Author Topic: Possible U.S. government default?  (Read 15921 times)

OzzieandHarriet

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Possible U.S. government default?
« on: October 06, 2013, 11:28:26 AM »
Is there anything we can do to prepare for the worst? Move money out of stocks temporarily?

I am ordinarily a "set it and forget it" saver, and I DON'T watch TV news, but this craziness right now is really scary. We have no plans to tap into our retirement money any time soon (maybe in about 10 years), but this situation seems worse than anything we've seen before. What are people doing who can't afford to lose a big chunk right now?

pom

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Re: Possible U.S. government default?
« Reply #1 on: October 06, 2013, 12:10:06 PM »
I am doing absolutely nothing.

schoenbauer

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Re: Possible U.S. government default?
« Reply #2 on: October 06, 2013, 12:17:37 PM »
specifically those who can not afford to lose a big chunck of money should do: nothing.

keith

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Re: Possible U.S. government default?
« Reply #3 on: October 06, 2013, 04:56:58 PM »
 Stay the course, stick with your investing plan.

dragoncar

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Re: Possible U.S. government default?
« Reply #4 on: October 06, 2013, 06:47:15 PM »
Default can't happen for the US in the way people who are scared of default may think.  It's not an issue I'd worry about

beltim

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Re: Possible U.S. government default?
« Reply #5 on: October 06, 2013, 09:18:21 PM »
Default can't happen for the US in the way people who are scared of default may think.  It's not an issue I'd worry about

What do you mean by default here?  It sure seems like there are too many political leaders all too willing to not do anything about the debt ceiling before it is hit which is a default.

dragoncar

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Re: Possible U.S. government default?
« Reply #6 on: October 06, 2013, 09:56:57 PM »
Default can't happen for the US in the way people who are scared of default may think.  It's not an issue I'd worry about

What do you mean by default here?  It sure seems like there are too many political leaders all too willing to not do anything about the debt ceiling before it is hit which is a default.

I mean catastrophic default - there may be an outside chance we won't raise the debt ceiling (I personally believe that chance is almost zero), but even if we didn't, debt service would likely be simply delayed not abandoned.

In other words, it's not like the economy will implode if congress gets their shit together a day late.

GreenGuava

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Re: Possible U.S. government default?
« Reply #7 on: October 07, 2013, 08:44:49 AM »
Is there anything we can do to prepare for the worst? Move money out of stocks temporarily?

Whenever you think of selling your stocks or bonds for a reason that came out of the news (or other public source of information), ask yourself:  what do you know about the situation that the professionals who follow the stock market for 40+ hours a week, and have done so for years, don't know about it?

If the answer is "nothing," then the information you're acting on is already priced in - selling now won't help.

Ottawa

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Re: Possible U.S. government default?
« Reply #8 on: October 07, 2013, 09:39:17 AM »
Default can't happen for the US in the way people who are scared of default may think.  It's not an issue I'd worry about

Agreed...just another small undulation on a relentless upward trajectory.   Also...big difference between can't pay off debt and won't pay off debts...

odput

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Re: Possible U.S. government default?
« Reply #9 on: October 07, 2013, 10:59:59 AM »
We have no plans to tap into our retirement money any time soon (maybe in about 10 years)

This gives you your answer.  If you have no need for the money right now, the correct answer is do nothing with the money you have already invested, and if the market crashes, invest MORE.

Stocks are only really worth money when you sell them, so as long as you don't sell during the pandemonium (if there turns out to be any), you will find that you will come out quite far ahead of the curve by reinvesting the dividends they pay out and keeping a level head.

smedleyb

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Re: Possible U.S. government default?
« Reply #10 on: October 07, 2013, 11:44:31 AM »
Default can't happen for the US in the way people who are scared of default may think.  It's not an issue I'd worry about

What would the financial fall out be if Uncle Sam missed a bond payment?  Since U.S. treasuries are the bedrock of the global financial system, I shudder to think of the possible ramifications.  Of course diverting funds to pay debt before social services (Social Security, etc.) is always an option and likely the first line of defense.

daverobev

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The Financial Lexicon

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Re: Possible U.S. government default?
« Reply #12 on: October 07, 2013, 08:26:24 PM »
@smedleyb,

The consequences would be catastrophic.  The shadow banking system/swaps market/derivatives markets would implode, taking everything else with it.  The fact that the media is ignoring the rollover risk to maturing debt is irresponsible.  Yes, the U.S. can figure out how to make interest payments on the debt.  But there is no chance the U.S. will be able to pay off maturing debt as it comes due and institutions decide not to roll over the debt (as some told Sec. Geithner in 2011 they wouldn't). 

