Finance
The debt ceiling’s silver lining
What’s worse than the perennial and sometimes temporary Washington sport of hen over elevating the debt ceiling with the fixed risk of defaults compromising the “full religion and credit score of america,” economists fretting, markets swooning and the media glued to the skirmish? The six-month debt ceiling tussle we’re about to endure: The U.S. Treasury lately pushed the button on time-tested “extraordinary measures,” which is able to be sure that this episode performs out till the summer time.
However relaxation assured, there shall be no default, solely the predictable ritual dance punctuated by brinkmanship, feigned righteousness and rank political maneuvering. The ceiling will finally be raised with little gained by anybody — in Shakespeare’s phrases, plenty of “sound and fury signifying nothing.”
So, what’s the worth in a course of that places the world on edge and rattles markets but usually leads to either side overplaying their hand for little political acquire?
The reply is that it’s a uncommon alternative in our politics for the few remaining champions of fiscal prudence in both get together to make their case in a discussion board that galvanizes international consideration. Regardless of the mud and haze kicked up, we get a priceless periodic report card on America’s fiscal well being.
Stipulated, there is a lot to criticize within the regulation. To start out, it’s redundant to the finances and appropriations course of, which just about at all times generates spending quantities that exceed the beforehand accepted debt ceiling and that are not technically accessible till the restrict is raised. That’s a actuality left unsaid, for instance, amid the hullabaloo over the current $1.7 trillion omnibus.
Since such giant appropriations typically require a future debt ceiling improve so as to be absolutely spent, the regulation additionally imposes a lingering uncertainty over authorities funds, the bane of enterprise, economists and score businesses. Certainly, political wrangling over the debt ceiling helped drive S&P’s 2011 U.S. sovereign debt downgrade.
And sadly, each debt-ceiling debate inevitably devolves into the identical Kabuki theater of hypocrisy and demagoguery, with the earlier actors merely reversing roles. Whichever get together occupies the White Home needs to boost the ceiling to keep away from financial dislocation on their watch; the Capitol Hill opposition at all times seeks to attain political factors across the perils of unconstrained spending or one other subject du jour.
Once I was the debt-ceiling level particular person on the George W. Bush Treasury, each Sens. Obama (D-Ailing.) and Biden (D-Del.) have been constant “no” votes, with the previous righteously saying, “America has a debt drawback and a failure of management,” suggesting he was prepared to place the nation in default. As president, Obama was extra sensible: “We have now to [pass] it by subsequent Tuesday or we received’t have the ability to pay all our payments.” He later got here clear, admitting his place was “a political vote.”
Then-Sen. Biden’s 2006 place towards elevating the ceiling? “I refuse to be related to the insurance policies that introduced us so far.” In the present day, President Biden seems desperate to embrace “the insurance policies which have introduced us so far” with $31 trillion in nationwide purple ink, now lecturing that it might be “irresponsible” to eradicate the debt ceiling.
I predict that GOP’s hypocrisy might now truly exceed Democrats’. Sen. Ted Cruz (R-Texas) filibustered a debt-ceiling hike through the Obama administration, solely to grow to be a dependable sure vote for President Trump. Count on déjà vu yet again as Republicans back-flip as soon as extra, particularly as Home Speaker Kevin McCarthy (R-Calif.) should show his spending chops after his 15-ballot choice debacle.
One basic actuality: Historical past suggests the regulation actually has no tooth. For the reason that late Fifties, sitting presidents’ debt-ceiling success report is one hundred pc as a result of no politician will dare take the career-ending step of touching the third rail of default. In 2006, as Senate Chief Harry Reid (D-Nev.) and his fellow Democrats took to the Senate ground keelhauling President Bush over spending, his employees was frantically calling my workplace to make sure we weren’t out of time to carry the ceiling and keep away from default. It offered us a superb snigger.
Put together for comparable chuckles from McCarthy and Republicans, who’re girding for a struggle with spending restraint their said objective. Whereas they will’t say it publicly, they perceive effectively that their leverage with the administration lies not within the empty risk of forcing default, however in the chance for an open and really public dialog, the place they are going to spotlight Biden’s position in current report spending. Their danger is that they push too arduous and look silly by fomenting panic solely to beat a hasty retreat.
Amid protests of pending financial Armageddon, the Biden group’s actual calculus in contemplating concessions to group McCarthy won’t be their concern of default however as a substitute how a lot injury his presidency can stand up to from the day by day reminders over the following six months of the spending bonanza of final two years, and its ensuing historic inflation. With 2024 proper across the nook, the stakes are excessive.
