asia is waking up - no debt deal - what were these politicos thinking?

by truthbetold Sun Jul 24, 2011 2:01 pm

2 p.m. EST, Sunday. No debt deal. Both sides locked in to their positions.

Asian markets and debt rating agencies could flip the panic button as there is no compromise.

Repubs seem to think they can escape the blame if they pass a bill that contains their version of cuts and no increases in taxes and debt ceiling rise at the last minute. Senate dems and Obama have to refuse to act on a seemingly increased debt ceiling. Then any market fallout could be Obama's and dems.

I hope these pols won't go that far as one event could cause psychological feeling that will kill hundreds of years of US economical superiority. The impact could be felt in Dollar loss of primacy, refusal of buyers of US debt and most importantly belief in US economy. Whether market reacts violently or not, US hegemony over world economy is withdrawn voluntarily. It will be a mortal wound.

by charvaka Sun Jul 24, 2011 2:11 pm

truthbetold wrote:Repubs seem to think they can escape the blame if they pass a bill that contains their version of cuts and no increases in taxes and debt ceiling rise at the last minute. Senate dems and Obama have to refuse to act on a seemingly increased debt ceiling. Then any market fallout could be Obama's and dems.

My feeling is that the GOP leadership has decided to wash their hands off the problem by passing their version of the two-step debt ceiling increase. They want to push this thing to the brink and dare Reid to block it in the Senate or even worse, dare Obama to veto it. If they do that, Obama should veto it anyway, and invoke the 14th Amendment to raise it by executive fiat.

by charvaka Sun Jul 24, 2011 2:12 pm

I pulled out from stocks for the most part on Friday. I am not sure how to play Monday... I am more or less convinced at this point that the markets will open much lower; not sure if I want to get back in or sit it out until Aug 2nd.

by Marathadi-Saamiyaar Sun Jul 24, 2011 2:26 pm

charvaka wrote:I pulled out from stocks for the most part on Friday. I am not sure how to play Monday... I am more or less convinced at this point that the markets will open much lower; not sure if I want to get back in or sit it out until Aug 2nd.

There is one difference between the US drama and the Greece/Spain drama. In Europe the debt is tied up with the strong decades-long socialist/labor policy-benefits. In the US, people reluctantly agree to benefit reduction and selective tax increases. It is now a political stunt - badly miscalculated - by the Republicans against ANY tax increase/reduction in tax breaks.

The market knows it is a matter of time. Heard that the short-term treasury - one that should be sinking - is actually rising, and so does the 30-yr treasuries. also, where will one put the money? Euro with its own debt crisis? fully loaded Asia with its own inflation and corruption ? So the market will go down slowly - but not now but in the long run, bcz the assured safety of US financial system has got a black mark now.

At the end of any economic crisis, it is the congress that gets burnt badly. Looks like the republican idiots never learn.

by truthbetold Sun Jul 24, 2011 2:27 pm

charvaka wrote:I pulled out from stocks for the most part on Friday. I am not sure how to play Monday... I am more or less convinced at this point that the markets will open much lower; not sure if I want to get back in or sit it out until Aug 2nd.

I think political events and market reaction will move faster than I can understand and react. I kept one larger portion of my fodder dry. Short term market reaction could be bad but I am also concerned about long term implications. This may be the Bretten woods agreement of the modern era where US took over from UK the leadership of world economy. (US was virtually running it for a while before that). If a default happens, US is voluntarily signalling end of its unique position in the world economy. The ability to print money as required may be lost. Investor psychology is beyond legal terms, politics, markets and even national economies. We all enjoy the benefits of US's economic power and default is likely to have some impact on individual living standards over time.

by charvaka Sun Jul 24, 2011 2:28 pm

Marathadi-Saamiyaar wrote:also, where will one put the money?

I put mine in gold.

by Hellsangel Sun Jul 24, 2011 2:29 pm

charvaka wrote:
Marathadi-Saamiyaar wrote:also, where will one put the money?
I put mine in gold.

Real gold or paper gold?

by Kris Sun Jul 24, 2011 2:32 pm

2 p.m. EST, Sunday. No debt deal. Both sides locked in to their positions.

>>>> Down to a few hours before Asian markets open. Titanic, anyone?

by Hellsangel Sun Jul 24, 2011 2:35 pm

Marathadi-Saamiyaar wrote:Looks like the republican idiots never learn.

How united are the Democrats to push back?

by charvaka Sun Jul 24, 2011 2:41 pm

Hellsangel wrote:
charvaka wrote:
Marathadi-Saamiyaar wrote:also, where will one put the money?
I put mine in gold.
Real gold or paper gold?

Good point -- paper gold.

by charvaka Sun Jul 24, 2011 2:42 pm

Hellsangel wrote:How united are the Democrats to push back?

United enough to block it in the Senate. And if the GOP is not united enough, to block it in the House as well. After all, the GOP is now split between Wall Street types and Tea Party types.

by truthbetold Sun Jul 24, 2011 2:53 pm

charvaka wrote:
Hellsangel wrote:How united are the Democrats to push back?
United enough to block it in the Senate. And if the GOP is not united enough, to block it in the House as well. After all, the GOP is now split between Wall Street types and Tea Party types.

Dems may not block repub's bill if time is short. They may modify it enough to force repub action. That could put the bill in repub corner in the hot potato game. But this is all so involved, it is prone to errors and convoluted logic. International markets may not be able to digest it as well as wall street.

In terms where can you place the money, Gold is already suggested. Commodities will work ok. Oil goes up if dollar goes down. However none of them will help if national economies are impacted and stumbled. Large cap stocks may be able tot ake the hit better than others. The changes and impact of default are not just short term. A beneficiary of a strong US economy will see long term negative effects over next several months and years.

by charvaka Sun Jul 24, 2011 3:24 pm

truthbetold wrote:
charvaka wrote:
Hellsangel wrote:How united are the Democrats to push back?
United enough to block it in the Senate. And if the GOP is not united enough, to block it in the House as well. After all, the GOP is now split between Wall Street types and Tea Party types.

Dems may not block repub's bill if time is short. They may modify it enough to force repub action. That could put the bill in repub corner in the hot potato

This is why I think Obama should talk up the 14th amendment route out of this. He has a week to lady the ground work fire that and he should start now. The GOP won't even fight it going by the proposals they are coming up with, but they will try to use it against him next year.

by truthbetold Sun Jul 24, 2011 3:45 pm

charvaka wrote:
truthbetold wrote:

Dems may not block repub's bill if time is short. They may modify it enough to force repub action. That could put the bill in repub corner in the hot potato
This is why I think Obama should talk up the 14th amendment route out of this. He has a week to lady the ground work fire that and he should start now. The GOP won't even fight it going by the proposals they are coming up with, but they will try to use it against him next year.

Not sure if Obama is willing to use 14th amendment. I remember reading (but don't bet on my weak memory) in the past few days Obama stating that 14th amendment is not an option. White House also seems to have made similar comments.

The division in washington has gone beyond normal. New normal is get the other guy no matter what.

by Kris Sun Jul 24, 2011 3:46 pm

Boy, I was just reading up on Clinton's suggestion on this. That would be something if Obama invokes it, although looks like there is leeway there. I agree if he is going that route, he needs to start now. There will be the usual challenges and back and forth, but I can't see how the Supreme Court can find against the president's right on this.

by truthbetold Sun Jul 24, 2011 3:48 pm

http://www.deccanchronicle.com/channels/business/market/wall-st-companies-brace-us-default-649

Reuters article on debt crisis status. Their expectation is that a default could cause 10% decline on major indices.

by charvaka Sun Jul 24, 2011 4:18 pm

truthbetold wrote:
Not sure if Obama is willing to use 14th amendment. I remember reading (but don't bet on my weak memory) in the past few days Obama stating that 14th amendment is not an option. White House also seems to have made similar comments.

The division in washington has gone beyond normal. New normal is get the other guy no matter what.

Yes he has said those things but he got the treasury secretary to raise it in the first place so I won't rule it out.

by Marathadi-Saamiyaar Sun Jul 24, 2011 4:19 pm

charvaka wrote:
Hellsangel wrote:
charvaka wrote:
Marathadi-Saamiyaar wrote:also, where will one put the money?
I put mine in gold.
Real gold or paper gold?
Good point -- paper gold.

Most funds wont let you cash out for 1 year without a penalty. Also, you will pay 15 to 20% on any gains.

So hope your gold funds go up by at least 30% over the next 1 year.

Better to buy 24 -carat gold bangles and save the receipts.

by charvaka Sun Jul 24, 2011 8:02 pm

Marathadi-Saamiyaar wrote:Most funds wont let you cash out for 1 year without a penalty. Also, you will pay 15 to 20% on any gains.

So hope your gold funds go up by at least 30% over the next 1 year.

I don't know what you are talking about. I have already bought and sold a gold ETF, without running into the issues you mention. I am not as focused on gold itself, as I am on hedging the dollar risk at this point. For that, the gold ETF seems to be fine.

by Another Brick Mon Jul 25, 2011 5:02 am

Kris wrote:2 p.m. EST, Sunday. No debt deal. Both sides locked in to their positions.

