30 Jul 2011
people asked me what may happen if U.S. could not raise the debt limit by 2 Aug 2011?
I told them, I think it is just a matter of time the increase in debt limit would be approved, exactly when, I don't know. Hopefully before 2 Aug, but if not, likely not too long after that.
Hopefully they don't drag too long until S & P and Moody's downgrade U.S. credit rating and cause a Crash in U.S. bond markets...if and when that happens, probably the next Global Financial Crisis would be triggered, and even if market Crash, I'm not concerned becos I have planned and positioned for such a possibility.
I am likely to sell all my stocks if and when major markets fall below these levels (for over 10 trading days):
Dow below 11,600
Shanghai index below 2,600
Hang Seng below 22,000
STI below 2,900
If markets stay above these levels, then I'm likely to stay invested in stocks.
How would markets react in the next few days before debt limit approved?
Frankly, I don't know and I'm NOT really bothered about it.
As a Market Cycle Investor, I look and invest based on Major Market Trends, NOT what may happen in a day or week.
ALL I know is the debt limit would be approved, then QE 3 will be launched (exact time, I don't know, maybe Aug or Sep 2011)...then likely stock markets would have its Last Rally in the Current Bull Market before the next Global Financial Crisis hit us, probably NO later than Jun 2012...
Can I be wrong about my views?
Of course.
My No. 1 question is "What if I'm wrong, will I be financially ok?"
So I planned my Investment Portfolio to be ALL Weather Proof, that I'll be ok no matter what happens.
32% of my Wealth now in Cash, if market Crashes, I'll be there to scoop up bargains in stocks and property.
8% of my wealth in UK Endowment, which provides Capital Guarantee even in event of market Crash.
35% of my Wealth now in Stocks, if market rallies, I'll be there to make money in stocks.
25% of my Wealth now in Real Assets, (which includes 5% in Silver, 2% in Gold), 11% in Property and 7% in Land Banking. (So in event of high inflation, Real Assets would go up in price.
My fear and concern is many people out there (who didn't attend my seminars) would be totally unprepared and will be shocked and some might even see a huge part of their wealth being wiped out when the next Global Financial Crisis hit us, so I really urge seminar graduates to help us spread the word and at least get your friends to attend the weekly Path to Financial Freedowm workshop, which I share about why there'll be a next Global Financial Crisis in the workshop.
Let's try to "save" as many people from getting financially wiped out in the next Global Financial Crisis.
What May Happen if U.S. Debt Limit Not Increased by 2 Aug?
Moderators: alvin, learner, Dennis Ng
What May Happen if U.S. Debt Limit Not Increased by 2 Aug?
Cheers!
Dennis Ng - When You Master Your Finances, You Master Your Destiny
Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
Dennis Ng - When You Master Your Finances, You Master Your Destiny
Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
31 Jul 2011
Latest News: Deal Framework Reached on Raising U.S. Debt Ceiling
By Heidi Przybyla and Kate Andersen Brower - Jul 31, 2011 1:54 PM GMT+0800
President Barack Obama and congressional leaders began a fresh attempt to reach agreement on raising the U.S. debt cap, with a potential framework for a deal emerging two days before a threatened default deadline.
The White House and congressional Republicans have sketched out the contours of an agreement to increase the nation’s $14.3 trillion debt ceiling that would raise borrowing authority through the next presidential election, a person familiar with the talks said late last night.
The tentative framework includes immediate spending cuts of $1 trillion and creation of a special committee to recommend additional savings of up to $1.8 trillion later this year. The new panel would have to act before the Thanksgiving congressional recess in late November and Congress would have to approve its recommendations by late December or government departments and programs, including defense and Medicare, would face automatic, across-the-board cuts, the person said.
No more than 4 percent of Medicare would be subject to cuts, and beneficiaries would be unaffected as reductions would apply to providers, the person said. Social Security would be untouched.
Constitutional Amendment
The framework also calls for Congress to vote on a balanced budget amendment to the Constitution, the person said. Amendments require two-thirds majorities to pass, and if enough Democrats oppose the measure it would have little chance of winning approval.
White House officials familiar with the talks cautioned after reports of the framework surfaced last night that no final agreement has been reached among those involved in negotiations and that negotiations were continuing.
The prospective agreement wouldn’t include increased net revenue, a sticking point for Republicans who’ve been adamant that any deal with tax increases couldn’t pass the Republican- run House.
Democrats, including those who run the Senate, have been insistent that any deal must be a “balanced approach” that includes revenue, raising questions about whether Obama would find substantial support from his party for the plan.
Obama and congressional leaders yesterday kick-started the new push to prevent a U.S. government default on its debt after several previous efforts in recent weeks had fallen short. As the day progressed, Republicans and Democrats expressed greater optimism a deal may be within reach before Aug. 2, the date Treasury Department officials have said they will run out of options for avoiding default without a debt limit increase.
Market Response
Financial markets were restrained in reacting to the impasse on a debt deal through July 29.
Treasuries rallied, sending yields on 10-year notes to the lowest level since November. The yield on 10-year Treasury notes declined 15 basis points to 2.79 percent in New York.
Stocks fell as economic growth trailed forecasts. The Standard & Poor’s 500 Index slipped 0.7 percent and tumbled 3.9 percent this week for its worst slide in a year.
Senate Majority Leader Harry Reid last night said he was “confident that reasonable people from both parties should be able to reach an agreement.”
Reid, in remarks on the Senate floor before details of the framework emerged, cautioned that “there are many elements to be finalized and there is still a distance to go before any arrangement can be completed.” Still, the Nevada Democrat said, “I am glad to see this move toward cooperation and compromise.”
‘More Optimistic’
Earlier Senate Minority Leader Mitch McConnell, a Kentucky Republican, said he was “more optimistic” and that negotiators have “got a chance of getting there.” House Speaker John Boehner, an Ohio Republican, also voiced confidence an agreement could be reached.
Obama has been demanding an increase in the $14.3 trillion debt limit that lasts through the 2012 election, when he is seeking another term.
Reid moved last night to give the negotiations more breathing room, pushing forward by 12 hours a planned test vote today on a pending measure he has to raise the debt ceiling and cut government spending. The planned 1 a.m. vote was rescheduled for 1 p.m. at the Capitol.
The House earlier yesterday held a symbolic vote rejecting the Reid plan, 246-173. The vote was scheduled after the Senate voted down on July 29 a Boehner debt ceiling plan that had passed the House earlier in the day.
Lower Profile
Since direct talks between Obama and Boehner on a so-called “grand bargain” that would revamp the government’s finance as part of a debt ceiling increase broke down on July 22, Obama had kept a lower profile, looking to congressional leaders to hammer out a deal he can sign into law.
The president has warned of potential disruptions if the borrowing authority isn’t upped by Aug. 2, including missed checks to Social Security recipients and a downgrade of the U.S. credit rating if Congress allows the government to crash into the debt ceiling.
Yesterday he summoned Pelosi and Reid to the White House. Pelosi said they talked about “what our priorities are.” He spoke by phone with McConnell after a similar conversation with Boehner the day prior. McConnell also spoke multiple times yesterday with Vice President Joe Biden as part of the search for a deal, said John Ashbrook, a spokesman for McConnell.
Republicans had been putting the onus on Obama to take the lead in the closing hours of the standoff. “The only way we’re going to get an agreement before Tuesday is to have an agreement with the president of the United States,” said McConnell.
Second Round
A compromise has appeared to hinge on guaranteeing a second round of spending cuts beyond the roughly $1 trillion in overlapping savings in Reid’s plan and one by Boehner that the House, solely with Republican support, passed July 29. The second round of cuts most likely involve rewriting U.S. laws on entitlements and taxes, something the tentative framework would assign to the new joint congressional committee.
Such a mechanism is called a “trigger,” and it would force the across-the-board spending cuts if Congress failed to approve the committee’s recommendations.
Senator Olympia Snowe, a Maine Republican, said the trigger is essential to a deal. “You have to have it,” she said. “That does tie to whether or not Treasury securities are downgraded by the ratings agencies,” she said.
Boehner’s measure would have required congressional approval of a constitutional amendment to balance the budget and forced another debt-limit vote by lawmakers in about six months to continue the nation’s borrowing authority beyond early 2012.
No Tax Increases
Reid said his plan aims to attract bipartisan support because it includes no tax increases and would cut spending by the same amount as the debt-limit boost.
Republicans have said the Democrats’ plan is unacceptable in part because it doesn’t ensure long-term deficit reduction, including cuts to entitlement programs. They also said it relies on a budget “gimmick” by counting as deficit reduction plans to bring troops home from Iraq and Afghanistan.
The Treasury is preparing contingency plans to pay the government’s obligations should Congress fail to raise the borrowing limit in time. White House press secretary Jay Carney said Treasury officials may reveal the plans this weekend.
To contact the reporters on this story: Heidi Przybyla in Washington at hprzybyla@bloomberg.net; Kate Andersen Brower in Washington at kandersen7@bloomberg.net
To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net
Latest News: Deal Framework Reached on Raising U.S. Debt Ceiling
By Heidi Przybyla and Kate Andersen Brower - Jul 31, 2011 1:54 PM GMT+0800
President Barack Obama and congressional leaders began a fresh attempt to reach agreement on raising the U.S. debt cap, with a potential framework for a deal emerging two days before a threatened default deadline.
The White House and congressional Republicans have sketched out the contours of an agreement to increase the nation’s $14.3 trillion debt ceiling that would raise borrowing authority through the next presidential election, a person familiar with the talks said late last night.
The tentative framework includes immediate spending cuts of $1 trillion and creation of a special committee to recommend additional savings of up to $1.8 trillion later this year. The new panel would have to act before the Thanksgiving congressional recess in late November and Congress would have to approve its recommendations by late December or government departments and programs, including defense and Medicare, would face automatic, across-the-board cuts, the person said.
No more than 4 percent of Medicare would be subject to cuts, and beneficiaries would be unaffected as reductions would apply to providers, the person said. Social Security would be untouched.
Constitutional Amendment
The framework also calls for Congress to vote on a balanced budget amendment to the Constitution, the person said. Amendments require two-thirds majorities to pass, and if enough Democrats oppose the measure it would have little chance of winning approval.
White House officials familiar with the talks cautioned after reports of the framework surfaced last night that no final agreement has been reached among those involved in negotiations and that negotiations were continuing.
The prospective agreement wouldn’t include increased net revenue, a sticking point for Republicans who’ve been adamant that any deal with tax increases couldn’t pass the Republican- run House.
Democrats, including those who run the Senate, have been insistent that any deal must be a “balanced approach” that includes revenue, raising questions about whether Obama would find substantial support from his party for the plan.
Obama and congressional leaders yesterday kick-started the new push to prevent a U.S. government default on its debt after several previous efforts in recent weeks had fallen short. As the day progressed, Republicans and Democrats expressed greater optimism a deal may be within reach before Aug. 2, the date Treasury Department officials have said they will run out of options for avoiding default without a debt limit increase.
Market Response
Financial markets were restrained in reacting to the impasse on a debt deal through July 29.
Treasuries rallied, sending yields on 10-year notes to the lowest level since November. The yield on 10-year Treasury notes declined 15 basis points to 2.79 percent in New York.
Stocks fell as economic growth trailed forecasts. The Standard & Poor’s 500 Index slipped 0.7 percent and tumbled 3.9 percent this week for its worst slide in a year.
Senate Majority Leader Harry Reid last night said he was “confident that reasonable people from both parties should be able to reach an agreement.”
Reid, in remarks on the Senate floor before details of the framework emerged, cautioned that “there are many elements to be finalized and there is still a distance to go before any arrangement can be completed.” Still, the Nevada Democrat said, “I am glad to see this move toward cooperation and compromise.”
‘More Optimistic’
Earlier Senate Minority Leader Mitch McConnell, a Kentucky Republican, said he was “more optimistic” and that negotiators have “got a chance of getting there.” House Speaker John Boehner, an Ohio Republican, also voiced confidence an agreement could be reached.
Obama has been demanding an increase in the $14.3 trillion debt limit that lasts through the 2012 election, when he is seeking another term.
Reid moved last night to give the negotiations more breathing room, pushing forward by 12 hours a planned test vote today on a pending measure he has to raise the debt ceiling and cut government spending. The planned 1 a.m. vote was rescheduled for 1 p.m. at the Capitol.
The House earlier yesterday held a symbolic vote rejecting the Reid plan, 246-173. The vote was scheduled after the Senate voted down on July 29 a Boehner debt ceiling plan that had passed the House earlier in the day.
Lower Profile
Since direct talks between Obama and Boehner on a so-called “grand bargain” that would revamp the government’s finance as part of a debt ceiling increase broke down on July 22, Obama had kept a lower profile, looking to congressional leaders to hammer out a deal he can sign into law.
The president has warned of potential disruptions if the borrowing authority isn’t upped by Aug. 2, including missed checks to Social Security recipients and a downgrade of the U.S. credit rating if Congress allows the government to crash into the debt ceiling.
Yesterday he summoned Pelosi and Reid to the White House. Pelosi said they talked about “what our priorities are.” He spoke by phone with McConnell after a similar conversation with Boehner the day prior. McConnell also spoke multiple times yesterday with Vice President Joe Biden as part of the search for a deal, said John Ashbrook, a spokesman for McConnell.
Republicans had been putting the onus on Obama to take the lead in the closing hours of the standoff. “The only way we’re going to get an agreement before Tuesday is to have an agreement with the president of the United States,” said McConnell.
Second Round
A compromise has appeared to hinge on guaranteeing a second round of spending cuts beyond the roughly $1 trillion in overlapping savings in Reid’s plan and one by Boehner that the House, solely with Republican support, passed July 29. The second round of cuts most likely involve rewriting U.S. laws on entitlements and taxes, something the tentative framework would assign to the new joint congressional committee.
Such a mechanism is called a “trigger,” and it would force the across-the-board spending cuts if Congress failed to approve the committee’s recommendations.
Senator Olympia Snowe, a Maine Republican, said the trigger is essential to a deal. “You have to have it,” she said. “That does tie to whether or not Treasury securities are downgraded by the ratings agencies,” she said.
Boehner’s measure would have required congressional approval of a constitutional amendment to balance the budget and forced another debt-limit vote by lawmakers in about six months to continue the nation’s borrowing authority beyond early 2012.
No Tax Increases
Reid said his plan aims to attract bipartisan support because it includes no tax increases and would cut spending by the same amount as the debt-limit boost.
Republicans have said the Democrats’ plan is unacceptable in part because it doesn’t ensure long-term deficit reduction, including cuts to entitlement programs. They also said it relies on a budget “gimmick” by counting as deficit reduction plans to bring troops home from Iraq and Afghanistan.
The Treasury is preparing contingency plans to pay the government’s obligations should Congress fail to raise the borrowing limit in time. White House press secretary Jay Carney said Treasury officials may reveal the plans this weekend.
To contact the reporters on this story: Heidi Przybyla in Washington at hprzybyla@bloomberg.net; Kate Andersen Brower in Washington at kandersen7@bloomberg.net
To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net
Cheers!
Dennis Ng - When You Master Your Finances, You Master Your Destiny
Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
Dennis Ng - When You Master Your Finances, You Master Your Destiny
Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
1 Aug 2011
Latest news: Obama: Congressional Leaders Approve Debt-Limit Increase
By Julie Hirschfeld Davis and Mike Dorning - Aug 1, 2011 8:51 AM GMT+0800
http://www.bloomberg.com/news/2011-07-3 ... iling.html
My posting on 24 Jul 2011 already mention that the Increase in U.S. Debt Ceiling would be approved and what might happen in the next 6 to 9 months in the Global Stock Markets. Hope that posting can help you see things in a Clearer Light.
I don't know exactly since when that I seem to be able to see things very clearly, of what might happen, but if you follow my postings, you would probably find that I got Major Trends and Major News all correct.
Cheers!
Dennis Ng
Latest news: Obama: Congressional Leaders Approve Debt-Limit Increase
By Julie Hirschfeld Davis and Mike Dorning - Aug 1, 2011 8:51 AM GMT+0800
http://www.bloomberg.com/news/2011-07-3 ... iling.html
My posting on 24 Jul 2011 already mention that the Increase in U.S. Debt Ceiling would be approved and what might happen in the next 6 to 9 months in the Global Stock Markets. Hope that posting can help you see things in a Clearer Light.
I don't know exactly since when that I seem to be able to see things very clearly, of what might happen, but if you follow my postings, you would probably find that I got Major Trends and Major News all correct.
Cheers!
Dennis Ng
Dennis Ng wrote:I don't really know exactly when, whether it is 2 Aug or a later date. It wont' be a single date, it will be rally for a few months.chezball wrote: 24 Jul 2011
There is a lot of talk that Aug 2nd is a once a life time opportunity to make money. Because of the uncertainly at this point of time, stocks prices are still holding steady. But once the Aug 2nd results is out (that they will raise the debt limit) the market will run.
What do you think of that assessment?
I Invest in Major market trend. What is likely is with approval of increase in debt limit, is there'll be further monetary easing (Printing of money) by U.S. and when that happens, likely that Stock Markets in the Whole World will enjoy the Last Rally in current Bull Market. STI Might go up to 3,900 to 4,300 in the last Rally. Shanghai index might go up to 3,500 to 4,000 in the last rally. Dow might go up to 13,500 to 14,000 in the last rally.
Then the next Global Financial Crisis would hit us, Global Stock markets and Bond markets would then Crash. STI might crash to as low as 1,600; Dow to 7,000; Shanghai index to 1,800 (basically Crash by 50% or more)...for someone who is prepared like myself, all I know is I will just get Richer through this process.
So I have positioned myself (35% of my wealth in Stocks) to benefit from such a possibility. Even if it does NOT happens, my 32% in Cash would also serve as Opportunity Fund. and my my 25% investments in Real Assets (including Silver/Gold/Property/Land) will benefit from any rise in inflation rate. While my 8% investment into UK Traded Endowment will offer me the certainty of Capital Guarantee in the event of a Global Financial Crisis.
No matter what may happen, rally, crash, depression, inflation, stagflation, my investment portfolio can be considered ALL Weather Proof and I'm likely to just get Richer becos of how I plan the Asset Allocation.
Cheers!
Dennis Ng - When You Master Your Finances, You Master Your Destiny
Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
Dennis Ng - When You Master Your Finances, You Master Your Destiny
Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
Focus now turns to potential downgrade
US debt deal reached, now we wait for rating agencies
A debt deal has been struck in the US, which now needs to be voted on in the
Senate and the House.
The most positive feature of the deal is that there will not be another vote on
raising the debt ceiling in six months.
Otherwise, the deal was pretty much in line with expectations of spending cuts of
USD2.8trn over 10 years. However, this may not be enough to avoid a
downgrade and we still see a higher than 50% probability that this will happen
in coming months.
Focus now turns to potential downgrade
Following relief about the increase in the debt limit, focus will turn to the matter of a
possible US downgrade. In our view this is still a clear possibility and we see the
probability of this taking place as higher than 50%. Spending cuts are in the low end of
what Standard & Poor’s had suggested was needed.
In its note mid-July when S&P put the US on CreditWatch with negative implications,
S&P said that an agreement implying cuts of USD4trn would make it affirm the AAA
rating. Last week, though, S&P said that a deal implying cuts of less than USD4000bn
would not necessarily trigger a downgrade – but it was not specific about any other
number. Hence it is not clear what exactly will trigger a downgrade.
Our estimate has been that USD3-4trn was needed and the deal falls short of this. Also
GDP growth looks set to be weaker than expected in 2011 and 2012 following dismal
GDP data for Q2 released on Friday. Lower growth will also weigh on the budget and –
all else equal - requires even higher discretionary budget cuts to reduce the deficit and get
debt under control. It is not an easy decision to downgrade sovereign debt of the world’s
leading reserve currency and it will require some courage to do this. We believe, though,
that S&P’s credibility is at stake here – and given the signals it has sent we believe it will
prove hard not to follow through and downgrade US debt. We therefore still see more
than a 50% chance of a downgrade - but it will likely be a close call.
(News from Danske Bank Research)
A debt deal has been struck in the US, which now needs to be voted on in the
Senate and the House.
The most positive feature of the deal is that there will not be another vote on
raising the debt ceiling in six months.
Otherwise, the deal was pretty much in line with expectations of spending cuts of
USD2.8trn over 10 years. However, this may not be enough to avoid a
downgrade and we still see a higher than 50% probability that this will happen
in coming months.
Focus now turns to potential downgrade
Following relief about the increase in the debt limit, focus will turn to the matter of a
possible US downgrade. In our view this is still a clear possibility and we see the
probability of this taking place as higher than 50%. Spending cuts are in the low end of
what Standard & Poor’s had suggested was needed.
In its note mid-July when S&P put the US on CreditWatch with negative implications,
S&P said that an agreement implying cuts of USD4trn would make it affirm the AAA
rating. Last week, though, S&P said that a deal implying cuts of less than USD4000bn
would not necessarily trigger a downgrade – but it was not specific about any other
number. Hence it is not clear what exactly will trigger a downgrade.
Our estimate has been that USD3-4trn was needed and the deal falls short of this. Also
GDP growth looks set to be weaker than expected in 2011 and 2012 following dismal
GDP data for Q2 released on Friday. Lower growth will also weigh on the budget and –
all else equal - requires even higher discretionary budget cuts to reduce the deficit and get
debt under control. It is not an easy decision to downgrade sovereign debt of the world’s
leading reserve currency and it will require some courage to do this. We believe, though,
that S&P’s credibility is at stake here – and given the signals it has sent we believe it will
prove hard not to follow through and downgrade US debt. We therefore still see more
than a 50% chance of a downgrade - but it will likely be a close call.
(News from Danske Bank Research)
http://stores.ebay.com.sg/Happy-Skymart
Books by Master Ryuho Okawa - Happy Science
Books by Master Ryuho Okawa - Happy Science