Will This Football Club Once again PROOF themselves as a CASH COW for 2011/12

Debt Deal Doubts Lower Wall St

 

Doubts on the Obama Debt deal have hit stocks and the USD shortly after open today.

Sunday’s deal would raise the debt ceiling by up to $2.4tn from the current $14.3tn and would cut the US budget deficit by a similar amount.

A bipartisan commission will also be set up to seek further reforms.

The deal needs to pass both houses of Congress to become law, but elements of both parties are expected to oppose it.

Republican and Democratic leaders in the House of Representatives and the Senate are to spend Monday meeting their own party members and attempting to convince them of the merits of the bipartisan deal.

The markets responded to the breakthrough with relief. The Dow Jones index in New York gained nearly 1% soon after opening, following gains in Tokyo and London.

The US Congress is preparing to vote on a deal struck between the White House and party leaders that would end weeks of uncertainty and avoid a default.

In the Senate, where a vote is expected around 14:00 local time (18:00 GMT), analysts say there is more of consensus.

Democratic Majority Leader Harry Reid and Republican Senate leader Mitch McConnell were two of those pushing the plan and they are thought likely to be able to corral their troops to approve the deal.

In the House, Democratic leader Nancy Pelosi is expected to ensure enough Democrats vote for the bill to help smooth its passage, analysts say.

Announcing the deal on Sunday night, President Obama himself conceded that the deal was not the one he would have preferred, but noted that the compromise plan would make a “serious downpayment” on the US deficit.

“I want to announce that the leaders of both parties in both chambers have reached an agreement that will reduce the deficit and avoid default, a default that would have had a devastating effect on our economy,” Mr Obama said.

* The deal would allow President Barack Obama to raise the debt ceiling in three steps. Congress would get a chance to register its disapproval on two of these, but would not be able to block them unless it musters a two-thirds vote in both the House and the Senate — an unlikely prospect.

* It envisions spending cuts of roughly $2.4 trillion over 10 years, which Congress would approve in two steps — an initial $917 billion when the deal passes Congress and another $1.5 trillion by the end of the year.

* The first group of spending cuts would apply to the discretionary programs that Congress approves annually, covering everything from the military to food inspection.

* Those programs would be capped each year for 10 years. The caps would be relatively modest at first to avoid stifling the shaky economy — spending for the fiscal year that begins October 1 would be only $6 billion below the current level of $1.049 trillion. The caps would have a greater impact in later years, when it is hoped that the economy will have recovered.

* Some $350 billion of the $917 billion total would come from defense and other security programs which now account for more than half of all discretionary spending. Republicans are resisting this idea and it is one of the few areas of dispute left.

* Automatic across-the-board spending cuts would kick in if Congress does not observe the caps in coming years.

* A 12-member congressional committee, made up equally of Republicans and Democrats from each chamber, would be tasked with finding a further $1.5 trillion in budget savings.

* That committee could find savings from an overhaul of the tax code and restructuring benefit programs like Medicare — the politically risky decisions that lawmakers have not been able to agree on so far.

* The committee would have to complete its work by November 23. Congress would have an up-or-down vote, with no modifications, on the committee’s recommendations by December 23.

* If the committee cannot agree on at least $1.2 trillion in savings, or Congress rejects its findings, automatic spending cuts totaling that amount would kick in starting in 2013.

* Those cuts would fall equally on domestic and military programs. Medicare would face automatic cuts as well, but Social Security, Medicaid, federal employee pay, and benefits for veterans and the poor would be exempt.

* The plan also calls for both the House and the Senate to vote on a balanced budget amendment to the Constitution by the end of the year. It is not likely to receive the two-thirds vote in each chamber needed for passage, but its inclusion will make it easier for conservatives to back the overall deal.

The DJIA appears to be tracing a Head and Shoulder chart pattern. We need to watch whether the neckline will be broken. When it occurs, we will be looking at 10,750. The validity of H& S pattern rely heavily on volume. Unfortunately, volume is not available in my MetaStock. Therefore, please take this with a pinch of salt.

