g Text Version
Beauty & Self
Books & Music
Food & Wine
Health & Fitness
Hobbies & Crafts
Home & Garden
News & Politics
Religion & Spirituality
Travel & Culture
TV & Movies

Bored? Games!
Take a Quiz
Rate My Photo

Heart Disease
Horror Literature
Hiking & Backpacking
SF/Fantasy Books
Healthy Foods

All times in EST

Low Carb: 8:00 PM

Full Schedule
g Investing Site

BellaOnline's Investing Editor


U.S. Debt Woes Hit Home

Guest Author - Tony Daltorio

It seems as if the United States' debt problems are coming home to roost.

The current conflict in Congress about raising the debt ceiling while putting a plan into place to cut the country's long-term debt shows how dysfunctional America's political system has become.

What will come out of all of this political rancor?

Most likely, a muddle through compromise will be brokered over the next several days. This compromise no doubt will raise the debt ceiling while making token, 'smoke and mirrors' cuts in the nation's debt.

Any token cuts made will be offset by the downgrade to the United States' triple-A credit rating by the credit rating agencies. Surprisingly to me, the rating agencies actually seem to be serious about the downgrade and giving the US a more realistic credit rating.

It is almost laughable seeing all the Wall Street talking heads on the financial news networks saying that the downgrade would be “meaningless”.

The downgrading of US debt would have very meaningful effects.

For example, there are many financial institutions around the globe such as pension funds which are only permitted to own triple-A bonds. This means if US government debt is downgraded to say AA, these institutions would be forced to sell all of their US Treasuries.

Needless to say, this would cause a steep sell-off in US Treasuries and other government-backed bonds.

The recent Wall Street reaction to this debacle shows once again the stupidity that runs rampant in the US financial industry today and passes for “street smarts”.

With a few notable exceptions like Pimco's Bill Gross, what do you think the geniuses on Wall Street are doing in reaction to the pending problems in the Treasury market? Why, of course, they are liquidating other assets and putting the proceeds into the “safe haven” of US Treasuries.

Huh? Did I miss something? Isn't the problem with US government debt?

There is a problem with US Treasuries, so you naturally go and buy more of them. Think of it this way – a nuclear blast has gone off and the geniuses on Wall Street, instead of fleeing, are running full speed towards ground zero. With the money you've invested I might add.

If you're an individual investor who invests on your own, what should you do?

Many of you may recall that I have been telling anyone who would listen to get out of US Treasuries for many months now. It is a bubble waiting to burst.

There are many other government bonds and currencies around the world which are much safer than US Treasuries and the US dollar.

The list of safer countries includes: Germany, Switzerland, Sweden, Norway and Australia. Even France, Canada and New Zealand aren't bad.

There are ETFs traded on the stock exchange which allow you to buy German or Australian government bonds, for instance. And Australian bonds pay about 5% too!
Add U%2ES%2E+Debt+Woes+Hit+Home to Twitter Add U%2ES%2E+Debt+Woes+Hit+Home to Facebook Add U%2ES%2E+Debt+Woes+Hit+Home to MySpace Add U%2ES%2E+Debt+Woes+Hit+Home to Del.icio.us Digg U%2ES%2E+Debt+Woes+Hit+Home Add U%2ES%2E+Debt+Woes+Hit+Home to Yahoo My Web Add U%2ES%2E+Debt+Woes+Hit+Home to Google Bookmarks Add U%2ES%2E+Debt+Woes+Hit+Home to Stumbleupon Add U%2ES%2E+Debt+Woes+Hit+Home to Reddit


RSS | Related Articles | Editor's Picks Articles | Top Ten Articles | Previous Features | Site Map

For FREE email updates, subscribe to the Investing Newsletter

Past Issues

Printer Friendly
tell friend
Tell a Friend
Email Editor

Content copyright © 2013 by Tony Daltorio. All rights reserved.
This content was written by Tony Daltorio. If you wish to use this content in any manner, you need written permission. Contact Sandra Baublitz for details.


g features
Alternative Investments for the Small Investor

Rental Properties Book Review

Liquid or Illiquid Assets

Archives | Site Map


Past Issues

Less than Monthly

BellaOnline on Facebook

| About BellaOnline | Privacy Policy | Advertising | Become an Editor |
Website copyright © 2013 Minerva WebWorks LLC. All rights reserved.

BellaOnline Editor