NEW YORK ( Real Money) -- It's pretty binary now.
You can write whatever you want, but in a default, it is going to be game over, and right now the stance from both sides -- not the president and not the GOP alone -- would definitely take us over the cliff.
If it is not possible to dislodge the president from his view of no negotiations and it is not possible for the speaker to call for a majority-rule vote, then it is hopeless and we will have a default and there is no way this market can handle a default without giving up a huge chunk of gains.
Given the rhetoric, once again it seems odd that Treasuries aren't going down in price and up in yield. But there is a complacency -- and there has been a complacency -- that seems a little unrealistic considering the stances that both sides are taking.What's odd for me is that if the president truly believes that it's the constitutional duty of Congress to raise the debt ceiling, then why isn't he preparing a constitutional initiative with the Supreme Court? If he truly believes no negotiations should occur, then he definitely believes that there is a constitutional imperative. It simply can't be anything else, can it? If the speaker has said point blank that he does not have the votes for a clean debt bill, then the president must know that his debt ceiling non-negotiable stance will cause a constitutional crisis. Unless he, too, doesn't believe that a default is a constitutional issue. Ironic, but we know that the 14th Amendment has a clause that says the bills must be paid. Sure, it is tied to the notion of an intransigent block that has seceded, but it is still in and it is a totally viable argument. In the meantime, we know the Oct. 17 date is looking specious given how much Treasury has been taking in from Fannie/Freddie and TARP, and so it would help to know the real date, even as we know that a real date will be the date we get to plus one.