Yahoo Finance expected the stock market to tumble by 30% if US is unable to resolve the debt ceiling crisis which will result to a downgrade of credit rating from the current AAA

Source taken: http://marketwizardsllp.blogspot.com

Debt Limit Latest

 

Unless Congress acts before Tuesday, Treasury officials have said they will begin to run out of cash to pay the nation’s bills. That could force the government into default, an outcome that could devastate the sputtering U.S. recovery and global financial markets. Over the past week, the Dow Jones Industrial Average fell nearly 540 points amid rising anxiety about the debate in Washington.

On Saturday, talks were focused on somehow combining the debt-limit plans that emerged from bipartisan negotiations among congressional leaders last weekend. That effort was cut short last Sunday by Democrats, including Obama. But the next day, Reid and Boehner unveiled strikingly similar bills that would cut deeply into agency budgets and create a 12-member committee to identify further savings by the end of this year.

The key difference was the length of the debt-limit extension. Boehner’s bill, which passed the House but died in the Senate, would have granted a reprieve only through February or March. Unless the committee came up with $1.8 trillion in additional savings, Congress would face another standoff over the debt limit.

Reid’s bill, which was pending in the Senate, would increase the debt limit into 2013 by counting $1 trillion in savings from winding down the wars in Iraq and Afghanistan. Republicans decried that as an accounting gimmick, although it was one the party enthusiastically embraced in its own budget plan earlier this year.

To bridge the divide, lawmakers and administration officials were trying to design a mechanism to force the committee to act, giving Republicans their cuts and Obama his debt-limit increase. Many ideas were in play from both parties, and Senate Budget Committee Chairman Kent Conrad, D-N.D., said his staff had drafted three into formal legislation.

But aides said the sticking point remained Republican opposition to a trigger that would force automatic tax increases if the committee failed in its work. Democrats, meanwhile, opposed any trigger that only cut spending, saying that it would not give Republicans sufficient incentive to work with Democrats toward a compromise.

As talks continued, McConnell and Boehner appeared briefly to assure the nation that progress was at hand.

“Our country is not going to default for the first time in history that is not going to happen,” McConnell said. “We now have a level of seriousness, with the right people at the table, that we needed.”

All day Saturday, both parties pressed their partisan attacks. In the House, Republicans were smarting over the Senate’s quick Friday night defeat of Boehner’s proposal for a short-term debt limit increase. So the GOP returned the favor Saturday afternoon with a unanimous vote in opposition to Reid’s proposal to increase the debt limit into 2013.

It was not, however, a real vote. The Reid measure was still pending before the Senate. So Rep. David Dreier, R-Calif., chairman of the House Rules Committee, drew up his own version of the Reid bill and sent it to its death on the House floor, where 11 Democrats joined Republicans in rejecting the measure, 246-173.

“There are some good things in Senator Reid’s proposals. But I will say this: I don’t believe that continuing down the road towards increasing debt ceilings without the kinds of checks necessary is the right thing to do,” Dreier said as he urged fellow Republicans to reject the measure.

Even by House standards, the debate was particularly rowdy and sharp-edged, as lawmakers in both parties hooted and shouted down their colleagues across the aisle.

Republican members booed Minority Leader Nancy Pelosi, D-Calif., who accused Boehner of going “to the dark side” when he rewrote his debt-limit bill to add required passage of a balanced budget amendment — a change designed to appeal to his far-right wing.

Pelosi turned to look at them, and said it again with emphasis. “Let me repeat: He chose to go to the dark side.”

The atmosphere was just as tense and bitter in the Senate, where McConnell delivered a letter to Reid signed by 43 Republicans declaring their opposition to his version of the debt-limit bill.