There is $441 billion of debt maturing between October 24 and November 15 of this year.  If won't take a whole lot of people owning that debt to decide they don't want to roll it over, instead demanding repayment of principal (which Treasury historically pays by issuing new debt), to cause a default. 

Regards,

The Financial Lexicon
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Jwesleym

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Re: Possible U.S. government default?
« Reply #13 on: October 07, 2013, 09:03:47 PM »
Should I use some of my emergency funds to buy index funds when if the market crashes? I know we normally don't time the market, but would it be worth it?

smedleyb

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Re: Possible U.S. government default?
« Reply #14 on: October 07, 2013, 09:45:05 PM »
@smedleyb,

The consequences would be catastrophic.  The shadow banking system/swaps market/derivatives markets would implode, taking everything else with it.  The fact that the media is ignoring the rollover risk to maturing debt is irresponsible.  Yes, the U.S. can figure out how to make interest payments on the debt.  But there is no chance the U.S. will be able to pay off maturing debt as it comes due and institutions decide not to roll over the debt (as some told Sec. Geithner in 2011 they wouldn't). 

There is $441 billion of debt maturing between October 24 and November 15 of this year.  If won't take a whole lot of people owning that debt to decide they don't want to roll it over, instead demanding repayment of principal (which Treasury historically pays by issuing new debt), to cause a default.

In other words, it would make the Lehman fiasco look like a tempest in teapot. 

When shit hit the fan in 2008-2009, there was a flight to safety, i.e., U.S. treasuries.   What happens when the markets no longer view treasuries as safe?  What happens when the lifeguards of the global financial system can't stay afloat themselves?   

Yes, there appears to be unanimity among the pros that an agreement will be reached on the 10th hour, and by next Monday markets will spike and yields will collapse when the deal gets done.  Political theater.

But I think each act of theater extracts a price on our stature in the world, and contributes to a growing perception that we are no longer in control and that congressmen and women twiddle their thumbs as Washington burns.  In my estimation there is no doubt at some point it will no longer be a question of if such behavior is detrimental to our financial health (think higher borrowing costs), but when


smedleyb

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Re: Possible U.S. government default?
« Reply #15 on: October 07, 2013, 10:11:15 PM »
Quote
Debt limit breach no big deal, some GOP lawmakers say


...."I will hear language like, 'Well, we are heading toward the debt ceiling and you are going to default.' Anyone that says that is looking you in the eyes and lying to you, either that or they don't own a calculator," Rep. David Schweikert, R-Ariz., said in a House debate Friday.

And Rep. Ted Yoho, R-Fla., even argues that reaching the debt limit could help the economy, by showing the world the U.S. is serious about its debt problem. "I think, personally, it would bring stability to the world markets," he told The Washington Post Monday

http://www.usatoday.com/story/news/politics/2013/10/07/debt-limit-denial/2937087/

I think Rep. Ted Yahoo needs to take a basic economics and finance class.  I'm not a political partisan and find stupidity equally distributed across the ideological spectrum, but it's this kind of talk -- based on a warm and fuzzy personal feeling the congressman has -- that I find ridiculous coming from an elected leader.

Any bets that when Ted Yoho is not practicing hocu pocus economics, he's taking in the sights at the Creationist Museum?

