Best of the Week
Most Popular
1.Bitcoin War Begins – Bitcoin Cash Rises 50% While Bitcoin Drops $1,000 In 24 Hours - Jeff_Berwick
2.Fragile Stock Market Bull in a China Shop -James_Quinn
3.Sheffield Leafy Suburbs Tree Felling's Triggering House Prices CRASH! - Nadeem_Walayat
4.Bank of England Hikes UK Interest Rates 100%, Reversing BREXIT PANIC Cut! - Nadeem_Walayat
5.Government Finances and Gold - Cautionary Tale told in Four Charts - Michael_J_Kosares
6.Gold Stocks Winter Rally - Zeal_LLC
7.The Stock Market- From Here to Infinity? - Plunger
8.Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - MarketsToday
9.Electronic Gold: The Deep State’s Corrupt Threat to Human Prosperity and Freedom - Stewart_Dougherty
10.Finally, The Fall Of The House Of Saud - Jim_Willie_CB
Last 7 days
Who Knows What Will Black Gold Do in Coming Week? - 18th Dec 17
Gold’s Shooting Star and Its Implications - 18th Dec 17
UK Used Car Christmas From Dealers Buying Discount Sales Bargains - 18th Dec 17
How To Play The 2018 Cannabis Boom - 18th Dec 17
Should You Consider Investing/ Buying Gold or Bitcoin? - 18th Dec 17
Gold EFPs: Absolute Proof that the Paper Gold Price is a Fraud - 18th Dec 17
Gold – Technical Obfuscation, Fundamentals, Predictions - 18th Dec 17
Stock Market Final Thrust is Likely - 17th Dec 17
Never Mind Tea Leaves, Here’s a Strong Signal from the Economic Dashboard - 17th Dec 17
As Bitcoin Breaks All-Time Highs Near $18,000 Its Future Has Never Been So Uncertain - 17th Dec 17
Best Time / Month to Buy a Used Car From a UK Dealer - 16th Dec 17
Relief Rally in Gold Mining Stocks - 16th Dec 17
Amid Bad Fundamentals, Gold Sector Rally May Have Begun - 16th Dec 17
Gold Bullish on US Fed Interest Rate Hike - 16th Dec 17
The LORAX Explains What Happened to Sheffield's Street Trees 2017 - 16th Dec 17
Bitcoin Trading Alert: Bitcoin Pauses – Will Appreciation Follow? - 16th Dec 17
SanDisk Ultra 128gb 100mbs Micro SD Card for Smartphone's Speed Test - 15th Dec 17
Inflation is Spiking Globally… Bond Bubble Bursts in 3… 2… - 15th Dec 17
Sheffield's 'Real' LORAX Defending the Trees From the Labour City Council Patrol Units - 15th Dec 17
Stock Market Decline Signals are Near - 15th Dec 17
Santa Is Putting Christmas On The Blockchain And Saving Billions - 14th Dec 17
The Unprotected, the Protected, the Vulnerably Protected Classes—Which Are You? - 14th Dec 17
Gold’s Upside Target - 14th Dec 17
Year-end US Interest Rate Hike Again Proves To Be Launchpad For Gold Price - 14th Dec 17
2 Charts That Might Define the Fed’s Jerome Powell Era - 13th Dec 17
UK Stagflation Risk As Inflation Hits 3.1% and House Prices Fall - 13th Dec 17
Stock Market Elliott Wave Forecasts - Is the World coming to the end? - 13th Dec 17
A Method Traders Can Use to Confirm an Elliott Wave Count - 13th Dec 17
Best Time / Month of Year to BUY a USED Car is DECEMBER, UK Analysis - 13th Dec 17
A Former Wall Street Veteran: Good Traders Are Born, Not Trained - 12th Dec 17
Buy Gold, Silver Time After Speculators Reduce Longs and Banks Reduce Shorts to Continue? - 12th Dec 17
Masters of Economic and Political Illusion – in Taxes, Debt, Government, and Markets - 12th Dec 17
Approved Used Land Rover Main Dealer Real Customer Buying Guide - Hunters, Chester - 12th Dec 17
Gold Price 100% Bullish Signal - 12th Dec 17
Epic Stock Market & Fixed Income Bubble Will Not End Well - 12th Dec 17
Bitcoin can be stolen. Although Can’t be hacked - 11th Dec 17
Have Stocks Reached A Permanently Rigged Plateau? - 11th Dec 17
Trying To Beat The System Is A Fatally Flawed Investment Strategy - 11th Dec 17
Is This The Beginning Of The Next Silver Rush? - 11th Dec 17
The Dow Gold Ratio - 11th Dec 17

Market Oracle FREE Newsletter

Traders Workshop

Investor Moves to Make Before Debt Ceiling Debacles Disfigures Your Portfolio

Portfolio / US Debt Jul 27, 2011 - 07:36 AM GMT

By: Money_Morning

Portfolio

Best Financial Markets Analysis ArticleKeith Fitz-Gerald writes: One night at dinner a few years back, my Dad, Greg Fitz-Gerald, explained exactly why the "tax-takers" in Washington think that recoveries, bailouts, negotiations and stimulus packages are a good idea - while the taxpayers believe just the opposite.

