So you’re giving back gains in the stock market and having a difficult time finding a job thanks to the threat of higher taxes and a government default. Meanwhile, you’re losing purchasing power as the US dollar goes to zero, while your savings returns a pitiful 0.3%. You might have a better chance riding a hungry grizzly bear naked and escaping unharmed than accumulating great wealth and enjoying a worry-free retirement if this keeps up.
Yet, I’m as optimistic as can be because I see the human spirit shine. Republicans in Congress are fighting for what their supporters elected them to do, provide checks and balances, reduce spending and limit the size of government. Democrats, on the other hand, are fighting for those who depend on Medicare and Social Security to survive and are refusing to cut entitlements and therefore costs without the wealthy contributing more in taxes.
Both parties care little if the stock markets implode and unemployment stays woefully weak in the short-term, because they care for what they believe in for the long-term. Besides, as you know from a previous post, Congressmen and women are extremely well off. They can afford the hit. They are willing to fight tooth and nail until the very last minute before agreeing to terms. You must admit, that standing up for what you believe in is one of the most admirable straights a human being can possess. Whether one is right or wrong is another matter. Too few people battle to the very end. Instead, we are so easily convinced and just roll over. That’s not very courageous.
It’s obvious that an agreement will be reached before August 2, 2011 to prevent a US default. I know this because the 10 year US treasury yield remains at 3%. Remember, if there is one figure you should always pay attention to, it’s the US long bond yield. It will tell you everything from inflation expectations, to growth prospects, to foreign risk appetite, to whether that stud or babe will ask you out. In this case, the US long bond is telling us the US will not default and everything will be alright, otherwise yields would be spiking right now.
So don’t worry everybody! Sit back, pop some corn, and enjoy the show. You’re fully diversified and know that in the final hour, each party will make an announcement and claim victory to save our economy. It’s all one big mirage. At the very least, the two parties are fighting for what they believe in and that’s better than a swift kick in the teeth.
Readers, do you admire our politicians for fighting to the very end, despite putting all of us in a financially compromised position? Does this debt ceiling debacle affect you?