Stockman Warns of “Huge Air Pocket Between Wall Street Fantasy and Economic Reality”
The comments above & below is an edited and abridged synopsis of an article by Tyler Durden
David Stockman talks about the massive storm that is building and about to take over Wall Street. During the discussion, he reveals what he believes is ahead for the stocks in the market and the economy.
The acclaimed author was asked about his concern surrounding a government shutdown. Stockman said, “We’re in the midst of the biggest political train wreck in modern history… There will be no governance in Washington. There will be no tax bill, stimulus or infrastructure.”
Stockman goes on to discuss the expiration of the debt ceiling, the odds of a government shutdown, shocks to the S&P 500 and the threats stocks face in a severe decline, the likelihood of a recession, the Fed shrinking its balance sheet; what would and would not pass in Washington before 2018; and budgetary concerns in Washington.
“The reason I saw a government shutdown,” Stockman said, “is because the debt ceiling is now frozen at $19.8 trillion. They have $150 billion in cash. It is draining away by $2 billion to $3 billion a day. They will be out of cash and there is no majority in the House or the Senate, for that matter, to pass a clean debt ceiling bill.”
Stockman gave a final warning for stocks: Without a clean bill, there will be a fight over the quid pro quo to raise the debt ceiling. That will not end easily. It is likely to end in a complete breakdown, similar to 2011.