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NATIONAL REVIEW ONLINE
September 28, 2013 1:33 PM

House GOP Cheers Delay CR as They Head Toward Impasse With Obama

By Jonathan Strong

In a pivotal closed-door meeting just now, House Republicans enthusiastically embraced a plan from Speaker John Boehner to attach a one-year delay of Obamacare to the government-funding bill, an act that dramatically raises the odds that the current funding law will expire on Tuesday without a replacement.

Boehner, who had weighed less antagonistic options such as attaching the delay or repeal of only some unpopular provisions in the health-care law, began the meeting by presenting the proposal in a confident but matter-of-fact tone, lawmakers said.

The reaction was “overwhelmingly positive,” in the words of one person in the room. “Beautiful” is how Representative Lynn Westmoreland of Georgia put it.

At one point, Representative John Culberson of Texas, whose aide had only last week confronted a top aide to Senator Ted Cruz over strategy, yelled “Let’s roll!,” an allusion to a rallying cry used by Todd Bremer on a hijacked plane in the September 11 attacks.

“We’re totally unified. 100 percent,” Culberson told reporters afterwards. “We’re doing the right thing for the right reasons.”

http://www.nationalreview.com/corner/359813/house-gop-cheers-delay-cr-they-head-toward-impasse-obama-jonathan-strong

What do you have against charts?

Before I went on The Willis Report on Fox Business to discuss the latest FHA bailout, reporter Rich Edson discussed the pending government shutdown. That is, The House passed a continuing resolution without Obamacare funding, the Senate put Obamacare back in the continuing resolution, and now the ball in the House’s court with only days to go …. to government shutdown!

Zero Hedge has a nice summary of the negatives associated with a government shutdown. Suffice it to say, it is all about the crippling Obamacare legislation.

Regardless of the government shutdown or not, labor force participation rate will continue to fall along with M2 Money Velocity.

But what about a default since? the government could miss interest payments on Treasuries, triggering a first-ever default by the U.S. government. U.S. Treasuries are held by banks, governments and individuals worldwide. Ultimately, a prolonged default could lead to a global financial crisis.

But what do financial markets think? 5 year credit default swaps (CDS) for the US are still very low, about the same as Switzerland.

But US 5 year CDS prices have risen in the last two weeks from 24 to 32.

The VIX (the Chicago Board Options Exchange Volatility Index that reflects a market estimate of future volatility) rose slightly on Friday.

And gold prices are not reflecting any risk of government default either.

So, the market is pricing in a low probability of default for the US. But with $17 trillion in Federal Debt and $70 trillion in off-balance sheet liabilities, …

But fear not. If you are a taxpayer, your share of unfunded liabilities is $1.1 million EACH. And if you don’t pay Federal taxes like 43% of Americans, you also get an Obamacare subsidy for healthcare.

I will check the market reaction on Monday.