The Financial Lexicon

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Re: Possible U.S. government default?
« Reply #16 on: October 08, 2013, 01:53:59 AM »
Here's my take on what would happen to Treasury yields if there were a default:  Initially yields would spike across the entire Treasury curve.  How much is anyone's guess.  On the long end, I could envision a move in the 30-year to the 4.75% to 5% range and the 10-year to the 3.75% to 4% range.  There would quickly be an inversion at the front end of the curve and the longer end of the curve would settle down very quickly as Congress, completely horrified by the consequences of what was allowed to happen, realizes it made a big mistake and works to correct it.  In the end, bondholders would be made whole (not sure how money markets that broke the buck would handle things), but it would not change the effects to the markets (except the Treasury market).  As soon as the possibility of a Treasury default becomes a reality, Treasuries (especially bills), which are currently a major form of collateral in the world's financial system will be viewed and priced (from a haircut perspective) differently.  It would cause so much havoc in the shadow banking system/swaps markets/derivatives markets that major margin calls would work their way through the financial system.  Stocks, commodities (except gold and maybe silver), and corporate and muni bonds would all sell off dramatically.  I don't know what plan the Fed would come up with to try to provide liquidity to the markets.  I suspect the Fed might be forced to put an explicit cap on Treasury rates (saying it would buy every single Treasury above a certain yield).

As all this is happening, a completely confusing thing (to the financial press) will occur.  Treasury yields will start to decline, and decline in a dramatic way.  This will occur because at the end of the day, it will still take time to usher in a new reserve currency (the reserve currency needs to be backed by an extremely liquid and deep bond market) and Treasuries, which will still be the major form of collateral in the world's financial system will be needed more than ever as the selloff in other assets intensifies.  Plus, there will likely be collateral haircuts applied to Treasuries (because of the initial default, which makes people realize that a default actually can happen), and those haircuts will only intensify the demand for Treasuries as more will need to be purchased to satisfy the same level of collateral needs that used to require purchasing fewer Treasuries.

My apologies for the run-ons and at times not clearly presented thoughts.  It's late, and I'm off to bed.

Regards,

The Financial Lexicon
Author of Income Investing Insider

dragoncar

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Re: Possible U.S. government default?
« Reply #17 on: October 08, 2013, 02:00:18 AM »
Here's my take on what would happen to Treasury yields if there were a default:  Initially yields would spike across the entire Treasury curve.  How much is anyone's guess.  On the long end, I could envision a move in the 30-year to the 4.75% to 5% range and the 10-year to the 3.75% to 4% range.  There would quickly be an inversion at the front end of the curve and the longer end of the curve would settle down very quickly as Congress, completely horrified by the consequences of what was allowed to happen, realizes it made a big mistake and works to correct it.  In the end, bondholders would be made whole (not sure how money markets that broke the buck would handle things), but it would not change the effects to the markets (except the Treasury market).  As soon as the possibility of a Treasury default becomes a reality, Treasuries (especially bills), which are currently a major form of collateral in the world's financial system will be viewed and priced (from a haircut perspective) differently.  It would cause so much havoc in the shadow banking system/swaps markets/derivatives markets that major margin calls would work their way through the financial system.  Stocks, commodities (except gold and maybe silver), and corporate and muni bonds would all sell off dramatically.  I don't know what plan the Fed would come up with to try to provide liquidity to the markets.  I suspect the Fed might be forced to put an explicit cap on Treasury rates (saying it would buy every single Treasury above a certain yield).

As all this is happening, a completely confusing thing (to the financial press) will occur.  Treasury yields will start to decline, and decline in a dramatic way.  This will occur because at the end of the day, it will still take time to usher in a new reserve currency (the reserve currency needs to be backed by an extremely liquid and deep bond market) and Treasuries, which will still be the major form of collateral in the world's financial system will be needed more than ever as the selloff in other assets intensifies.  Plus, there will likely be collateral haircuts applied to Treasuries (because of the initial default, which makes people realize that a default actually can happen), and those haircuts will only intensify the demand for Treasuries as more will need to be purchased to satisfy the same level of collateral needs that used to require purchasing fewer Treasuries.

My apologies for the run-ons and at times not clearly presented thoughts.  It's late, and I'm off to bed.

Regards,

The Financial Lexicon
Author of Income Investing Insider

I like your analysis, but I'm not sure how this lines up with your earlier statement that the results would be "catastrophic".   Maybe we just have different interpretations of that word.

The Financial Lexicon

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Re: Possible U.S. government default?
« Reply #18 on: October 08, 2013, 08:23:27 AM »
Let me clarify my definition of catastrophic:  credit markets completely freeze, massive amounts of corporations fail, stock market falls 50%, corporate spreads widen dramatically raising borrowing costs in a major way (I've already addressed borrowing costs for the U.S. Treasury, which will be different than corporate borrowing costs), huge layoffs, banks failing, and probably other things I'm not thinking of.

