90 seconds at 9 am: Pressure on

90 seconds at 9 am: Boehner 'determined' to prevent US default; damage warnings; US jobless claims fall; US PSI down, China up; NZ$1 = US$0.829 TWI = 76.9

4th Oct 13, 7:52am by David Chaston

Here's my summary of the key overnight news in 90 seconds at 9 am, including news pressure is piling up on US congressional leaders.

The US House of Representatives Speaker John Boehner has reportedly told colleagues that he was determined to prevent a default and was willing to pass a measure through a combination of Republican and Democratic votes.

This comes after intelligence, military, Treasury and international officials backed up President Obama's warnings of the damage the US Budget and debt limit stand-offs could have.

In late trade, the Dow is down is down 0.5% although it is recovering a bit on the Boehner reports, oil and gold are lower, and UST 10yr yields have risen above 2.6%.

Meanwhile, the US economy chugs on. The number of Americans filing new claims for jobless benefits remained at pre-recession levels last week but growth in the massive US service sector cooled in September as firms took on fewer new workers.

In contrast, the Chinese services-industry index rose to a six-month high, adding to signs that the world’s second-biggest economy will sustain a rebound after a two-quarter slowdown.

In other news you may wish to check out, the US is about to overtake Russia as the world's largest producer of oil and natural gas. Singapore is positioning itself as a gold trading hub. And shareholders are to be asked to approve CBA boss Ian Narev's latest bonus - of A$4.3 million.

The NZ dollar starts today at 82.9 USc, 88.3 AUc, and the TWI is at 76.9.

The easiest place to stay up with today's event risk is by following our Economic Calendar here »

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19 Comments

by Gummy Bear Hero | 4th Oct 13, 9:15am 1380831350

The Republicans will blink first , David .... else they'd go down in history as being the political party that deliberately caused the US to default on their debts ( for the first time since about 1790 ) ... that's an albatross no one wants slung around their neck for all time .. ..

.... ssssshhhhhhh on the USA oil & gas production ! .... steven's in on record for saying that " the USA is finished " ..... don't burst the fellow's delusion ....

by steven | 4th Oct 13, 9:24am 1380831867

I dont think the GOP leadership wants the default, but the Tea party contingent are it seems content for that to happen.

I do hope you are putting your money where your mouth is GBH and are invested heavily in oil shale plays, like up to your neck.

Then we'll see who's deluded...

regards

by Gummy Bear Hero | 4th Oct 13, 9:27am 1380832045

The Russell 2000 index is at an all time high .... the companies which make up the smaller end of the US economy are going gangbusters ...

.... you'll soon be laughing at the other side of my face , my friend !

by steven | 4th Oct 13, 10:20am 1380835257

Really........

Small cap index....is that heavily oil shale play / small energy stocks biased? or just a cross section of small US stock? which is what it looks like to me....

So then, it doesnt look like you are putting your money where your mouth is?

regards

by Gummy Bear Hero | 4th Oct 13, 12:30pm 1380843005

NZ should be so lucky to have such a robust list of companies as these , scattered across all industries of human endeavour ....

http://www.russell.com/indexes/documents/Membership/Russell2000_Membership_list.pdf

... as for putting my money where my mouth is , if I could fill that particular hole I'd be richer than Bill Gates !

by steven | 4th Oct 13, 12:49pm 1380844175

ah right, so you are so utterly convinced Im wrong you are prepared to bet on it.

um, not.

regards

by Gummy Bear Hero | 4th Oct 13, 1:00pm 1380844845

The TAB won't give me any odds on betting that you're wrong , steven ....

....but my investments are all in medical , tech and fracking stocks which are even smaller than those found on the Russell2000 ....

If I'm wrong , I still get to swing in my hammock under the coconut palms on my beach .... if you're wrong , you get to hang around here and snarl at anyone who dares to dream of a prosperous and healthy future for mankind ....

by Roger Witherspoon | 4th Oct 13, 10:32am 1380835969

It is great drama to watch though. My take is the Tea Party is basically a protest movement that got taken over by the Republicans. The Occupy movement was a less significant movement that the Democrats just ignored until it withered and died. Both were the expression of dissatifaction with the US political system.

