This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The United States Does Not Need a Debt Ceiling

Nobody can know for sure what would happen in the global economy if the United States was to miss an interest payment or miss a payoff on a maturing note or bond. The risk would be sell orders from around the world, which could cause a collapse in the bond market. The Federal Reserve would be at risk as its $3.5 trillion balance sheet makes the central bank insolvent.

What would happen to citizens who depend upon Medicare and Social Security? Many bills that are paid with money from social security would not be paid, which could be catastrophic in the local economies on Main Street, U.S.A.

Placing the debt ceiling as a crisis issue is a huge mistake. In 2011, a delay in raising the debt ceiling caused a rating agency to downgrade the U.S. debt for the first time ever and resulted in the fiscal cliff and the sequestration spending cuts.

I am optimistic that the debt ceiling will be raised in time to avert these potential negatives, but our trading partners and investors in our debt will be less likely to add to their Treasury portfolios and may seek trade agreements in non-dollar terms. Our reputation has been hurt by this divided Congress.

This environment is a difficult one for investors, but fortunately the markets have been stable and so far the downside volatility that has occurred since mid-September has provided buying opportunities.

Take a look at the daily chart of the Dow Industrial Average. The Dow set its latest all time high at 15,709.59 on Sept. 18 then declined 6.3% to 14,719.43 into last Wednesday, holding its 200-day simple moving average 14,748.65 and my semiannual value level at 14,724. The close at 15,237.11 on Monday was above its 50-day SMA at 15,171.43, which indicates upside potential is to this month's risky level at 15,932, yet another new all-time high. Above are my semiannual and quarterly risky levels at 16,490 and 16,775. If things go wrong and the Dow closes below 14,724 the downside risk is to my annual value level at 12,696.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AAPL $124.25 0.00%
FB $81.66 0.00%
GOOG $542.56 0.00%
TSLA $187.59 0.00%
YHOO $44.13 0.00%


DOW 17,698.18 -77.94 -0.44%
S&P 500 2,059.69 -8.20 -0.40%
NASDAQ 4,880.2280 -20.6570 -0.42%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs