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Debt deal

Discussion in 'Political Discussion' started by Tunescribe, Jul 31, 2011.

  1. Tunescribe

    Tunescribe PatsFans.com Supporter PatsFans.com Supporter

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    #61 Jersey

    I just don't trust these idiots playing political chicken with MY life and MY money. So, should I get out of the stock market tomorrow?
     
  2. Real World

    Real World Moderator Staff Member

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    Nah, the markets will probably do well in the short term.
     
  3. Tunescribe

    Tunescribe PatsFans.com Supporter PatsFans.com Supporter

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    #61 Jersey

    Well, they've slid significantly the last several days because of Washington (worst week in a year), and the morons are still butting heads with default looming. You really think we're on terra firma?
     
    Last edited: Jul 31, 2011
  4. PatsFanInVa

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    All the fat ladies still have to sing today (i.e., the house has to vote for it, after calving off the extreme rightists who don't understand what the debt limit is, and the progressives who just can't believe how bad they got trampled.)

    We've got a new mark for how a minority party in the Senate should behave - you filibuster everything - from last year.

    Now we know how the House should behave, once you have control of it: You threaten to execute the American economy by destroying its credit until you get everything you want (and then good measure complain about that.)

    And now we get to see the Big Fat Commission replicate the whole process in a few months.

    So in the end it was a choice between "Destroy the economy on Tuesday or destroy it a little at a time."

    Oh sorry, right, to your question: your equities should be okay this week... but there's always the House to think about.

    PFnV
     
  5. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    Don't get out of the stock market now, unless you're absolutely going to need the money quite soon. Market investments are generally fairly long-term, and usually those who pull out when the market is low regret it after awhile. The stock market goes up and the stock market goes down, but in the long run it so far has always gone up.
     
  6. PatsFanInVa

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    And there's the added bonus that the market reflects capitalization of businesses... so in the long term if the market doesn't pay off, assuming you're bought into a broad basket of stuff in the market, the wheels have come off and you have to start thinking about how good you are at growing vegetables and the like.

    But in terms of the balance of your portfolio, well, I'm not a guru but what I just saw is that we're withdrawing (cold turkey) every government support of an economy that was barely stumbling out of a recession. That was already gonna happen. Now we're going to look for ways everywhere to cut deeper into government spending -- one example we can discuss w/some distance (b/c most here oppose it) is bloated military spending.

    We're re-creating the 1937 moment, when we got the depression-within-a-depression. And we're doing it without WWII to juice the hell out of government spending. Now, the recession was no depression -- just the closest thing we've ever seen to it.

    Is there a "silver lining" [sic]? Sort of. Bonds did get temporarily rescued, assuming the bill passes the House.

    What I'd expect to happen is the recovery stalls and reverses. More people will be unemployed and those who are unemployed now will find jobs in fewer, not more, cases, because we're withdrawing the public sector from the economy in right-now terms.

    Measured by what it takes to fix the debt right now as soon as we can!!! taking a couple trillion bucks out of the economy over ten years is tepid.

    Measured by what part of the economy is dependent on those dollars, it's going to be significant. Again, dollars aren't in pockets, demand goes south. Nobody's building that next carrier, nobody's running the diner where he eats, etc. etc. etc.

    More people using "do it yourself" versions of retirement savings (IRAs, 401ks,) are going to contribute less in tight economies, many of them withdrawing early because they're unemployed. That's another source of market cap.

    These are just the facts of what happens when government spends money, as it relates to the larger economy and to the markets.

    One piece that might be of value to the investor is that you can invest internationally.

    Now, if the U.S. had defaulted and dragged down the whole world (or if we still do, if the House doesn't pass this bill,) your international investments would get clobbered too. They'll still be affected, but not in as severe or as sudden a way.

    It's all guesswork, after the markets opening up today. Probably the deal gets done, the markets stay happy for a week.

    MAYBE we still get downgraded by the rating agencies, and if so probably it's harder to sell our bonds. That further batters the ability of the general public to borrow, and that further batters demand (housing, autos, education...) But it also presents you with a play on bonds -- so it may (may) make US paper attractive. Possibly the same effect would apply to corporate bonds, given what happens to equities. Commodities/metals? Suuuure, there are appealing aspects to those too.

    I dunno. Ask Patters. As with all other such world-shaking events, it seems to me like you would want the bulk of your assets diversified around as many types of uncorrelated asset classes as possible. There's this big trillion-dollar tranche of further uncertainty hanging over all of us for a few more months. Doesn't seem to me like the market's about to skyrocket.

    But hell, I have no crystal ball. It appears that I will have to go to work all week however, so I better get my buttocks in gear. (Well, it appears that way, but I know I need to get there today LOL)

    PFnV
     
  7. patsfan13

    patsfan13 Hall of Fame Poster PatsFans.com Supporter

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    This was a small down payment on what is needed. We were planning on spending from 40-50T + over the next 10 years, of that we are talking about cutting ~2T, IOW ~4%. This isn't a big given the spending binge and increase in spending we have seen over the past couple of years.

    The house has passed a 2012 budget, will Reid actually pass a budget or punt again and go back to a continuing resolution?


    As to stocks, The reason they went down last week was the downward revision of the GDP numbers there is a very good chance we are going back into a recession, this process started back in Q1.
     
  8. patsfan13

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  9. Tunescribe

    Tunescribe PatsFans.com Supporter PatsFans.com Supporter

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    #61 Jersey

    Last night I froze my market-driven investments for the first time since going in 23 years ago. It's a 10-day freeze that I can shorten or extend. I've never succumbed to market jitters and wouldn't if it was just economic factors playing out. This is a different animal altogether. I truly feel these idiots in Congress are being reckless, irresponsible, and downright dangerous. The all-or-nothing absolutism driving them ideologically is bizarre. I'll likely get back full-in after the deal passes and there's a solid read on the credit-rating fiasco, but we'll see.
     

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