The reason all this would happen (and it doesn't happen in one day, just like Lehman's consequences didn't happen in one day...it actually took a few weeks after Lehman went down for things to really get bad in the financial markets that most Americans follow....behind the scenes things were going bad almost immediately) is that U.S. Treasuries are at the bottom of today's Exter's pyramid....gold may reclaim that position after a default, but until that time, Treasuries occupy it.

I still have a hard time believing it would be allowed to happen.  But each day we get closer, the more real the possibility becomes.

Regards,

Ottawa

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Re: Possible U.S. government default?
« Reply #19 on: October 08, 2013, 08:41:29 AM »
There is no way that a 'catastrophic' default would be allowed to happen.  I think that speculating that it would is a bit doomsday.  I don't mind it being outlined in a hypothetical manner...however, this is the sort of stuff that causes needless 'panic' and creates a wet dream for the CNN's (and others) of the world...fear sells. 

We all know that an unmonitored asteroid could collide with the earth at any time and cause catastrophic damage.  While this is certainly within the Circle of Concern for some people (not mine) it is not in the Circle of Control for ANYONE.  So, spend no more time worrying about unmonitored asteroid strikes.

Likewise, a catastrophic default is not something I concern myself with.  Since the likelihood of a default happening is extremely remote and the potential outfall terrible, people tend to make dumb investment decisions...like selling - and missing the swift upward movement that will occur after the political posturing suddenly resolves (timeline unknown)...thus a mistimed market play...which is why individual investors cannot become emotional with this kind of news crap...and should not attempt to make investment decisions other than on a predetermined timeline...

Frankies Girl

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Re: Possible U.S. government default?
« Reply #20 on: October 08, 2013, 10:19:12 AM »
I am being (mildly) stupid with some market timing in that I was getting ready to use a large amount of money (150K) to buy into the total stock market index, but then this silly pissing contest started... so I am waiting a bit longer to see just how low it can go before putting the money into the market. Even if I miss the upward swing once this resolves, I'll still probably get a "discounted" price on the purchase compared to when I was originally planning on investing.

But I'm not selling off anything and not freaking out as I do think it is highly likely that they will eventually stop screwing around and pointing fingers at each other before we hit the debt ceiling deadline.


The Financial Lexicon

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Re: Possible U.S. government default?
« Reply #21 on: October 08, 2013, 11:16:56 AM »
Well I'm not making any portfolio moves besides getting my money out of money markets until after the air cleared.  But it is far from doomsday to outline what will happen if Congress doesn't take certain actions in just nine days. 

Have you seen what the 1 month TBill is doing?  It's now trading at the highest yield in 5 years, it's inverted to LIBOR, and is essentially flat with the 2-year.  Perhaps someone should tell the institutions selling that TBill because they believe there is a realistic chance of the default that their selling is foolish and doomsdayish.

The Financial Lexicon

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Re: Possible U.S. government default?
« Reply #22 on: October 08, 2013, 11:21:07 AM »
Actually, I also added a new equity REIT preferred in recent days, so I did make that move as well.  And I did just get pitched a pretty awesome real estate deal that I will need to fund by selling something else....and that something else is Treasuries.  Even if they don't default, I am so disgusted with the political posturing that selling Treasuries to fund another position seems like an appropriate thing to do.

beltim

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Re: Possible U.S. government default?
« Reply #23 on: October 08, 2013, 11:50:43 AM »
A one month treasury bill now yields 0.3%. About a quarter of a percent more than a three-month. Financial markets are taking very seriously the possibility of disruptions in investment markets caused by not having a debt ceiling agreement.

smedleyb

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Re: Possible U.S. government default?
« Reply #24 on: October 08, 2013, 06:23:15 PM »
A one month treasury bill now yields 0.3%. About a quarter of a percent more than a three-month. Financial markets are taking very seriously the possibility of disruptions in investment markets caused by not having a debt ceiling agreement.

But why are 10 year rates barely budging, and in fact look coiled to fall? 

