There’s really only one scenario that is likely to play out over the coming 6 days:
We’re running right up against the debt ceiling deadline and the two sides don’t look like they’re ready to agree on anything. The Boehner plan is going to go up for vote on Thursday according to the latest reports, but Obama has already said he’ll veto it. So, there’s some potential that we get a “mini TARP” in the next few days where markets continue to tumble as the politicians prove they are serious about deciding to let America go bankrupt.
Then, when push comes to shove, they’ll “work all weekend” (those hard workers in Congress!) and we’ll get some sort of incredible rescue announcement at the last hour on Sunday evening. Futures soar 200 points and everyone breathes a big sigh of relief as our politicians ride off into the sunset on their white horses….
That’s just a guess though. There is some chance we get no vote over until next week and the Treasury will scrounge up the funds to operate as the sense of urgency builds and the politicians vote on a new plan early next week. Either way, I don’t see how something doesn’t get resolved. The politicians are not intelligent, but even they know they won’t keep their jobs if they let us default and spiral back into recession just because they couldn’t agree on something. And at the end of the day, we have to remember that it’s their jobs that are important – not necessarily the American people.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
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