How the Debt-Ceiling Debacle Will Spark a Short-Term Drop in Gold Prices
...During his primetime television address last week, President
Obama actually told us that interest rates on credit cards and car
loans would spike, and that the U.S. economy would suffer a serious
disruption.
Sorry, but I don't buy it.
And neither does Jan Ericsson, assistant professor
of finance at Montreal's Ï㽶ÊÓƵ. According to Ericsson,
whose latest research has focused on bond-market default risk, U.S.
interest rates may increase by 50 whole basis points, or half a
percentage point - hardly the financial-market Armageddon that the
fear-mongering gloom-and-doom crowd claims is fait accompli.
In actuality, the U.S. Treasury holds more than $1 trillion in
marketable securities - more than $100 billion of which is in cash.
If no deal is reached by the deadline, instead of just defaulting
on payments, there's no reason the government can't just use this
cash, or liquidate assets, and buy some time until an agreement is
actually reached and the debt ceiling raised....
Read full article: , August 1, 2011
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