jueves, 17 de octubre de 2013

A government again...

The US Senate cobbled together a last minute deal to reopen the government and raise the debt ceiling last night, narrowly averting a default by the US Government. The yield on the one-month Treasury bill  plunged from 32 basis points (hundredths of a percentage point) on Tuesday to 14 basis points on Wednesday when a deal looked likely. Today, with the deal inked, the yield dropped to 1 basis point, its typical level prior to the latest edition of the budget/debt ceiling crisis.

The deal bought time. It is not a solution. Unless congressional committees have better luck negotiating budget packages than they've had in the past, we'll suffer a replay of what we've just been through early next year. It doesn't bode well for spending in the holiday season.

Here in Mexico the Chamber of Deputies approved the income half of the budget. The PRI found the votes it needed to pass its tax proposals with votes from the PRD.  It's not coincidental that a few days before the vote the federal government announced the creation of a special fund for the PRD-controlled capital city. The business community is not happy with the "tax reform", which increases the cost of being part of the formal economy.

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