Four Republican senators did not sign the letter: Olympia Snowe and Susan Collins of Maine, Lisa Murkowski of Alaska and Scott Brown of Massachusetts. But there was little evidence that Reid’s bill could muster the 60 votes needed to overcome a Republican filibuster — a fact Reid tacitly acknowledged when he rejected McConnell’s offer to stage a vote Saturday evening.

In his weekly address, Obama repeated his call for a “bipartisan” deal that requires both parties to compromise.

“It must have the support of both parties that were sent here to represent the American people — not just one faction of one party,” the president said.

While Conrad said discussions were under way Saturday with a handful of Republicans on trigger mechanisms, Boehner, too, showed signs of paving the way for compromise. He convened a meeting Saturday afternoon of the Tuesday Group, a bloc of about 45 moderate Republicans whose votes would be key to pushing any deal that emerges from the Senate through the more fractious House.

1. 10:43a

   Obama confident debt ceiling will be resolved

2. 10:42a

   Obama would back mechanism as part of debt deal

3. 10:41a

   Stocks trim drop as Obama calls for debt bill

The Point and Figure chart is showing the same bullish sentiment with a target of 3,700 as previously stated :

Note : In regard to the target, I have mentioned many times here. It should not be taken as a straight target that will be fulfilled without any interruption of the bears. Market is going to move up and down before reaching the target eventually ( it may take months ).

On the mechanical long term chart, the index has turned bullish too :

Finally! STI has managed to breakout from the major downtrend line, which is also the upper boarder of a symmetrical triangle. The upside target is 3,650. It is likely to see some profit takings in the upcoming sessions, a good time to buy on dip.

Obama Deal With Boehner Upset by Last-Minute ‘Gang’ Plan

July 23 (Bloomberg) -- President Barack Obama, running out of time to strike a deal to raise the U.S. debt ceiling, had some bad news for House Speaker John Boehner on July 20.

The tax overhaul they had been discussing to raise $800 billion in revenue over a decade had to be bigger, Obama told Boehner and House Majority Leader Eric Cantor during an evening meeting in the Oval Office. Obama’s new offer: $1.2 trillion.

A new proposal by the “Gang of Six,” a bipartisan group of senators who were calling for $3.7 trillion in budget savings over 10 years to slash the deficit, had changed the dynamics of the accord that Obama and Boehner had been negotiating in closed-door talks for weeks, the president told the speaker.

The group, praised by both senior Republicans and Democrats for its mix of spending cuts and tax increases, proposed a bigger revenue target than Obama and Boehner were considering, according to officials on Capitol Hill and at the White House who gave their accounts of the talks on condition of anonymity.

And Obama, who had called for months for the sort of grand bargain the gang was offering, was going to have a hard time selling a deal that stopped short of that.

The turnabout ultimately led Boehner to walk out of the talks, he said last night, unraveling the progress that had been made toward a sweeping compromise to slice $3.5 trillion from the nation’s debt and raise the $14.3 trillion debt ceiling before a default threatened Aug. 2.

Back to Beginning

The breakdown sent both sides back to the beginning with little room left to reach a deal to boost the nation’s borrowing authority in time to head off the default. Obama and Vice President Joe Biden met with congressional leaders from both parties today at the White House in an effort to reach an accord.

“It’s the president who walked away from his agreement and demanded more money at the last minute,” Boehner, of Ohio, told reporters at an evening news conference on Capitol Hill, hours after calling Obama to tell him he was abandoning their negotiations. “Dealing with the White House is like dealing with a bowl of Jell-O.”

It was the final breakdown in the private negotiations between Obama and Boehner over a politically challenging debt- reduction agreement both were eager to reach.

“We had very intense negotiations,” Obama said last night. “I’ve been left at the altar now a couple of times.”

The courtship began June 18, when Obama, 49, invited Boehner, 61, for a round of golf at Andrews Air Force Base. The two teamed up against Vice President Joe Biden, who was spearheading bipartisan talks on the deficit with congressional leaders, and Ohio Governor John Kasich, a friend of Boehner’s.

