Geithner: GOP debt talk is 'theater'

[Mr. Big Dog 10,747]

When is it going to get to the point where we deal with the mess we have gotten ourselves into???

When the GOP grows out of their diapers.

[scandal 951]

Most of Japan's debt is internally owned by Japanese pensioners (about 85 percent if memory serves.)

Unless our government devise a means of forcing people to invest their IRAs and 401(k)

in US Treasuries, I don't see how we can sustain Japanese debt levels.

I don't think we should ever approach Japanese levels either.

I still see nothing from you defending the 100% magic number though.

[_Simpson_ 250]

When the GOP grows out of their diapers.

So we raise the ceiling, then what happens after that doesn't work? Another stimulus package? When does it end, when do we say "dam we fvcked up" and deal with it?

[scandal 951]

I just love David Brooks take on things. I think Brooks is one of best spot-on commentators on the pulse of the American public discourse today.

http://www.pbs.org/newshour/bb/politics/jan-june11/sandb_06-24.html

JIM LEHRER: But that's not only Grover Norquist, David, Mark. There's also the leader -- the Republican leader of the United States Senate. There's John Boehner, the House speaker. They have all said no deal on this debt ceiling deal if there is revenue enhancement or increased revenue in there.

DAVID BROOKS: Right.

And so the ultimate question here is, who is playing games? Grover believes what he believes. He's completely sincere.

JIM LEHRER: Sure. Sure.

DAVID BROOKS: When McConnell and Cantor and those guys and Boehner are talking, that's part of the show. We're in the middle of show season.

And the -- Cantor walked out of this Biden commission.

JIM LEHRER: Yes.

DAVID BROOKS: That was part of the show. It was part of the show to get -- to get Obama to come forward with a plan and have some meetings, which he's doing.

It was part of the show to tell people in the Republican Party, we're really fighting for you. We're really fighting for you. It was part for the Democratic shooting, so they could say, hey, look, this is really blowing up. We're really fighting for you.

And so the question to me -- and this is the crucial question -- is, when they say no revenue, are they saying that now and then, at the last moment, on Aug. 2, or whatever it is going to be, they're going to say, we fought hard, we got a lot, we held tough, and we really got a great deal but then...

JIM LEHRER: You're going to have to do a little revenue stuff?

DAVID BROOKS: Yes, as part of that.

JIM LEHRER: Yes.

DAVID BROOKS: And so I -- the question is, how much of that is 100 percent conviction, how much of that is part of the show? And I confess I don't know the answer to that.

JIM LEHRER: Do you know the answer, Mark?

MARK SHIELDS: I do, Jim, but I can't tell you right now. No.

(LAUGHTER)

JIM LEHRER: Hey, look, we -- hey, David -- just tell David and me. We won't tell anybody.

(LAUGHTER)

MARK SHIELDS: The -- David is right, in that -- I think where he may be a little bit optimistic is Republicans in the House.

I think there's probably 60 percent of the Republicans in the House who will not vote for any revenue increase. And this drives John Boehner to the reality that, if he's going to pass anything out of the House on the debt limit, he needs Democratic votes. And so this forces it.

I thought that -- I thought that Cantor, Eric Cantor, looked a little small walking out of that meeting. I mean, American voters, particularly independents, want people working together. And there was a certain air of petulance on it. I know he's trying to kick it upstairs.

JIM LEHRER: Kick it up.

MARK SHIELDS: He kicks it upstairs to Boehner, the speaker. He also kicks it upstairs to the president and brings the president in.

And this is -- this has got a skittishness on the part of Democrats, because they think the president was more than accommodating last December when it came to the extension of the Bush tax cuts to agree on the budget that got us through the first four months of this past year.

JIM LEHRER: Well, what do you see the entrance of President Obama, well, the effect of that? Well, do you think -- is that -- is this -- are we getting close to an end here? Do you think a deal can now be made? Or...

MARK SHIELDS: I think the end will come at the end. I think...

JIM LEHRER: Midnight August the 2nd?

MARK SHIELDS: Well, maybe even beyond. I think...

JIM LEHRER: Do a temporary thing or something?

MARK SHIELDS: But, right now, what we have, Jim, is we have an American public that doesn't believe the debt ceiling ought to be -- every measurement, by 2-1, they do not think it ought to be raised, Democrats, Republicans, independents.

And what you have got to do is convince people of the consequences if it isn't raised. And that means that the fighting people that Bob Gates discussed with you in the interview last night who are taking all the strain, stress, and sacrifice, they won't be paid. Their families won't be paid. Social Security won't be paid.

And they have got to drive that home. This is going to force the president to do something which the president is reluctant to do. And that's lay out rather bright lines what he's for. He likes to play -- be the ultimate conciliator, bringing people together. It's a natural role for him and one he does quite well. But this, I think, forces him out.