LF, feel free to share any insights.

KingCoin

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Re: Possible U.S. government default?
« Reply #25 on: October 08, 2013, 06:34:51 PM »
A one month treasury bill now yields 0.3%. About a quarter of a percent more than a three-month. Financial markets are taking very seriously the possibility of disruptions in investment markets caused by not having a debt ceiling agreement.

But why are 10 year rates barely budging, and in fact look coiled to fall? 

LF, feel free to share any insights.

A default will much more dramatically affect short term notes (whose effective interest rate will go to 0 after maturity during default) than 10yr bonds (which will simply trade with the expectation that missed coupon payments will be made whole later).  Also, that duration on 1mo paper is so low that a 30bp move in rates doesn't really affect the price in any way that approaches meaningful. The 1mo note market and 10yr bond market are really different animals for different investors.


smedleyb

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Re: Possible U.S. government default?
« Reply #26 on: October 08, 2013, 06:42:14 PM »
A one month treasury bill now yields 0.3%. About a quarter of a percent more than a three-month. Financial markets are taking very seriously the possibility of disruptions in investment markets caused by not having a debt ceiling agreement.

But why are 10 year rates barely budging, and in fact look coiled to fall? 

LF, feel free to share any insights.

A default will much more dramatically affect short term notes (whose effective interest rate will go to 0 after maturity during default) than 10yr bonds (which will simply trade with the expectation that missed coupon payments will be made whole later).  Also, that duration on 1mo paper is so low that a 30bp move in rates doesn't really affect the price in any way that approaches meaningful. The 1mo note market and 10yr bond market are really different animals for different investors.

I definitely get that.  Thanks King.  Always good stuff.


PeachFuzzInVA

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Re: Possible U.S. government default?
« Reply #27 on: October 10, 2013, 06:19:09 PM »
Coming from someone who sincerely believes we're in the beginning stages of a currency crisis, I will tell you that we have already defaulted on our debt. Not in the sense that we aren't paying it, that will never happen. We've defaulted in the sense that we're monetizing our debt. In layman's terms, we're printing a bunch of fucking money to pay our bills. What does it mean to you and me? Absolutely nothing. In spite of my Austrian beliefs, I still invest pretty much the same as anyone else here does. If you're invested in good companies, those good companies will still be good companies regardless of what our world's reserve currency is.

btw I think this is my first post, I've been lurking for a few weeks now. Hi everybody!

daverobev

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Re: Possible U.S. government default?
« Reply #28 on: October 10, 2013, 07:07:12 PM »
Coming from someone who sincerely believes we're in the beginning stages of a currency crisis, I will tell you that we have already defaulted on our debt. Not in the sense that we aren't paying it, that will never happen. We've defaulted in the sense that we're monetizing our debt. In layman's terms, we're printing a bunch of fucking money to pay our bills. What does it mean to you and me? Absolutely nothing. In spite of my Austrian beliefs, I still invest pretty much the same as anyone else here does. If you're invested in good companies, those good companies will still be good companies regardless of what our world's reserve currency is.

btw I think this is my first post, I've been lurking for a few weeks now. Hi everybody!

Um.. no? Default means what it means - not paying your debt. If you owe $100, and you are able to create $100 to pay that debt and proceed to do so - the debt is still paid. That's just how it works.

Now, I'm not saying printing money doesn't have side effects! It does! Who knows where the US$ is headed. But if you pay your debts, it's not default.

PeachFuzzInVA

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Re: Possible U.S. government default?
« Reply #29 on: October 11, 2013, 04:48:27 AM »
Coming from someone who sincerely believes we're in the beginning stages of a currency crisis, I will tell you that we have already defaulted on our debt. Not in the sense that we aren't paying it, that will never happen. We've defaulted in the sense that we're monetizing our debt. In layman's terms, we're printing a bunch of fucking money to pay our bills. What does it mean to you and me? Absolutely nothing. In spite of my Austrian beliefs, I still invest pretty much the same as anyone else here does. If you're invested in good companies, those good companies will still be good companies regardless of what our world's reserve currency is.

btw I think this is my first post, I've been lurking for a few weeks now. Hi everybody!

