Eric Cantor, the Debt Ceiling, and his Conflict of Interest

Last week during the party of six debt ceiling talks Eric Cantor abruptly left the negotiations. Since then, there have been real fears that a compromise will not be made, which economists are predicting could cause our economy to sink into a depression.

This week it has come to light that Eric Cantor has a very big conflict of interest. It seems he is invested in a fund that stands to make profits if the debt ceiling does not get raised. 

Cantor is invested in a fund called ProShares Trust Ultrashort 20+ Year Treasury EFT. Per the Washington Street Journal, they reported “the fund aggressively “shorts” long-term U.S. Treasury bonds, meaning that it performs well when U.S. debt is undesirable (A short is when the trader hopes to profit from the decline in the value of an asset.).”

Jonathan Easley of Salon reported:  

The fund hasn’t significantly spiked yet because many investors believe Congress will eventually raise the debt ceiling. However, since Cantor abruptly called off debt ceiling negotiations last Thursday, the fund is up 3.3%. Even if an agreement is ultimately reached before Aug. 2, the fund could continue to benefit between now and then from the uncertainty. (One tactic some speculators are using is to “trade the debt ceiling debate” — that is, to place short-term bets on prices as they fluctuate with the news out of Washington.)

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3 responses to “Eric Cantor, the Debt Ceiling, and his Conflict of Interest

  1. As a former US Treasury debt trader, I have some insights on the subject.

    I wouldn’t say this is a “very big” conflict of interest as the reported amount of his investment is only 15k, but it is a conflict of interest.

    Refusing to raise the debt ceiling is one way to possibly make money with this investment strategy, but it is not the only way. Raising the debt ceiling could also have the same effect as borrowing more than you can pay back is also a credit concern. Cantor could just go along with the proposed debt ceiling hikes and confidence in US debt could go down just as fast.

    I am certainly not saying which approach will benefit him the most as I am not a genie nor do I know the intent of his investment (long or short term).

    This could even be a play on a future rise in the inflation rate.

  2. SO HE IS LIKE A SNAKE IN THE GRASS. iT IS SO SAD THAT THE PEOPLE WE PUT INTO OFFICE OR MORE INTERESTED IN GETTING RICHER THAN HELPING THE PEOPLE OF THIS GRAND COUNTRY. I CAN’T WAIT UNTIL ELECTION TIME ROLLS AROUND AND HOPEFULLY WE CAN PUT THIS COUNTRY OF OURS BACK “IN GOD WE TRUST.” GOD BLESS AMERICA

  3. Pingback: The Precipice Of Economic Failure | The Blue States

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