The interesting thing is that the Tea Party Republicans are not house trained yet. The traditional Republicans are easily bought, but the Tea Party Republicans are still determined to cause change. I don't think the Tea Party types actually know what they want, but they are angry, so any damage they can inflict seems good to them. So the rhetoric of the Republican leadership is old style bargaining for pork barrel concessions, ie over the price of their votes, but, and this is important, they do not control the Tea Party group who are out for blood. The Republicans are the party of blood after all, that's why their colour is red. As I say, great drama.

As I understand it the US Constition is totally unlike ours. Essentially the House of Representatives is the equivalent to our Parliament, which is based on the UK House of Commons. Their Senate is where the real power lies but is equivalent to the UK House of Lords before it was eviscerated - ie, Senators are elected for life and are probably extremely wealthy. The US President is basically the elected King who overseas the administration. So in our system the Republican leader would be Prime Minister. As I say, totally different from our system. The argument they are having is basically similar to England prior to the English Civil War - the King had to get the House of Commons to agree to increased taxes (usually before he could afford to raise an army to go and kill his personal enemies).

by scarfie | 4th Oct 13, 10:38am 1380836330

The thought occurred to me this morning after reading this piece is that Obamacare is about the only thing the man has achieved in his tenure. Without it his innings would be almost meaningless so my pick is he will cling to it at all costs. So I suspect your house training scenario will eventually kick in, the only question is how long they hold out.

by steven | 4th Oct 13, 10:44am 1380836677

"training" na, I think they are out and out loons....they dont care at all....plus I'd suggest they are backed / funded by even more extreme right wing loons than the "run of the mill" lobbyists etc...

Dunno if its good or not...

regards

by steven | 4th Oct 13, 10:38am 1380836337

I'd suggest the Tea party was created by right wingers, unlike the occupy movement which is real. Its beginning to look more like the GOP has taken too big a bite and it looks like the bite is likely to choke them. Great Drama indeed, except its real life and we are involved. Not sure if anyone knows what will happen if the US defaults....even if they dont I'd suggest its going to casue another recession...

US Senators are not elected for life btw....they have 4 year terms. My limited understanding is Congress proposes and draws up legislation, the senate ratifies it and the President signs it into law. So simply the Senate wont kill off Obamacase and Obama certianly wont.

I'd suggest both the Republicans and Tea Party are petrified their lies will be unmasked on Obamacare so are going hell for broke to kill it off....they lose big time either way....and with nothing to lose why not....

ho hum.

regards

by Roger Witherspoon | 4th Oct 13, 11:54am 1380840887

I thought senators were effectively elcted for life with something like 90% re-election rate due to gerrymandered electoral districts. The 4 yearly drama is merely a parade.

by dh | 4th Oct 13, 12:32pm 1380843152

Senators are elected at the state level, Representatives are elected at the district level where gerrymandering has an effect. This is why in the Senate, the Democrats won a majority of the vote and have a majority of the seats, but in the House Democrats won a majority of the vote but hold a minority of the seats.

Because of the gerrymandering, Republican representatives face no Democrat threats at election time. Instead their main threat is during the Republican primary period, from challengers who are more appealing to the sort of people motivated to vote in Republican primaries. This has pushed the Republican party toward the motivated fringes.

by Roger Witherspoon | 4th Oct 13, 1:08pm 1380845282

Thanks dh, my understanding is a bit fussy at best, but I find posting personal conjecture and speculation often brings out great replies, such as Anarkist's most excellent links below.

It seems re-election rates are 90% for both houses, hence my simplified comment understated the nefarious nature of the political process in the US.

http://www.outsidethebeltway.com/house-and-senate-incumbent-re-election…

by Anarkist | 4th Oct 13, 11:26am 1380839185

Roger, there's solid evidence was elaborately staged by neoconservative thinktanks/PR companies and funded by the Koch brothers. Its been planned since 2002 and they've been waiting for a pivotal moment to eventuate.

http://www.dailykos.com/story/2013/02/11/1186268/-Koch-Planning-Tea-Party-Since-2002-New-Research-Paper-Reveals

http://exiledonline.com/exposing-the-familiar-rightwing-pr-machine-is-cnbcs-rick-santelli-sucking-koch/2

The Occupy movement was ignored because it was actually a Grassroots movement and the Obama Administration was too beholden to the Wall Street financiers. In 2008 they were the fourth largest contributor to his presidential campaign.

http://www.opensecrets.org/news/2012/10/wall-street-funds-down-from-obamas.html

http://www.huffingtonpost.com/2012/09/05/wall-street-campaign-donations_n_1858086.html

by Roger Witherspoon | 4th Oct 13, 11:50am 1380840633

Thanks Anarkist, once again I bow to your superior knowledge of these matters. It does seem to confirm my theory that the US is a plutocracy pretending to be a democracy. They chose a system based on Rome and appear to be following the play book. A weak king beholden to the patricians in the Senate is the model. Plus lots of fake crises, blood, warfare, circuses and bread for the plebs.

by Anarkist | 4th Oct 13, 12:45pm 1380843900

Of more immediate signifance, since the 1970s, the world economy has shifted to a new economic model, that of plutonomy (an economy run for the benefit of the rich).

"Unlike the 99 per cent, the 1 per cent in the US and the UK are very much aware of both the income redistributions and the new political system that make them possible. They even

have a name for it: plutonomy. It is the term used by some of the key backers of this political ideology, political movement and concept of government, whose primary players belong to the financial sector. The history of plutonomy’s conceptual development remains clouded in secrecy. But the fact that plutonomy as a real-world political phenomenon is conceptually driven, rather than merely an historical accident, emerged to public view in 2005 when the first of three Citigroup documents prepared for its wealthiest clients were leaked."

http://www.paecon.net/PAEReview/issue59/Fullbrook59.pdf

The process began well before 2002, the Tea Party campaign is just the latest iteration of a plot that began in the late 1970s, orchestrated by Nixon's energy Czar and Treasury Secretary, who sought to undermine the "Liberal Establishment's" grip on power.

"The disgraced president retreated to his estate in San Clemente, Calif. But Nixon's followers blamed the "liberal" news media for hounding Nixon from office and for "losing" the Vietnam War. They concluded that a more conservative press was vital to their success.

Taking the lead in this endeavor was Nixon's treasury secretary, William Simon, who was president of the John M. Olin Foundation. In the late 1970s, Simon began pulling together executives of other conservative foundations with the goal of building "OUR establishment."

In 1979, Simon argued in his book, A Time for Truth, that only a strong conservative ideological movement could break the back of the dominant Liberal Establishment. Simon accused this Liberal Establishment of enforcing misguided concepts of "equality" and of being "possessed of delusions of moral grandeur."

To build the Right's "counter-intelligentsia" and to transform the Republican Party into a conservative weapon would require "multi-millions" from business, Simon said. Simon's Olin Foundation allied itself with other like-minded foundations to advance this cause, giving rise to the nucleus of the Right's national infrastructure of think tanks, media and pressure groups."

http://www.consortiumnews.com/1999/080499a2.html

The idea that the United States is a democracy has been a delusion from the very beginning. The Founding Fathers had no illusions about the true nature of the Republic.

"Few Federalists harbored any doubts as to America's future greatness under a centralized, energetic regime. As early as 1775 John Adams was calling for a second Continental Congress to write "a constitution to form for a great empire." Benjamin Franklin, too, had abandoned the ideal of the small Spartan republic, as he began to sense the awesome implications of "our growing Strength, both in Numbers and Wealth." Robert Morris foresaw the establishment of an American empire of "power, consequence, and grandeur." Some were more ardent still. "The Almighty.. . has made choice of the present generation to erect the American Empire," William Henry Drayton of South Carolina exulted. It "bids fair, by the blessings of God, to be the most glorious of any upon Record." http://mises.org/journals/jls/4_3/4_3_1.pdf

by Roger Witherspoon | 4th Oct 13, 1:30pm 1380846651

Thanks for the links, they are very interesting.

by Gummy Bear Hero | 4th Oct 13, 6:01pm 1380862881

Bernard Hickey's new venture " HiveNews " is a subscription internet site .... you gotta pay $ 29 / month to participate ....

... dare I ask , are there any bloggers ( or bloggeresses ) here who're gonna pay up ?

Be it ever so humble , interest.co.nz is my home ...