Um.. no? Default means what it means - not paying your debt. If you owe $100, and you are able to create $100 to pay that debt and proceed to do so - the debt is still paid. That's just how it works.

Now, I'm not saying printing money doesn't have side effects! It does! Who knows where the US$ is headed. But if you pay your debts, it's not default.

By paying off debt with money that's clearly not worth what it was when we borrowed it, we are defaulting, just not in the every day sense of the word the way you're used to hearing it. I think you're wrong, you think I'm wrong. This forum isn't the place to debate Hayek vs Keynes. We'll have to agree to disagree on semantics.

daverobev

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Re: Possible U.S. government default?
« Reply #30 on: October 11, 2013, 08:59:39 AM »
Mmm, but it's the English language. https://en.wikipedia.org/wiki/Default_%28finance%29

KingCoin

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Re: Possible U.S. government default?
« Reply #31 on: October 11, 2013, 09:24:00 AM »
By paying off debt with money that's clearly not worth what it was when we borrowed it, we are defaulting, just not in the every day sense of the word the way you're used to hearing it.

Inflation is a persistent and ongoing phenomenon. So, by your definition, all debt issued by governments, corporations, and individuals is in a permanent state of default (I guess with the exception of Yen denominated debt). I think we can agree that that's a fairly suspect claim, however you want to define things.

When we buy debt, we receive an interest rate that compensates us for inflation and default risk. It's up to every investor to decide whether they're being compensated fairly or not and include bonds in their portfolio accordingly. This isn't some con-game played by the government. Fixed income investors know the score, and know that they're negatively exposed to inflation.

No one has crystal ball so we hold diverse portfolios of assets. This is an especially helpful practice for Austrians who have generally (though of course not without exception) believed that hyperinflation is just around the corner for the last 5 years, as well as having been max bearish on stocks, and max bullish on gold. If you've followed the trading prescriptions over at ZeroHedge, you've probably gone broke four times over.

Brandon Curtis

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Re: Possible U.S. government default?
« Reply #32 on: October 11, 2013, 11:49:23 AM »
Yes, there could be short-term consequences of an impressive magnitude.

Yes, we can stand around and try to predict them (i.e. speculate) until we're blue in the face.

Yes, it's a huge waste of time and energy we'll probably be wrong.

For the long-term investor, events like these just aren't relevant.  Warren Buffett once said: "I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years."  He is a pretty smart dude.

Stay the course.  Don't touch nothin'.

J

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Re: Possible U.S. government default?
« Reply #33 on: October 13, 2013, 03:46:29 PM »
Don't try to predict or time the market.  You will lose money.

I see two likely scenarios here.  First, massive market crash; yay, I get to buy more at a lower price.  Second, small to moderate market rally when the panic passes; yay, my investments made great returns.

Or, for that matter, nothing major may happen at all; business as usual.

Either way, I'll continue doing exactly what I'm doing: investing the vast majority of my income at a fixed rate, dollar-cost averaging, and not panicking.

dragoncar

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Re: Possible U.S. government default?
« Reply #34 on: October 13, 2013, 09:01:29 PM »
It you are really scared, you could buy puts... But perhaps those are overpriced at the moment.

beltim

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Re: Possible U.S. government default?
« Reply #35 on: October 13, 2013, 09:40:14 PM »
I bought some puts last week.  They definitely weren't too expensive then.  They may or may not be when the markets open tomorrow - it'll be interesting to see!

Aloysius_Poutine

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Re: Possible U.S. government default?
« Reply #36 on: October 13, 2013, 10:12:02 PM »
If things start tanking dramatically I'm gonna BUY BUY BUY!!! Why the hell wouldn't you?

daverobev

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Re: Possible U.S. government default?
« Reply #37 on: October 14, 2013, 05:03:40 PM »
Thing is, if everyone is expecting a crash, there won't be one...

OzzieandHarriet

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Re: Possible U.S. government default?
« Reply #38 on: October 15, 2013, 05:34:49 PM »
So really, no one is concerned?

My husband's workplace is not federal government but depends on it for money. They were told today that they are fully funded until November (that's next month!), but if this thing drags on, who knows?

We have enough cash in the bank to last for a good long time (especially if we access some retirement accounts), so it's not a hair on fire emergency. But many many others are not in the same boat.

