Thread: Vote IS US default a 'good' thing?

Originally Posted by FailSafe

Who told you that?

CDs in the US are FDIC insured up to 250K these days (up from 100K a few years ago).

you better check the fine print on those CDs, I am pretty sure the FDIC insurance is not automatic for CDs, banks might choose to subscribe for additional protection with FDIC, but it's not by default. They are "investment" products, not cash account deposit, and they are associated with bonds. Last time I checked, FDIC wasn't insuring bonds or debt obligations by default. Check the fine print.

Originally Posted by Lancelot

Originally Posted by Butterfly

actually CDs do carry some "significant" risks, you can't liquidate them before a certain date or else you lose the interests

Inflation is a bigger risk. Try and find a CD now that will give the investor a meaningful real return. (adjusted for inflation)

CD/bonds have a place in an investor's portfolio; however, you will still need some equities for growth.

absolutely, but equities is not giving enough growth these days, which might explain the appetite for commodities, and Gold in particular.

Originally Posted by Butterfly

Originally Posted by Lancelot

Originally Posted by Butterfly

actually CDs do carry some "significant" risks, you can't liquidate them before a certain date or else you lose the interests

Inflation is a bigger risk. Try and find a CD now that will give the investor a meaningful real return. (adjusted for inflation)

CD/bonds have a place in an investor's portfolio; however, you will still need some equities for growth.

absolutely, but equities is not giving enough growth these days, which might explain the appetite for commodities, and Gold in particular.

Sure, but I was thinking more long term. In any case CDs, bonds and cash won't generate the returns to keep us naughty boys happy

Originally Posted by Butterfly

Originally Posted by FailSafe

Who told you that?

CDs in the US are FDIC insured up to 250K these days (up from 100K a few years ago).

you better check the fine print on those CDs, I am pretty sure the FDIC insurance is not automatic for CDs, banks might choose to subscribe for additional protection with FDIC, but it's not by default. They are "investment" products, not cash account deposit, and they are associated with bonds. Last time I checked, FDIC wasn't insuring bonds or debt obligations by default. Check the fine print.

Money Markey funds have no FDIC Insurance protection.

Federally chartered US banks offer FDIC insurance to $250k.

US State chartered banks offer different insurance coverage unique to each state.

Originally Posted by Lancelot

Originally Posted by Butterfly

Originally Posted by FailSafe

Who told you that?

CDs in the US are FDIC insured up to 250K these days (up from 100K a few years ago).

you better check the fine print on those CDs, I am pretty sure the FDIC insurance is not automatic for CDs, banks might choose to subscribe for additional protection with FDIC, but it's not by default. They are "investment" products, not cash account deposit, and they are associated with bonds. Last time I checked, FDIC wasn't insuring bonds or debt obligations by default. Check the fine print.

Money Markey funds have no FDIC Insurance protection.

Federally chartered US banks offer FDIC insurance to $250k.


US State chartered banks offer different insurance coverage unique to each state.

A good strategy that has worked for me is 2 CD's on staggered 6 month rollovers. Basically can access one of them every 3 months. Both were FDIC'd to $100K. Locking up your $$ for 6 months is very low risk but also offers low return. But it is money earned. Its OK. Its a good discipline. Very easy to get stupid with free cash. It goes very fast with none coming in. I am retired and have been since turning 48. I have a long way to go to my IRA (59.5) and then SS (62.5) if it even exists after this latest US debacle


In the end I am no economist nor financial adviser. However I do believe with the debt ceiling concern people should maintain a long term focus and a broad diversification portfolio and avoid a knee jerk reaction to this short term BS. It will only derail your strategies IMHO.

it really seems like a manufactured panic, probably the Republicans behind it

Originally Posted by WSJ

For Investors, Cash Is King
The stalemate in Washington is spurring money flows out of the markets and into plain-vanilla bank accounts.

[quote=JPPR2;1831391]

Originally Posted by socal

Thats all fine and dandy, just a question....Where would you put $500,000 to invest today.

If I had $500K free cash I would not invest in anything but going off and having a good time in life while I have all my faculties to do so. With $500k spread out in CD's you can have some good fun. Why put $500K at risk?

On the flipside, I guess it all depends on how much money one needs to satisfy his wants and needs.

Its a good question and right now I would keep all my $$ liquid until the muddy water settles down.

No risk in CS's ?

What about the fact that most of them have negative inflation adjusted return ?

Originally Posted by socal

I doubt you where on board with gold in the 70's either at $35 or $55 or $155 or $255 or $455.

No I was not, My Uncle and Dad were. They also took a large hit when it tanked in 1980. I played the high flying tech run from 1993 thru 1999 and got out way way ahead.

So if your Dad and Uncle where in gold in the 70's, there is no possible way they could have taken a "bad hit". The gold price didn't go over $220 through the whole decade.

typical internet investor. Always got the timing perfect.

Right now no investing makes any sense to me. Even day/weekly trading as I do is tremendously hard. Seems the only way to make any $$ is jump on the legal pyramid game of IPO's, then bail out. In fact, If had $500K free, I'd wait for Facebook IPO, dump all of it there for 48 hrs and walk......Just kidding..But I am morbidly curious how it would go.

But you are aware that most cash equivalent investments are below the rate of inflation which means you are losing money every day. And not only that, most western govts make you pay taxes on income that is below the rate of inflation, so you are getting taxed for a loss.

The Euro zone has 0% tax on gold sales.

Originally Posted by JPPR2

Originally Posted by FailSafe

Originally Posted by JPPR2

If I had $500K free cash I would not invest in anything but going off and having a good time in life while I have all my faculties to do so. With $500k spread out in CD's you can have some good fun. Why put $500K at risk?

With low interest rates, $500K isn't enough to do that anymore, sadly- I think about 6x that is a decent number, though- that would get you at least 100K per year even in the safest (and most modest) of investments.

^ True,
But only a handful sit on that much free cash to put it in a safe haven. CD's and money markets will return some (very little with no risk) while you live. $500K in Thailand is ton of cash as we all know. Of course like anything you have to manage it. Some cant. They want the big house, fancy car(I shutter when I know people are paying $100,000 for a Mini Cooper which is barely worth $25K) and all the bells and whistles they left behind in the home country. Of course with that comes carrying debt and the stress/worry that is part of it. Been there and done that. Lesson learned. Cash is King!!!! I found it is far more satisfying driving a nice little truck, living in a modest place and absolutely no debt. This is why I do not care what the US does with the debt ceiling. It will have zero impact on me. My friends are in a far different boat.

I will however look for opportunities to make some play money in it. Just have to watch for it and keep it simple.

Money markets, no risk ?

http://www.nytimes.com/2011/06/20/bu...l/20views.html

But money market funds are still sitting on $360 billion worth of European bank short-term debt. That leaves open a trans-Atlantic channel for Greek turmoil to play havoc with United States markets.

Originally Posted by JPPR2

Originally Posted by Lancelot

Originally Posted by Butterfly

Originally Posted by FailSafe

Who told you that?

CDs in the US are FDIC insured up to 250K these days (up from 100K a few years ago).

you better check the fine print on those CDs, I am pretty sure the FDIC insurance is not automatic for CDs, banks might choose to subscribe for additional protection with FDIC, but it's not by default. They are "investment" products, not cash account deposit, and they are associated with bonds. Last time I checked, FDIC wasn't insuring bonds or debt obligations by default. Check the fine print.

Money Markey funds have no FDIC Insurance protection.

Federally chartered US banks offer FDIC insurance to $250k.


US State chartered banks offer different insurance coverage unique to each state.

A good strategy that has worked for me is 2 CD's on staggered 6 month rollovers. Basically can access one of them every 3 months. Both were FDIC'd to $100K. Locking up your $$ for 6 months is very low risk but also offers low return. But it is money earned. Its OK. Its a good discipline. Very easy to get stupid with free cash. It goes very fast with none coming in. I am retired and have been since turning 48. I have a long way to go to my IRA (59.5) and then SS (62.5) if it even exists after this latest US debacle


In the end I am no economist nor financial adviser. However I do believe with the debt ceiling concern people should maintain a long term focus and a broad diversification portfolio and avoid a knee jerk reaction to this short term BS. It will only derail your strategies IMHO.

I have not done the exact math, but I am almost sure there is no way you can make money in 6 month terms, inflation adjusted. Especially when they tax you on the nominal non inflation adjusted income.

If you made 3% last year, you lost money.

Originally Posted by socal

The Euro zone has 0% tax on gold sales.

In the UK there is not VAT tax, as of 1994, on purchases or sales of gold, however I believe if you have "unearned " income arriving in your bank account it may be questioned as to it's source, similar to "investments".

Originally Posted by Butterfly

you better check the fine print on those CDs, I am pretty sure the FDIC insurance is not automatic for CDs, banks might choose to subscribe for additional protection with FDIC, but it's not by default.

They are all insured by the FDIC up to 250K (which is why they are safe, and also why they offer such shitty interest).

Check the FDIC site.

White House, GOP discuss potential debt limit pact - Yahoo! News

WASHINGTON (AP) — White House officials and congressional Republicans are reaching toward a potential end to their bitter debt limit showdown, raising hopes that a deal could be in place by Tuesday to avert a possible federal default.

After weeks of strident partisan conflict, the two sides were discussing an accord that would raise the government's borrowing authority in two steps by about $2.4 trillion and cut federal spending by slightly more, according to knowledgeable officials.

Congress would also have to vote on a constitutional amendment requiring a balanced federal budget, a top-flight GOP goal. Unlike a bill approved Friday by the Republican-run House, none of the debt limit increase would be tied to congressional approval of that amendment.

Details of a possible accord began emerging Saturday night after Senate Majority Leader Harry Reid, D-Nev., said on the Senate floor that the two sides were trying to nail down loose ends and complete an agreement.
"I'm glad to see this move toward cooperation and compromise, and hope it bears fruit," he said.

A Democratic official said that while bargainers were not on the cusp of a deal, one could gel quickly. A Republican said there was consensus on general concepts but cautioned there were no guarantees of a final handshake. Both spoke on condition of anonymity to reveal details of confidential talks.

Any pact would have to quickly pass both chambers of Congress after a rancorous period that has seen the two parties repeatedly belittle each other's efforts to end the standoff.

Even so, the deal under discussion offers wins for both sides. Republicans and their tea party supporters would get spending cuts at least as large as the amount the debt ceiling would grow and avoid any tax increases. For President Barack Obama and Democrats, there would be no renewed battle over extending the borrowing limit until after next year's elections.

Under the possible compromise, the debt limit would rise by an initial $1 trillion.
A second, $1.4 trillion increase would be tied to a specially created congressional committee that would have to suggest deficit cuts of a slightly larger amount. If that panel did not act — or if Congress rejected their recommendations — automatic spending cuts would be triggered that could affect Medicare and defense spending, two of the most politically sacrosanct programs.

Obama and Democrats have been insisting on a one-shot debt ceiling increase of around $2.4 trillion, enough to last until 2013. Bowing to GOP pressure, they eventually agreed to include an equal amount of spending cuts and dropped their earlier bid for tax increases.

In a bill the House approved Friday — and the Senate rejected — Republicans would initially extend federal borrowing authority by $900 billion, accompanied by $917 billion in spending cuts. They would tie a second $1.6 trillion debt limit boost to spending cuts of up to $1.8 trillion and approval of the balanced budget amendment.

The government has exhausted its $14.3 trillion borrowing limit and has paid its bills since May with money freed up by accounting maneuvers.

The Treasury Department has said it will run out of available cash on Tuesday. The administration has warned that an economy-shaking default would follow that could balloon interest rates and wound the world economy.

Watch out, you might get what you're after. . .

Originally Posted by Hampsha

White House, GOP discuss potential debt limit pact - Yahoo! News

WASHINGTON (AP) — White House officials and congressional Republicans are reaching toward a potential end to their bitter debt limit showdown, raising hopes that a deal could be in place by Tuesday to avert a possible federal default.

After weeks of strident partisan conflict, the two sides were discussing an accord that would raise the government's borrowing authority in two steps by about $2.4 trillion and cut federal spending by slightly more, according to knowledgeable officials.

Congress would also have to vote on a constitutional amendment requiring a balanced federal budget, a top-flight GOP goal. Unlike a bill approved Friday by the Republican-run House, none of the debt limit increase would be tied to congressional approval of that amendment.

Details of a possible accord began emerging Saturday night after Senate Majority Leader Harry Reid, D-Nev., said on the Senate floor that the two sides were trying to nail down loose ends and complete an agreement.
"I'm glad to see this move toward cooperation and compromise, and hope it bears fruit," he said.

A Democratic official said that while bargainers were not on the cusp of a deal, one could gel quickly. A Republican said there was consensus on general concepts but cautioned there were no guarantees of a final handshake. Both spoke on condition of anonymity to reveal details of confidential talks.

Any pact would have to quickly pass both chambers of Congress after a rancorous period that has seen the two parties repeatedly belittle each other's efforts to end the standoff.

Even so, the deal under discussion offers wins for both sides. Republicans and their tea party supporters would get spending cuts at least as large as the amount the debt ceiling would grow and avoid any tax increases. For President Barack Obama and Democrats, there would be no renewed battle over extending the borrowing limit until after next year's elections.

Under the possible compromise, the debt limit would rise by an initial $1 trillion.
A second, $1.4 trillion increase would be tied to a specially created congressional committee that would have to suggest deficit cuts of a slightly larger amount. If that panel did not act — or if Congress rejected their recommendations — automatic spending cuts would be triggered that could affect Medicare and defense spending, two of the most politically sacrosanct programs.

Obama and Democrats have been insisting on a one-shot debt ceiling increase of around $2.4 trillion, enough to last until 2013. Bowing to GOP pressure, they eventually agreed to include an equal amount of spending cuts and dropped their earlier bid for tax increases.

In a bill the House approved Friday — and the Senate rejected — Republicans would initially extend federal borrowing authority by $900 billion, accompanied by $917 billion in spending cuts. They would tie a second $1.6 trillion debt limit boost to spending cuts of up to $1.8 trillion and approval of the balanced budget amendment.

The government has exhausted its $14.3 trillion borrowing limit and has paid its bills since May with money freed up by accounting maneuvers.

The Treasury Department has said it will run out of available cash on Tuesday. The administration has warned that an economy-shaking default would follow that could balloon interest rates and wound the world economy.

Fasten your seat belts................

Originally Posted by FailSafe

Originally Posted by Butterfly

you better check the fine print on those CDs, I am pretty sure the FDIC insurance is not automatic for CDs, banks might choose to subscribe for additional protection with FDIC, but it's not by default.

They are all insured by the FDIC up to 250K (which is why they are safe, and also why they offer such shitty interest).

Check the FDIC site.

ok for bank CDs they seem to be automatically, but not for broker CDs they might not be

Originally Posted by FDIC

For Brokered CDs, Identify the Issuer – Because federal deposit insurance is limited to a total aggregate amount of $250,000 for each depositor in each bank or thrift institution, it is very important that you know which bank or thrift issued your CD. In other words, find out where the deposit broker plans to deposit your money. Not all companies with bank-sounding names are actually banks or are insured by the FDIC. That is why you should verify that the institution is FDIC-insured. You can use our Bank Find service at www2.fdic.gov/idasp/main_bankfind.asp or by calling the FDIC toll-free at 1(877) 275-3342; for the hearing impaired call 1(800) 925-4618 (8 a.m. to 8 p.m. Eastern Time, Monday through Friday).

Originally Posted by Butterfly

ok for bank CDs they seem to be automatically, but not for broker CDs they might not be

I believe we were only referring to bank CDs- I know I was (in the States, when you say 'CD' it's a given that it's through a bank).

So what does the future lok like now? The same. A rising stock market or a crash? Still seems like this isn't finished and that the senate vote still could fail. A lot of people seem to be disappointed with this plan. Maybe I am just hearing the extremists on both ends shouting.

isn't it time for some tough love? Don't raise the ceiling, make the cuts needed within the year, and put in a flat tax that gets some moola from the fat cats.

Sound good to me.

FTSE down 1.0%
Dow down 1.6%
Gold up to $1657 (+$40)

Markets speak

Rich: Same Same Still drinking life's Champagne and living the high life
Poor: Same Same Still in the shit
Middleclass: ? ? ?

Originally Posted by Hampsha

Middleclass: ? ? ?

going.....

going.....

gone

In America the rich dominate politics and, having got rich from your country in the first place, they have now sold the country downstream. They care more about maintaining their tax rates at the lowest level in living memory than maintaining educational standards, paying down the government debt they incurred, or maintaining social welfare and pensions. The US baby boomers have turned out to be one of the more selfish and irresponsible generations in history. Cuts and Debt- a nice legacy to their kids.

Originally Posted by sabang

The US baby boomers ARE THE MOST selfish and irresponsible generation in history.

^ Fixed that for you Sab.

Kind of Ironic too. They are the ones bitching the most as this debacle is cutting into their slice of the pie now. Guess they did not isolate themselves so well after all.