>>>> Down to a few hours before Asian markets open. Titanic, anyone?

fortunately not. senseksi is up by 180 points.

by truthbetold Mon Jul 25, 2011 7:01 am

Another Brick wrote:
Kris wrote:2 p.m. EST, Sunday. No debt deal. Both sides locked in to their positions.

>>>> Down to a few hours before Asian markets open. Titanic, anyone?

fortunately not. senseksi is up by 180 points.

Shangai - 2.96%

All ordinaries - 1.5%

Japan - 0.8%

Japan and China are the biggest foreign debt holders of US debt.

All down.

by harharmahadev Mon Jul 25, 2011 9:49 am

charvaka wrote:
Marathadi-Saamiyaar wrote:also, where will one put the money?
I put mine in gold.

Gold will go up if the debt ceiling isn't raised and govt debt defaults. If the debt ceiling is not raised, gold will drop initially, but will go up in future. It is going to a volatile ride for gold for the next few weeks.....long term though, gold is in a bull trend.

If you are convinced debt ceiling will not be raised, you must buy UUP.

by truthbetold Mon Jul 25, 2011 8:42 pm

harharmahadev wrote:
charvaka wrote:
Marathadi-Saamiyaar wrote:also, where will one put the money?
I put mine in gold.

Gold will go up if the debt ceiling isn't raised and govt debt defaults. If the debt ceiling is not raised, gold will drop initially, but will go up in future. It is going to a volatile ride for gold for the next few weeks.....long term though, gold is in a bull trend.

If you are convinced debt ceiling will not be raised, you must buy UUP.

Wall street seems to think a deal is still possible. One of the commentators mentioned that many big names are not sure what to do prior to deal or post default? If you act early and then politicos come to a deal, market trend will reverse dramatically.

For example, Gold is your protection against default, what will happen if a 4T budget cost cuts with debt ceiling rise? Dollar may gain strengh and Gold may fall precipitously. Of course you can argue the euro debt threat is still out there (Italy , Spain, Portugal, Ireland are still out there). But momentary sentiment, weak gold holders are likely to jump. I am not arguing for or against Gold. Just pointing that there is a risk on either side and investment must take that into account.

by charvaka Mon Jul 25, 2011 8:45 pm

truthbetold wrote:Just pointing that there is a risk on either side and investment must take that into account.

There's no arguing with that. At this point, though, given what's going on both sides of the Atlantic, I think a long position on gold is a good one to have, particularly when you have a bunch of long-term equity positions in your 401k, for example.

by Hellsangel Wed Jul 27, 2011 3:53 pm

Looks like DJIA/S&P/NASADAQ are starting to show nervousness now.

by Marathadi-Saamiyaar Thu Jul 28, 2011 1:07 am

Hellsangel wrote:Looks like DJIA/S&P/NASADAQ are starting to show nervousness now.

Today, I moved a major portion of my retirement funds into money market and inflation-linked bonds.

tomorrow will do a few more transfers.

my hunch is things will shoot up once 'a deal" is reached" in 2 days. But, since the market is near the top it wont go much higher. Ratings will be lowered still, and interest rates will go up, stocks will gradually slide over several weeks - a significant correction will take place reflecting the state of the economy, interest rates, debt, unemployment etc. Right now, the market has no relation to the state of the economy. then comes the election instability. likely some increasing inflation is my guess - rather gyan.

by Kris Thu Jul 28, 2011 1:18 am

This squabbling does not bode well either, deal or no deal, as S&P has said. I think the tea party bunch will go down to the wire and blink, but the GOP has shot itself in the foot and caused economic damage already.I have had problems with Obama, but the GOP being held hostage by the tea partyers shows that they are not ready for prime time in the next election.

by Marathadi-Saamiyaar Thu Jul 28, 2011 1:34 am

Kris wrote:This squabbling does not bode well either, deal or no deal, as S&P has said. I think the tea party bunch will go down to the wire and blink, but the GOP has shot itself in the foot and caused economic damage already.I have had problems with Obama, but the GOP being held hostage by the tea partyers shows that they are not ready for prime time in the next election.

republicans are mostly church going, racist, pro-life, militaristic, rife totting single-digit iq trailer trash citizens brainwashed by rich, money laundering wall street looters.

by Kris Thu Jul 28, 2011 1:39 am

I think these idiots were made use of effectively by the country club set, but the same set is coming bad to haunt them

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