DAVID BROOKS: Yes, I think this has been one of the core weaknesses of his presidency, that he has not gotten out on front of this issue.

If you look at what -- the way Chris Christie governed New Jersey, you may not like the bill he passed into law this week, but he was out there with 30 town hall meeting, with charts, with explaining, here's our situation, and here's my plan.

I think that's the way you lead. And I don't Obama has done this. I don't understand the passivity, except it's become part of a pattern for the administration. But, at some point, he has got to get out and explain, A., here's our debt situation; B., here's the seriousness of the -- if we default.

JIM LEHRER: If we -- yes.

DAVID BROOKS: And no one else can do that. And, hopefully, he will start to do it, but he really hasn't. And he hasn't taken any risks.

And until he takes a risk, the Republicans are really hesitant to take any risks. And just -- so, finally, I'm not too worried about what's happening this week about the walkouts.

JIM LEHRER: Sure.

DAVID BROOKS: That's part of the script. But I am very pessimistic -- or moderately pessimistic about this coming next couple months. I really think they're much farther away than we all assume.

If you talk to conventional wisdom around here, conventional wisdom on Wall Street, everyone says, oh, the effects are so catastrophic, they will never not do a deal.

I think it's possible that we will have a period...

JIM LEHRER: You think it's possible?

MARK SHIELDS: I think, in the final analysis, we may -- we may go a week or two weeks or even, you know -- and have to see some of the dire consequences.

[Mr. Big Dog 10,747]

So we raise the ceiling, then what happens after that doesn't work? Another stimulus package? When does it end, when do we say "dam we fvcked up" and deal with it?

No, we have the GOP stop taking their oath to Grover Norquist less seriously than their oath of office and get on participating in the budget fixing exercise rather than taking their ball and go home when reality is brought to the table. You can't take revenues off the table and claim that you want to fix the defict all at once. Not if you're beyond the age of a juvenile.

[scandal 951]

No, we have the GOP stop taking their oath to Grover Norquist less seriously than their oath of office and get on participating in the budget fixing exercise r

The cracks are already there. Tom Coburn is already "out" and he's not the only one. The GOP is not entirely overrun with Tea Partiers. At least, not yet.

[_Simpson_ 250]

No, we have the GOP stop taking their oath to Grover Norquist less seriously than their oath of office and get on participating in the budget fixing exercise rather than taking their ball and go home when reality is brought to the table. You can't take revenues off the table and claim that you want to fix the defict all at once. Not if you're beyond the age of a juvenile.

That is a oversimplification of whats going on here but the reality is that we need to do something big here and deal with this mess were in. Sooner or later were going to have to suffer regardless to the BS your hearing from the Democratic party.

[Mr. Big Dog 10,747]

That is a oversimplification of whats going on here but the reality is that we need to do something big here and deal with this mess were in. Sooner or later were going to have to suffer regardless to the BS your hearing from the Democratic party.

You really think that the deficit is going to be dealt with merely by cutting expenditures? I've got some cool bridges for sale.

[mawilson 2,133]

I still see nothing from you defending the 100% magic number though.

It's a psychological barrier - there's no math behind it.

[one...two...tree 2,762]

When the GOP grows out of their diapers.

[scandal 951]

I think this game of chicken could make for an interesting trading strategy. Aggressively go short in the Treasury market in June just as all this political 'theater' starts to get everyone's attention - e.g. an ultrashort treasury ETF like TBT. Hold for about a month. By late June to mid July, the bond market will start getting very antsy when Congress still hasn't passed a new ceiling and the first unpayable treasury coupons are about to come due (Geithner estimated early Aug for that). As Treasuries start falling, the Ultrashort position should do very nicely. By late July, when the bond traders are at their antsiest about whether a bill will actually get passed, flip the position and go bullish (e.g.UBT)

to profit from the rally arising from the GOP giving in on the game of chicken at the last possible moment around Aug 1.

NOTE: This is NOT investment advice. If you do this, don't blame me. If I can think of it, I guarantee you every bond trader on the street has already thought of it and played it backwards, forwards and sideways by now.

I'm thinking this may be the point to pull the trigger and go seriously short. TBT is looking mighty bottom-y right now.

Again, this is not advice. It's just the nervous-nellie watching Obama walk out of talks and scold Eric Cantor. I think we're on a head-on collision for no-deal.

[IR5FORMUMSIE 850]

I'm thinking this may be the point to pull the trigger and go seriously short. TBT is looking mighty bottom-y right now.

Again, this is not advice. It's just the nervous-nellie watching Obama walk out of talks and scold Eric Cantor. I think we're on a head-on collision for no-deal.

Seems logical to me, but then again I don't follow the bond market too closely.