OptionsHouse

Options Trading News

October 8, 2013  Tue 8:26 AM CT

SPX: SEE CHART GET CHAIN FIND STRATEGIES
The end of the world is really hard to pin down, isn't it? What day does it end? Does it end immediately? Does it end with a bang? With a whimper?

These are the central issues. The Treasury secretary is almost too confident that everything will be resolved. The House speaker is equally confident.

What the heck makes them so confident? The only thing that seems to get everyone focused is a drop-dead deadline, and we don't have one because of the peculiar nature of money in and money out with the federal government.

Frankly, anyone who says what the world will look like on Oct. 18 doesn't really know. You would have to anticipate what the ratings agencies have to say and what the money in the till would be and whether Jack Lew can really prioritize things.

Then we don't really know when the government needs to actually raise money. Is there an alternative way to raise money that we don't know about? Is there a way to sell property that could quickly raise money? Sell gold? It is just hard to figure out what happens Oct.18.

TheStreet.com logoBut we do know what happens if we have to issue paper and we are not allowed to. Business just stops. It just stops everywhere. Every part of the world.

I think you could even argue that we will be in a cash economy because everyone has to figure out what they really own and what they are allowed to own and what can't be owned, as so many businesses assume that Treasuries are risk-free.

The idea of even one day of skipped interest payments is horrendous. But what comes in that day? What do they have in the till that day vs. what can come out?

Is it better to just stop Social Security checks? I would think so. Stop Medicare payments? Absolutely. Is that the hidden agenda of some?

All I know is that it is unthinkable for the U.S. to not pay its debt. It just puts us at the bottom of the heap and puts every institution that owns Treasuries at risk. Which is pretty much everyone.

You can argue that because so many have them, we can, in a sweeping way, declare that everyone's going to be fine. But I just don't see how that happens.

Until we know more, it is unthinkable. Maybe it can be thinkable if the president says what the plan is.
Right now, though, we just have an abyss and nothing to fill it.
Share this article with your friends


Related Stories

SPX

Stocks retreat following big surge

August 28, 2015

S&P 500 futures are down 0.7 percent, matching the declines in Europe. Asian markets were positive overnight, with Shanghai rallying 5 percent and Tokyo up 3 percent.

SPX

European, spending data on tap

August 28, 2015

European indexes covering the industrial, business, and consumer sectors are due early in the session and could have some impact on trading.

SPX

Strong GDP boosts stocks further

August 27, 2015

S&P 500 futures rose 1 percent, resuming their rebound after economic growth and jobless claims beat estimates. Europe gained more than 2 percent, and Shanghai surged 5 percent.

SPX

Revised GDP takes center stage

August 27, 2015

The Commerce Department is expected to report that the economy expanded 3.1 percent between April and June, up considerably from its early 2.3 percent growth estimate.

SPX

Stocks try to rally again after selloff

August 26, 2015

S&P 500 futures are up 2.4 percent, adding to gains after durable-goods orders beat estimates. Europe also recovered. Asia was mixed, with Shanghai down again but Tokyo rallying about 3 percent.

Invest Like a Monster - San Antonio: October 9-10

Premium Services

Archived Webinar

Education & Strategy

Options Academy: Ron's Risk Calculation--A Real Life Example

It is rare that I get a chance to give a real-life, real-time example in my articles that the readers were not only following but were actually involved in at the time the event is happening. Well, that is where we are right now in our QQQ trade from last week. Let's recap the trade itself.

View more education articles »