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What Are Your Thoughts On The Noise From DC?

Tuesday, July 26, 2011 - 7:46 PM
I decided the best thing to do was . . . nothing. I guess if everything goes to heck in a handbasket, dollars will still be dollars. So, then my wife will think I'm a genious for having so much in cash and CDs and cook me a nice dinner. Otherwise, if nothing major occurs, my wife will think I'm a genious for not having over-reacted, and cook me a nice dinner. Either way, I get a nice dinner.

My daily irritation, however, is with the "default clocks" on the various news channels. Folks, if anyone hasn't figured it out yet, the August 2 date was set to coincide with vacations. Everybody wants to get this "issue" solved before the dog days hit Washington and vacations get interrupted. Or postponed.

The US of A won't default on August 2, August 3, or August 31. It might have to stiff some folks (as California did, with those IOUs) for a time, but they'll survive. If Boeing or other defense contractors don't get checks on time, they'll be happy to wait. They know the check will eventually arrive.

As for government workers, they can expect furloughs, but then (when the funds are there) go back to work with "back pay" for the days they were "furloughed". I.e., extra paid vacation. Watch what happens to the FAA workers recently furloughed for a template. I suspect they'll get their money as if they had been working all along. If so, I wonder if they'll be required to return any unemployment compensation received? What's your guess?

Pardon my cynicism.

Bozo

PS: Was that a rant?
7
BozoBozo137 posts since
Feb 14, 2011
Rep Points: 937
1. Wednesday, July 27, 2011 - 3:24 PM
Hi Bozo,

It has certainly been entertaining to watch the three ring circus in our nation's capitol. I think the clowns (should I say Bozos) in Washington will probably agree on something to avoid default, but the agreement will do nothing to solve our long-term deficit problems. So, the real question is what will the rating agencies do. Will they downgrade US treasuries as they have threatened if we end up with an agreement that doesn't reform entitlement spending. If this happens, what will it mean for our portfolios. I would think it might push rates up and possibly benefit savers with better deposit rates, but who knows, it is really anyone's guess.
1
loulou543 posts since
Aug 3, 2010
Rep Points: 3,394
2. Wednesday, July 27, 2011 - 7:22 PM
Hi Lou:

I suspect the stealth downgrade of US Treasuries is already in progress. You might recall that Bill Gross began bailing from Treasury debt late last year. While he (and I) have no doubt been smarting from the yield decreases since last February, I also suspect the worm has begun to turn. Ask yourself this question: would you loan the US of A a gazillion dollars for 10 years at 3% if you knew inflation would run an equal amount? Your answer would be "yes" only if you had much to lose from American economic instability, i.e., you were a Chinese central banker. The Chinese are our bankers. We can't admit it, but we are mortgaged to Beijing.

Sad but true.

Bozo
2
BozoBozo137 posts since
Feb 14, 2011
Rep Points: 937
3. Saturday, July 30, 2011 - 6:46 AM
Bozo

Riddle me this:

Q:  What is a genious?

A:  A genious is a genius without a spell checker.

 

P.S.  I can't spell either.  Thank God for technology!! 
1
shinobyshinoby9 posts since
Feb 7, 2011
Rep Points: 129
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