#16 Daily Financial News Round Up - Nov 16,2021
What news caught my attention?
The debt ceiling discussion is back. Janet Yellen, the Treasure Secretary, says that the US government could run out of resources hitting the debt ceiling as early as December 15. What is the debt ceiling? The debt ceiling limits the amount of debt that the government can borrow as stipulated by Congress. Once the borrowing amount reaches the limit, the Treasure department can issue more debt only if the lawmakers agree to raise the ceiling limit or suspend the ceiling. What happens if the lawmakers disagree. In other words, what happens if the ceiling limit is not raised or suspended? The government will not meet its debt obligations as the Treasury will run out of emergency funds. Not meeting debt obligations will trigger the default status resulting in a loss of faith in the US financial markets. Stock markets will observe adverse reactions. Foreign investors might want to withdraw their funds from the US financial system. In short, default status could trigger a recession. A lovely metaphor that I once heard was that could summarize what will happen in such a situation is that - "If the US financial markets sneeze, the rest of the world catches a cold."
US authorities recovered $56 million from the BitConnect fraud scheme. They plan to liquidate these assets.
My Takeaways:
The debt ceiling discussion is an ongoing debate similar to the inflation discussion. The lawmakers have no other choice than to raise the debt ceiling limit. If they do not, that would be a huge surprise.
$56 million is the single most significant recovery from cryptocurrency fraud in the US. This recovery signals the possibility of a more prominent role of regulation/government in the future.