The Daily Doom

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The Daily Doom
The Daily Doom
D-Day is Coming, Stocks are Falling

D-Day is Coming, Stocks are Falling

Sometimes perception is reality.

David Haggith's avatar
David Haggith
May 24, 2023
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The Daily Doom
The Daily Doom
D-Day is Coming, Stocks are Falling
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The stock market started to fall, as soon as I started writing yesterday’s article claiming it would fall ahead of any decision on the debt ceiling, despite the fact that there is zero possibility legally of a US debt default. The US must, by law, prioritize spending toward paying its debt obligations before paying any expenses for which it has no obligations to others at all. As the article points out, the US has many discretionary expenses it can reduce that are non-contractual, and the US can cancel them at will; it just lacks the will. It can likely also cancel some of its contracts without going into default, depending on the terms of the contract, and its cashflow from revenue will cover what cannot be cancelled with no need to increase debt. Not even close. The real argument is “What are you willing to live without in order to avoid default if the debt ceiling is not raised?”

That said, the point of the article was that the specter of debt default — so thoroughly believed in as it is, thanks to all the fulmination — will be enough to damage the stock market and quite possibly the US credit rating from the game of brinksmanship being played … even without an actual default. Today, the market proves yesterday’s action like a game of H-O-R-S-E with a 240-point morning followup swish based on news that credit-ceiling talks seem to be hardening.

Terror has not struck the market yet, but Jamie Dimon’s forecast of panic becomes increasingly likely as the terror tactics of the Biden Administration and the House of Representatives close in on D-Day (Debt Day), as Yellen’s deadline is perceived because she keeps saying the US will have to default when that “hard deadline,” which is not hard at all, comes.

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