The thing is, this is a completely manufactured crisis -- that's what's so sick about it.

sol

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Re: Possible U.S. government default?
« Reply #39 on: October 15, 2013, 05:45:45 PM »
The thing is, this is a completely manufactured crisis -- that's what's so sick about it.

Not only is this particular crisis sickening, the whole process disturbs me.  In the best case scenario, the tea partiers completely fold and the government is reopened and the debt ceiling is raised.  We get a few months of negotiations about how to balance the budget, and when they refuse to accept a 7:1 ratio of budget cuts to new taxes, we're right back where we started come Q1 2014.

Even if this all goes away, it only buys us three months.  No one is talking about actually fixing this problem, and no on is admitting that taking the economy hostage is not a productive way to enact your legislative agenda.  So we'll be doing this every few months for the foreseeable future.

oldtoyota

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Re: Possible U.S. government default?
« Reply #40 on: October 15, 2013, 05:54:45 PM »
Yep. 100% manufactured by the Tea Party. I just saw--with growing sickness--the video of Rep Van Hollen speaking to Jason Chavetz. They use a lot of parliamentary lingo. The bottom line is that the Tea Party enacted a rule that allows only the speaker to open the government.

"On the House floor, Congressman Chris Van Hollen decided to get a clarification on the rules of the shutdown. Apparently, normally any congressperson can call for a vote on any bill at any time. But just before the shutdown happened, the GOP quietly passed a measure that said only House Majority Leader Eric Cantor can call for the shutdown to end (unless he gives a designee permission). Not even the most senior GOP congressperson, Speaker of the House John Boehner, is allowed to do it, without permission from his own guy."

http://www.upworthy.com/congress-did-something-so-spectacularly-creepy-that-its-too-unbelievable-to-make-up?c=ufb1

So, Eric Cantor owns us, basically.


Evidently, South Dakota cattle ranchers are not getting bailed out. Correct me if I am wrong, but they supported the folks who shut down the government...which is, in turn, going to slow down their payments to replace cattle.

"Ranchers who lost cattle will be able to dispose of the carcasses for free at several pits being dug in Pennington County, according to the county's Emergency Operations Center. The county is coordinating the effort because the U.S. Farm Service Agency is closed during the shutdown.

Livestock owners are encouraged to document all animal losses with pictures, vaccination and hauling receipts in case disaster payments are available in the future.

South Dakota Farmers Union president Doug Sombke said that even if the federal government was open and Congress could reach a compromise on a new farm bill, it would take months to implement the Livestock Indemnity Program."

http://www.usatoday.com/story/weather/2013/10/14/south-dakota-ranchers-reeling-from-cattle-losses/2980793/


brewer12345

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Re: Possible U.S. government default?
« Reply #41 on: October 15, 2013, 05:56:19 PM »
The thing is, this is a completely manufactured crisis -- that's what's so sick about it.

Not only is this particular crisis sickening, the whole process disturbs me.  In the best case scenario, the tea partiers completely fold and the government is reopened and the debt ceiling is raised.  We get a few months of negotiations about how to balance the budget, and when they refuse to accept a 7:1 ratio of budget cuts to new taxes, we're right back where we started come Q1 2014.

Even if this all goes away, it only buys us three months.  No one is talking about actually fixing this problem, and no on is admitting that taking the economy hostage is not a productive way to enact your legislative agenda.  So we'll be doing this every few months for the foreseeable future.

No, in the best case scenario the teabaggers all get voted out of office at the earliest possible opportunity, get replaced by sensible people of whatever party, and Boehner gets shot out a cannon in favor of a speaker with the stones to do what is necessary for the good of the country.

Now I have to go feed my pet unicorn.

oldtoyota

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Re: Possible U.S. government default?
« Reply #42 on: October 15, 2013, 06:36:59 PM »
The thing is, this is a completely manufactured crisis -- that's what's so sick about it.

Not only is this particular crisis sickening, the whole process disturbs me.  In the best case scenario, the tea partiers completely fold and the government is reopened and the debt ceiling is raised.  We get a few months of negotiations about how to balance the budget, and when they refuse to accept a 7:1 ratio of budget cuts to new taxes, we're right back where we started come Q1 2014.