Bonding Session

More bonding session than policy debate, the president and the speaker beat Kasich and Biden, winning $2 each. Still, the golf date proved a turning point, spurring Obama and Boehner to begin one-on-one talks on a broad compromise. Four days later, Boehner was at the White House meeting privately with Obama to sketch out what the deal could look like.

The following day, Cantor, a Virginia Republican who has cultivated a close relationship with Tea Party-backed lawmakers leading the call for spending cuts, abandoned the bipartisan Biden-led talks after a half-dozen meetings. He said Democrats’ insistence on raising taxes made an agreement impossible. The group had been making slow but steady progress, identifying more than $1 trillion in spending cuts the two parties could agree on.

The following week, Obama held a news conference in which he accused Republicans of siding with corporate-jet owners over children and the elderly in the negotiations, and compared Congress’s work ethic unfavorably with that of his pre-teen daughters.

Dire Consequences

“The yellow light is flashing,” Obama said during the June 30 news conference, warning of dire consequences if Congress didn’t raise the borrowing limit before Aug. 2. Standard & Poor’s said it would downgrade U.S. debt to junk status in the event of a default, and the Senate canceled its July 4 recess to continue talking.

The following Sunday, July 3, Boehner and Obama met secretly at the White House to continue their talks. Enough progress was made that Obama appeared at a White House briefing on July 5 to say the nation had “a unique opportunity to do something big to tackle our deficit,” and announce he was summoning congressional leaders from both parties for talks at the White House July 7.

At the roughly 90-minute meeting, Obama polled congressional leaders about what kind of deal they were seeking -- a limited one of between $2 trillion and $2.5 trillion over a decade, a medium-size agreement yielding about $3 trillion, or a big deal to cut $4 trillion off the debt.

Obama and Boehner both wanted to go big.

‘No Imminent Deal’

Still, Boehner -- cognizant of intense opposition among Republicans to any agreement that raised taxes -- cautioned that there was “no imminent deal about to happen,” saying there remained “serious disagreements.”

“We are this far apart,” Boehner told reporters, spreading his arms to indicate the gulf between himself and the president. Yet behind the scenes, his staff and Obama’s were beginning to exchange paper on the contours of a compromise to bridge that divide.

The White House was willing to consider major changes to Medicare, Medicaid and Social Security, including benefit cuts, that had previously been considered off-limits. Boehner was willing to discuss a tax overhaul that would raise revenue, until then dismissed by the Republicans as a tax increase.

Boehner’s aides, including Chief of Staff Barry Jackson and Policy Director Brett Loper, were haggling with Obama’s budget director Jack Lew and legislative liaison Rob Nabors on the details. Resistance was brewing in both parties to such a deal.

Pelosi Displeased

Meeting at the White House with Obama on July 8, House Minority Leader Nancy Pelosi of California vented her displeasure about the prospect of including Social Security and Medicare cuts in any deal, and told him such a package wouldn’t garner support among congressional Democrats.

On Capitol Hill, Boehner and other House leaders held a press conference to reiterate their opposition to tax increases. Still, negotiations continued into Saturday morning July 9, when a round of negotiating among Boehner’s and Obama’s aides yielded little progress in breaking remaining stalemates over details of the tax rewrite and entitlement cuts.

Later that day, Boehner phoned the president at Camp David to tell him he was pulling the plug on a broad deal and would seek a more limited measure.

“Despite good-faith efforts to find common ground, the White House will not pursue a bigger debt-reduction agreement without tax hikes,” Boehner said in a statement after the call.

No Stopgap Deal

Obama was still pressing for a broad agreement. He called a news conference on July 11 in which he ruled out the idea of signing a stopgap debt-limit boost and argued that the time was ripe for a major compromise to reduce the debt, whatever the political difficulties.

“We might as well do it now -- pull off the Band-Aid, eat our peas,” he said.