For all its flaws and regardless of all of the preening and posturing, the debt ceiling two-step forces an all-too-rare debate on the nation’s stability sheet that forces all of Washington to interact and, importantly, the media to cowl it. On condition that no president since Invoice Clinton has prevented deficits leading to report debt, political posturing and brinksmanship appear a suitable value to pay for the worth of sometimes reminding America of the perils of fiscal profligacy.
Emil Henry, previously assistant secretary of the Treasury, is CEO of personal fairness agency Tiger Infrastructure Companions.
Stocks traded mixed on Friday but closed the week on a high as investors embraced an inflation report seen as crucial to the Federal Reserve’s next decision on interest rate cuts.
The Dow Jones Industrial Average (^DJI) gained 0.3% and finished with a fresh record. The S&P 500 (^GSPC) lost 0.1%, but is coming off a record-high close from the prior session. Meanwhile, the tech-heavy Nasdaq Composite (^IXIC) sank about 0.4%.
Despite the mixed trading on Friday, the stock gauges all recorded wins for the week after confidence in the economy returned to the market. The Dow and the S&P added about 0.7%, while the Nasdaq rose 1%.
A solid GDP reading, combined with continued cooling in inflation, has cemented growing conviction that the Fed can nail a “soft landing” as it embarks on a rate-cutting campaign.
The August reading of the Personal Consumption Expenditures (PCE) index, the inflation metric favored by the Fed, showed continued cooling in price pressures. The “core” PCE index, which is most closely watched by policymakers, rose 0.1% month over month, lower than Wall Street forecasts.
The PCE reading appeared to goose up bets on another jumbo-sized rate cut from the Fed next month. More than half of traders — around 52% — now expect a 50 basis point cut.
Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards
Elsewhere, China added to its stream of stimulus measures, boosting markets once again. Mainland stocks scored their biggest weekly win since 2008, and luxury stocks are set for their best week in years as hopes for Chinese demand rise. Meanwhile, shares of Alibaba (BABA, 9988.HK), JD.com (JD, 9618.HK), and Meituan (3690.HK, MPNGY) surged amid the buying spree.
Live13 updates
-
-
-
-
Zuckerberg faces deposition in AI copyright lawsuit from Sarah Silverman and other authors
One of the most important debates sparked over the sudden rise of generative AI tools is whether the process of training large language models using existing artistic works is a new form of copyright infringement.
An array of authors, media outlets and other creative professionals have sued to stop AI companies from using their content on the internet, arguing that their works are being used without compensation in order to advance a new technology and market opportunities.
Meta CEO Mark Zuckerberg will soon play a direct role in one of the most important lawsuits tackling this subject. Earlier this week a US District Court judge overseeing a suit brought by authors including Sarah Silverman and Ta-Nehisi Coates rejected Meta’s bid to prevent the deposition of Zuckerberg, the Associated Press reported Friday.
Meta had tried to block Zuckerberg’s deposition by arguing that he does not have unique knowledge of the company’s AI operations and other Meta employees could provide the same information. Zuckerberg’s participation will likely draw even more attention to the legal matter, similar to his high-profile appearances on Capitol Hill during Congressional hearings on the role of social media in society.
-
New PCE reading supports case for smaller Fed rate cut in November
Change in core PCE since 2018 A fresh reading on inflation Friday keeps the Federal Reserve on track to continue cutting interest rates this fall, likely in 25 basis point increments, reports Yahoo Finance’s Jennifer Schonberger.
The result means that a bigger 50 basis point cut may be hard to justify at the Fed’s next meeting in November, according to some Fed watchers.
The fact that core inflation year-over-year is holding the level of the last two months, and not dropping, lines up more with a scenario for a smaller cut — lest the job market substantially weaken between now and November.
“The core year-over-year at 2.7% suggests that another round of 50 basis points needs to come under careful scrutiny unless the labor market suggests weakness,” said Quincy Krosby, chief global strategist for LPL Financial.
The consensus among Fed officials outlined last week is for two more 25 basis point rate cuts in 2024.
Read more here
-
-
-
-
-
-
-
-
Wall Street is digesting this morning’s release of the latest Personal Consumption Expenditures (PCE) data, the Federal Reserve’s preferred measure of inflation. Meanwhile, Costco (COST) shares are under pressure following the wholesale retail giant’s latest quarterly results. Despite recent increases in membership fees, the company fell short of sales expectations. Yahoo Finance’s trending tickers include BlackBerry Limited (BB), SuperMicro Computer (SMCI), and Coinbase (COIN).