"When you rob Peter to pay Paul, Paul generally thinks this is a good idea," he said.


When we look at the debt-ceiling debacle that's unfolding in Washington, you can see exactly what my Dad was saying. That's why I'm not going to mince words here: The debt debate is a complete sham and an utter disgrace. A costly reckoning is headed our way.

The country can't avoid the fallout.

But you can.

In fact, I'm going to show you three moves that will help you dodge the worst of the damage - and perhaps even profit.

Appalled and Disgusted
That our tax-taking leaders would play political chicken with our national wealth and our future is appalling and disgusting.

The sad thing is "they" could fix this in a New York minute if they really wanted to. It wouldn't be pretty nor would it be the "best solution," but it would be a start - especially when it comes to the bond markets, which are blithely going about their business.

Evidently somebody has forgotten to tell the traders who run this $3 trillion party that their world is about to change. The very notion that we should have stability flies in the face of everything we know about the political incompetence that now threatens it.

Moreover, Lipper Inc. notes that bond market inflows are about $4.46 billion a week - and that's just the taxable stuff. There's another $99 billion worth of two-year notes on the block this week, and they're all likely to be purchased by investors seeking "safe-haven" investments.

.In an era of trillion-dollar liabilities, I find it incredibly ironic that anyone would seek safety in the U.S. dollar, let alone in U.S. government paper. Yet, that's exactly what's happening.

I usually refer to situations like these as processes of limited choice. But in reality it's more like one choice: taking our medicine now, or taking it later. Kicking the can down the road will not help.

The way I see things, there are no longer any really good choices. In fact, the only logical choice is for all of us - and especially the U.S. government - to stop living beyond our means.

When we (the taxpaying citizens) spend money, we buy goods and services. When the government spends the money that it's collected from us, it buys votes.

In the weeks and months to come, we're going to find out for sure exactly whose spending is better for the economy. But I'll make a prediction: It isn't the government's.

Unfortunately, fixing this requires change. And change isn't something that any of us - our leaders included - have been particularly good at ... at least not short of a crisis that forces change.

But that's very much the world we live in. We want for our political fixes to be quick and easy.
If the nice man or woman on Capitol Hill wants to vote in such a way that we feel no pain, we're all over it. Never mind that we'll actually have to pay for this someday.

The problem is one that I have addressed time and again, and this is what's at the core of the debt debate right now: Political fixes cannot by their very nature be quick and easy.

That's especially true when they are long-cycle, which means they've taken years to form and will take years to work their way out of the system either by chance, design, growth, or some combination of all three.

We don't need our own version of a Greek vacation: Is anybody in Washington listening?

Three Steps Toward Debt-Ceiling Security
Given this rather dour outlook, the best thing you can do is to protect yourself, and those in your household. To do that, I'm suggesting three moves that are worth making in advance of the Aug. 2 debt-ceiling deadline.

You need to:

•Hedge Your Bets: If Washington blows it, U.S. Treasuries will suffer, with the long end of the curve getting whacked hardest. The Rydex Inverse Government Long Bond Strategy Fund (NYSE: RYJUX) will profit as that happens, and can be used in conjunction with existing portfolios as a hedge.
•Go For The Gold: Metals - especially gold - will take on new significance if fiat currencies fail, and the SPDR Gold Trust ETF (NYSE: GLD) is a good way to capitalize on the surge that we'll see. But be leery of overstaying your welcome. If failure at the negotiating table or a default appears imminent, this could shoot for the moon; but if an agreement is reached, gold could fall faster than Representative Weiner.
•Get Some Kicks From the VIX: The iPath S&P 500 VIX Mid-Term Futures ETN (NYSE: VZZB) is truly a day trader's choice that may be best immediately preceding the deadline - but certainly not much longer than that. Prices reset daily, making tracking a problem.

[Editor's Note: If this is the kind of financial-market intelligence that you demand, you need to be reading The Money Map Report. Our monthly newsletter gets behind the stories and looks at the trends and powerful global money flows that are creating some of the best investing opportunities of our lifetimes. Those trends - as well as some great protection tips - will leave you better-informed, safer and wealthier than you've ever been.

You can get this market intelligence delivered to you monthly with our affiliate, the The Money Map Report. Please click here to learn more about our latest offer.]

Source :http://moneymorning.com/2011/07/27...

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife