Answering questions about the federal debt debate

Not surprisingly investors are worried about what a failed debt ceiling vote might do to their investments. But they are also starting to get used to terrible things happening, and so many have already prepared for what are called "black swan" events, or unusual market mishaps that seemed to come out of nowhere.

Many tell me they are so cynical about the political process they simply refuse to look.  Some also refuse to look at 401(k)s.

Still, many are also nervous and asking what they can do. I have told seniors not to worry about their Social Security checks. They are not likely to miss any of them. The government has other options than to stop paying Social Security instantly after a failed vote on the debt ceiling.

At a certain point they will have to return to the political realm and take action. Other people have asked about their bank CDs. I have said that if their bank is FDIC insured, and they heed the $250,000 limit on the insurance, they should be fine.

While the FDIC is a government body, the debt ceiling issue will not go unresolved forever.

I look at the issue as a political problem that can and will be resolved; not a financial problem. Although the U.S. has a serious debt problem that must be addressed for the longrun, it can pay its bills. I say it's a political problem because this is the richest nation in the world.

It's not that there isn't money for government commitments. Rather, it's that there isn't enough money to keep going without adjustments in spending and taxes.

Politicians can't stomach the political decisions involving favoring one group over another with spending cuts or tax increases. But eventually the markets will force their hand.

In fact, I wonder if they are waiting for a good downturn in stocks or bonds so they can tell constituents they had no choice but to act immediately even though their actions will be unpopular with some.

What did Rahm Emanuel say?...Something like "An emergency is a terrible thing to waste."

-- Gail MarksJarvis

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