Key guests include:
9:05 a.m. ET : Tiffany Wilding, PIMCO Managing Director and Economist
9:30 a.m. ET Angelo Kourkafas, Edward Jones Senior Investment Strategist
10:15 a.m. ET Rich Lesser, BCG Global Chair
10:45 a.m. ET Stuart Kaiser, Citi Head of U.S. Equity Trading Strategy
11:30 a.m. ET Ed Hallen, Klaviyo Chief Product Officer & Co-Founder
Biodiversity-related projects have seen an increase in international funding in recent years, but remain a low priority compared to other development initiatives, according to a new report from the Organisation for Economic Co-operation and Development (OECD).
The report found total official development finance (ODF) for such projects grew from $7.3 billion in 2015 to $15.4 billion in 2022. That’s still less than what the nearly 200 governments that signed the Kunming-Montreal Global Biodiversity Framework (GBF) in December 2022 agreed would be needed to halt biodiversity loss: at least $20 billion annually by 2025, and $30 billion annually by 2030.
Government funding made up the bulk of the ODF for biodiversity-related projects in the OECD report, which is welcome news, Campaign for Nature (CfN), a U.S.-based advocacy group, said in a statement.
“We welcome the increase in international biodiversity finance reported in 2022 but that good news is tempered by a range of concerns,” Mark Opel, finance lead at CfN, told Mongabay.
One concern, CfN notes, is that funding specifically for biodiversity as a principal objective declined from $4.6 billion in 2015 to $3.8 billion in 2022. CfN reviewed hundreds of projects from 2022, which formed the source for the OECD’s report, and found that many either had vague descriptions or focused on other policies like agriculture but were counted toward protecting or restoring nature.
“We need to see more emphasis on funding with a primary focus on biodiversity,” Opel said. “So-called ‘principal’ funding that has biodiversity as its primary goal continues to be down since its 2015 peak. Increases in this type of funding are essential to meet the goals of the GBF … These goals cannot be met through funding with biodiversity as only a ‘significant’ goal that mainstreams biodiversity into projects with other primary goals like humanitarian aid or agriculture.”
The report also found that funding for biodiversity-related activities represent just 2-7% of the total ODF portfolio.
“It is concerning that biodiversity considerations still represent a relatively low share of the total official development assistance,” Markus Knigge, executive director of Germany-based nonprofit foundation Blue Action Fund, told Mongabay. He added it was also problematic that most funding came via loans, which have to be repaid, rather than grants, which are often more appropriate for conservation finance.
CfN says grants are preferable to loans because they don’t add to the debt burden of low-income recipient countries.
At the same time, development funding from major donors such as Germany, France, EU institutions, the U.S. and Japan have been cut in recent years.
“We have seen minimal announcements of new international biodiversity finance since [the GBF signing],” Opel said. “We estimate that only the equivalent of $162 million annually has been pledged since [then], which doesn’t come close to filling the $4.6 billion gap between the $15.4 billion in 2022 and the $20 billion commitment in 2025.”
Banner image: Javan lutung by Rhett A. Butler/Mongabay.
Hurricane Helene hits Florida homeowners already facing soaring insurance costs
Police search for shoplifter who attacked Macy's loss prevention officer
Alabama vs. Georgia: 3 ways the Crimson Tide can beat the Bulldogs
Creating a Sustainable Hawai‘i 2024 – Hawaii Business Magazine
US-20 Rexburg exit to temporarily close Monday – East Idaho News
Colorado Rockies game no. 116 thread: Zac Gallen vs José Ureña
See it: Tesla crashes into Columbus convention center at 70 mph
Fox News Politics: Georgia the whole day through
Death of missing Oregon girl found in stream ruled homicide
At least 2 dead as tornadoes hit Alabama, damage homes across Southeast
3 hackers with ties to Iran indicted in plot against Trump campaign: DOJ
Several explosions in Beirut as Israel says it attacked Hezbollah HQ
Trump campaign hack traced to three Iranians seeking to disrupt election, DOJ says
Video: What Threats Mean for Trump’s Campaign
North Carolina removes 747,000 from voter rolls
-
Politics1 week agoNew House Freedom Caucus chair reveals GOP rebel group's next 'big fight'
-
News1 week agoToplines: September 2024 Inquirer/Times/Siena Poll of Pennsylvania Registered Voters
-
Business1 week agoVideo: Federal Reserve Cuts Interest Rates for the First Time in Four Years
-
Business1 week agoCheaper Mortgages and Car Loans: Lower Rates Are on the Horizon
-
World1 week agoWATCH: Hungary braces for what could be the worst floods in a decade
-
Politics1 week agoDem lawmakers push bill to restore funding to UN agency with alleged ties to Hamas: 'So necessary'
-
Politics1 week agoHouse committee to demand 'stonewalled' memo detailing Biden agency's 'curious' voter registration work
-
World1 week agoWhat’s South Africa’s new school language law and why is it controversial?