Options Trading News

October 8, 2013  Tue 8:26 AM CT

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


Stocks keep upward momentum

October 5, 2015

S&P 500 futures are up 0.7 percent, while most of Europe is up 2-3 percent. Asian markets rose 1-2 percent overnight.


ISM services lead quiet agenda

October 5, 2015

The agenda quiets this week, though quarterly earnings will begin to flow. European retail sales are the first event early in the session and may have affect sentiment.


Stocks drop after weak jobs report

October 2, 2015

S&P 500 futures are down more than 1 percent after non-farm payrolls missed forecasts. Bonds and gold moved higher.


Monthly job report leads calendar

October 2, 2015

Due at 8:30 a.m. ET, the report is expected to show that 205,000 jobs were added last month, up from August's 173,000 gain.


Stocks higher before ISM report

October 1, 2015

S&P 500 futures are up 0.2 percent but well below their pre-market peak. Europe has traded similarly, with Germany turning negative while France and Italy are up about 0.8 percent.

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

Premium Services

Archived Webinar

Education & Strategy

Options Academy: More on the Covered Call Strategy

Last week, we talked about the Covered Call and the misconceptions that surround it. We spoke about how an investor must realize that the Covered Call is actually a premium collection strategy and not so much a directional one. If an investor can grasp this idea, the investor stands to do a heck of a lot better in the strategy than they currently do.

View more education articles »