With passage of the FY 2011 budget deal done in the House, the Senate will shortly give its approval, President Obama will sign the legislation into law and the US government will be funded through September of this year. 

The debate now moves to the much thornier issue of the debt ceiling, which will likely win House approval only if genuinely substantial cuts for FY 2012 are agreed to by the Democratic-controlled US Senate and the Obama Administration.

To set expectations, the Administration dispatched Treasury Secretary Tim Geithner to talk about what happens next with the press. 

“You see a lot of confidence in markets that the American political system will be able to get on a path [to resolving the fiscal problems],” (Mr. Geithner) told the Financial Times today. “The markets believe that our problems are manageable and our system will solve them. There is no conceivable way that Congress would take the risk [of forcing a default].”

Gillian Tett of the FT asks the obvious question: Do the markets believe Secretary Geithner's patter? Her answer (paraphrased): "they hope he's right, but just in case...." 

Ms. Tett writes:




This strikes us as more or less spot on.  You can read Ms. Tett's full column here.