Even if this all goes away, it only buys us three months.  No one is talking about actually fixing this problem, and no on is admitting that taking the economy hostage is not a productive way to enact your legislative agenda.  So we'll be doing this every few months for the foreseeable future.

No, in the best case scenario the teabaggers all get voted out of office at the earliest possible opportunity, get replaced by sensible people of whatever party, and Boehner gets shot out a cannon in favor of a speaker with the stones to do what is necessary for the good of the country.

Now I have to go feed my pet unicorn.

Agreed. Since the tea partiers are backed by two well-known billionaires, I don't see that happening.

beltim

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Re: Possible U.S. government default?
« Reply #43 on: October 15, 2013, 06:41:03 PM »

Agreed. Since the tea partiers are backed by two well-known billionaires, I don't see that happening.

Even they think Congress is insane: http://thinkprogress.org/politics/2013/10/09/2756941/right-wing-abandon-debt-limit-hostage-strategy/

oldtoyota

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Re: Possible U.S. government default?
« Reply #44 on: October 15, 2013, 06:43:23 PM »

Agreed. Since the tea partiers are backed by two well-known billionaires, I don't see that happening.

Even they think Congress is insane: http://thinkprogress.org/politics/2013/10/09/2756941/right-wing-abandon-debt-limit-hostage-strategy/

As in they created Frankenstein and can't control him? Someone call an ALEC meeting, quick!

AdrianM

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Re: Possible U.S. government default?
« Reply #45 on: October 15, 2013, 11:31:16 PM »
The US is going to Default one way or the other.

The sooner the better so we call all just move on past this social experiment in fiat currency.

Republicans and Democrats are just two sides of the same coin.
The only difference is that Republicans want to waste the money on the military industrial complex.
Democrats want to waste it on social welfare.

Both spend more than earn through taxes.
So the only difference is who gets to suckle at the teat of their largess.

http://www.theguardian.com/business/2013/oct/07/australia-us-government-default-economy?CMP=dis_829
« Last Edit: October 16, 2013, 05:13:53 AM by AdrianM »

OzzieandHarriet

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Re: Possible U.S. government default?
« Reply #46 on: October 16, 2013, 08:47:26 AM »
The US is going to Default one way or the other.

The sooner the better so we call all just move on past this social experiment in fiat currency.

Republicans and Democrats are just two sides of the same coin.
The only difference is that Republicans want to waste the money on the military industrial complex.
Democrats want to waste it on social welfare.

Both spend more than earn through taxes.
So the only difference is who gets to suckle at the teat of their largess.

http://www.theguardian.com/business/2013/oct/07/australia-us-government-default-economy?CMP=dis_829

I do not agree with this type of equivalence analysis. The Democrats do NOT equal the Republicans. "Social welfare" spending (and by that, do you also mean all public spending, the stuff that keeps things clean, safe, and working?) does NOT equal "military industrial complex" spending. In fact, a lot of the latter is part of the former. The "largess" is what we all pay to have a civilized society.

A lot of the budget problem would be solved if taxes were raised a small amount on the wealthiest and on corporations.

KulshanGirl

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Re: Possible U.S. government default?
« Reply #47 on: October 16, 2013, 09:48:55 AM »
I saw a good comment on a recent article that the Republicans are going to drown the baby to prove that we need a fence around the pool.  I think that about sums it up.

dragoncar

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AdrianM

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Re: Possible U.S. government default?
« Reply #49 on: October 16, 2013, 03:53:03 PM »
I do not agree with this type of equivalence analysis. The Democrats do NOT equal the Republicans. "Social welfare" spending (and by that, do you also mean all public spending, the stuff that keeps things clean, safe, and working?) does NOT equal "military industrial complex" spending. In fact, a lot of the latter is part of the former.

Keep telling your self that. It may one day come true. Both overspend.

The "largess" is what we all pay to have a civilized society.
No you pay because you have been taught that that is what you must do.
America survived for how long before the invention of big government?
and was a shinning beacon of success to the rest of the world.

A lot of the budget problem would be solved if taxes were raised a small amount on the wealthiest and on corporations.

You forgot the other half of the equation. Spend less