That didn’t stop Republican resistance. Senate Republican Leader Mitch McConnell of Kentucky proposed a fallback plan on July 12 -- a “last choice” option, he called it -- that would allow Obama to unilaterally raise the debt ceiling $2.4 trillion in installments, requiring that the president lay out the same amount of spending cuts and giving Republicans several opportunities to vote “no.”

At the close of a White House meeting July 13, Cantor pressed Obama about a shorter-term debt measure, prompting a testy response from the usually low-key president.

More Than Reagan

Leaning back from the table, Obama told Cantor that he’d been personally negotiating the details of the debt deal for weeks -- more than Ronald Reagan or George W. Bush would have done -- because he wanted to reach a deal that was important for the country. If Republicans sent him legislation he couldn’t accept, he’d veto it and take it to the American people, Obama said before closing the meeting.

Republicans announced they would move forward the next week with legislation that would slash spending, cap future expenditures, and condition a $2.4 trillion debt-ceiling increase on passage of a balanced budget constitutional amendment. Behind the scenes, though, Boehner and Cantor began serious talks with Obama’s staff on a major compromise.

The House Republicans invited Obama’s chief of staff Bill Daley and Treasury Secretary Timothy Geithner to Boehner’s Capitol office suite on July 15 for a quiet meeting on a framework for a tax overhaul, according to House Republican leadership aides.

Cutting Medicare

Over coffee and bagels at the White House July 17, with Obama popping in periodically to check their progress, the four negotiators, now joined by Lew, moved toward a deal to slash discretionary spending by $1.2 trillion over a decade and set a process for overhauling entitlements and the tax code within six to eight months to save trillions more.

The White House would agree to cut $250 billion from Medicare and trim Social Security benefits through a change in the way their annual increase is calculated. Republicans would agree to a tax rewrite that would raise no more than $800 billion while lowering rates, a number blessed by Geithner, the Republican aides said.

The two sides remained divided over key details, including an enforcement mechanism to ensure the entitlement and tax targets were met. The White House rejected the Republicans’ idea that future borrowing authority be conditioned on achieving the goals, and Republicans opposed Obama’s insistence on raising taxes on high earners while keeping them at the same level for the middle class in the event the promised debt savings didn’t materialize, the aides said.

‘Grand Bargain’

On July 19, as Boehner’s staff awaited a counterproposal from Obama’s aides, Democratic Senator Mark Warner of Virginia and Republican Senator Saxby Chambliss of Georgia, co-leaders of the Gang of Six, stood before about 50 senators in an ornate room on the first floor of the Capitol and pitched their long- awaited “grand bargain.” Obama made a surprise appearance in the White House briefing room to commend the outline, and Treasuries rallied on expectations of a long-term debt-reduction deal.

The president’s team told Boehner’s that their bottom line had changed based on the framework, a message Obama delivered to the speaker in person the next day at the White House, the Republican aides said. An administration official said the senators’ plan had changed the political dynamics in the push for a deal, making it harder to attract Democratic support for a proposal with a smaller revenue increase.

Obama Rebuffed

Still, Obama had no inkling Boehner was abandoning the talks until he began having trouble getting the speaker on the phone and Jackson stopped returning e-mails beginning the evening of July 21. Boehner’s office informed the president on July 22 at about 3:30 p.m. that the speaker would call Obama in two hours. Obama said he wanted to talk to Boehner right then and was rebuffed, administration officials told reporters.

The call came in as scheduled, not long after House Republican leadership aides finished briefing reporters about Boehner’s decision.

“Up until sometime early today when I couldn’t get a phone call returned, my expectation was that Speaker Boehner was going to be willing to go to his caucus and ask them to do the tough thing, but the right thing. I think it has proven difficult for Speaker Boehner,” Obama said at the White House.

“In the end,” Boehner wrote in a letter to Republican lawmakers detailing his decision, “we couldn’t connect.”