willing to cut Defense spending or do as many Democrats have proposed and raise the debt ceiling.

UPDATE: I wish to thank Elspeth Reeve for linking to me from The Atlantic Wire for the third time in as many weeks.

4 Responses to “Blood, The Debt Limit and Discretionary Spending”

  1. angellight says:

    When will the Dems act like grownups and be responsible and let these irresponsible tax cuts for the rich Expire, as that will only add to the deficit, and, with the expiration of these tax cuts, more revenue will be generated into the economy, the rich and wealthy will begin to pay their fairshare and not leave the tax burden to the middle class and working poor.

    For a so-called enlightened country like the U.S., to have such a discriminating ban on gays is disgraceful. As a country we are bigger than than and better than that — or should be. What made America great was her openess and compassion for others, with the advent of the Rush Limbaughs, we lost a lot of that. We have to get it back!

    • Tony says:

      If you’re a potential itvsenment player who’d like to make it big in the business and financial world, then you go for trading. The , also known as the foreign exchange market is one of the largest financial markets in the world with and estimate of $1.5 trillion turn-overs every day. Here are a few strategies on how to make it big in the market. Strategy One: Know your market. The best way to get advantage, earn profit and minimize losses is to familiarize yourself with the market and how the whole system works. In the market, the players are usually commercial banks, central banks and firms involved in foreign trade, itvsenment funds, broker companies and other private individuals with large capital. With the speed and high liquidity of asset, most companies engage in this business than in any other trading venture. Transactions are done in a jiffy; there are no membership fees and there is always the allure and promise of big, big profit. Trading is done in pairs. The most commonly traded currencies are usually the US Dollar, Japanese Yen, Euro, British Pound, Canadian Dollar, Australian Dollar and the Swiss Franc. The more commonly traded pairs are the US Dollar and the Japanese Yen, the Euro and the US Dollar, the Swiss Franc and the US Dollar. In trading, everything is speculative and virtual. There is no actual product being sold or bought. The activity mostly consists of computed entries made on the value of one against another. Say for example, you can buy Euros with US Dollar, hoping that the Euro will increase it value. Once its value rises, you can sell the Euro again, thus earning you profit. Strategy Two: Learn the language. There are three concepts you need to know in the market. Pips refer to the increase of one hundredth of a percent of the value of the pair you are trading. Usually each pip has a value of $10 or $1. Volume is the quantity or amount of money being traded at one particular time in the market. Buying is the acquisition of a particular . A trader buys with the hopes that the price of the will increase. Selling is putting a up for grabs in the market because of a potential or possibility of a decrease in its value. There are also two techniques of analysis usually used in this business – the fundamental and the technical analysis. Technical analysis is usually used by small and medium players. Here, the primary point of analysis revolves on the price. Fundamental analysis, on the other hand, is used by bigger companies and players with higher capital as it involves looking at the other factors affecting the value of a particular . In this type of analysis, the player also looks at the situation of the country, particularly issues like political stability, inflation rate, unemployment rate, and tax policies as these are seen to have an effect on the ’s value. Strategy Three: Develop a sound trading strategy. Your trading strategy would depend on what kind of trader you are. The basic thing with developing a trading strategy is to identify what kind of trader you are. A good trading strategy should lessen, if not, eliminate losses. Plan also the size of your transactions. It is better to conduct many different trades than one huge transaction. Not only does it develop discipline, but it also lessens any possible loss as only a fraction of the capital is affected. Part of a trading strategy is developing the values of discipline and proper money management. Strategy Four: Practice. Try paper trading, a great way to practice your skills, see how the market works and get acquainted with the software and tools being used. There are online brokers who allow free paper trades, which allows practice and experience before doing it with real money. Strategy Five: Choose the right dealer. Make sure that they are regulated by the law. Take not of dealers with itvsenment schemes that give out too-good-to-be-true-just-false-hopes promises. Look at itvsenment offers before getting started. trading may seem easy and manageable. But the emotional stress, the demands and challenges of being a trader requires more than just the knowledge of the market. It requires more than just a keen and sensible head for business. It’s all about a gameplan, a strategy.

  2. Himm Interesting article anyone which should be more widely known about in very own view. Your levels of detail is good and the clarity of writing is excellent. I have bookmarked it to help you making sure that others could see what was have to say.

  3. Renata says:

    I’ve read a lot about Forex, but I’ve never seen a proven paforlibte forex strategy, despite the claims of some scam web sites.Playing Forex can appear alluring, but the majority of people who try it lose money. All you have to do is do a web search on the words Forex and lose to see this is the consensus.Forex is what we call a zero sum game. You are making a bet with someone else about whether a currency will rise or fall. For every winner there has to be a loser. If you are smarter than the average player, you may make money. If you are dumber than the average player, you are likely to lose money. Most of the people making the bets in Forex are highly trained professionals at banks and other institutions. You are unlikely to beat them at this game.Actually Forex is not quite a zero sum game. It’s a slightly negative sum game as the Forex broker takes a small percentage each time in the spread. It’s a small amount but over a hundred trades, it ends up being a considerable amount of money. So the average player is likely to lose money, and remember the average player is a highly trained professional and probably smarter than you.There is a lot of luck in Forex, and if you play it, you will have some periods of time where you make money. This is usually because you are having a lucky streak, not because you have suddenly become an expert Forex player. However, most people are unwilling to admit their success is due to luck. They become convinced they have a system that works, and lose a lot of money trying to refine it.Further complicating the problem is the large number of Forex scams on the internet. Most Forex websites are of questionable honesty. You will find many people on the Internet that claim they made a lot of money using Forex. They are usually liars trying to make money. They will say: Go to Forexcrap,com/q2347. The q2347 is a signal to the Forexcrap site that you are being referred to them by q2347. If they sell something to you, q2347 gets a kickback. These coded signals can be hidden by different methods in the link. Other people will refer you to their own private website or blog for the purpose of trying to get money off you. Also there are a good number of trolls out there that like to pretend they are successful forex traders just for the fun of it.I would recommend not trying to do Forex at all, unless you are a trained professional. It’s like playing poker with people better than you, with the house constantly taking a small percentage from the pot.

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