Where to invest should the US go bankrupt??

[clifp]

While I can imagine a situation where the US become a dead beat borrower. I think it would take the form of some creative loan restructuring rather than outright bankruptcy. For example if you owned a 30 year T bond, rather than give you money. The government would let/force you to exchange this for enhanced future social security payments. Thus partially cushioning the blow. Of course this does the Chinese government very little good

 

[novaman]

Still think I'm nuts?

US May Lose Its 'AAA' Rating - General * Europe * News * Story - CNBC.com

 

[ziggy29]

Still think I'm nuts?

US May Lose Its 'AAA' Rating - General * Europe * News * Story - CNBC.com

This is just one person's opinion on the usual CNBC Scaremongering Circuit. The headline makes it sound like there's some official "bond rating service" for the federal government considering a cut in the bond rating.

Irresponsible journalism, IMO -- doubly so because it just adds more to the panic and the FUD out there, and more FUD is the last thing this economy and these markets need.

 

[d]

in answer to the question, i'd suggest 50% in b3av3r ch33s3 and 50% in bangladesh waterfront realestate.

 

[mark500]

If the USA loses it's AAA rating, then Europe and the rest of the world will too. For goodness sake, even the Swiss banks have developed some difficulties.

 

[freebird5825]

With the continued bloating of the national debt, talk of another bailout bill/stimulus package, a new administration coming in with many promised new programs, my fear is that the US could cease to be able to meet its debt obligations and go bankrupt in the next decade.
Any thoughts on an investment portfolio designed to protect yourself in case such an event happens?

now here's a cheerful thread.
i'll go 100% hypothetical...if the US went bankrupt, then current financial instruments don't mean squat. currency becomes meaningless. banking system closes down.
so it's back to the basics...food taking priority. i would invest in some seeds, fertilizer, and a tractor + equipment so i can till my lawn and grow my own food. i would barter my crops and possessions for ammunition so i can learn to shoot and hunt the wild critters that abound here. i would teach myself some basic trade so i can barter for other people's production items.
sound screwy? maybe...but think about what people did before the market existed? they traded in basic commodities.

 

[novaman]

Yet another log on the fire

China 'worried' about US Treasury holdings

 

[clifp]

Yet another log on the fire

China 'worried' about US Treasury holdings

I don't think China is being crazy. I'll repost this link to Harvard study about countries defaulting on debt. Page 10 gives a (partial) list of countries, I think it is worth noting that the countries that have never defaulted on debt (e.g. US, Canada, Belgium, Norway) are out numbered by the countries (e.g. Germany, Japan, China, Russia, France, India) that have defaulted by a wide margin.

When Newfoundland defaulted Canada took over the province, so perhaps China will take over .

Cheery thought I know but the market was up 10% this week, no reason not inject more fear.

 

[Dennis]

LOL you're kidding right? If The USA goesbankrupt? Best pack your Bags and go allthe way to China.. for all and any other countries will bein shambles as well..
China , China Won't befar behind depending on the USA,but None the Less..

Nothing /noInvestment , especially Ins.Annuities or anything else will be worth the paper they're printed on and only Gold will buy you toilet paper..

BTW > Insurance Co.'s are asking for a Bail out now..
They made be insured, but who's Re-InSuring them?

 

[dmpi]

US is not going bankrupt. It's the dollar that's going to be under attack. I realy believe this. All my equities dollars are going into international funds. IMHO there is just less risk outside the US, than inside.

 

[Koolau]

only Gold will buy you toilet paper..

In this scenario, TP will buy you just about anything as well - through barter. Skip the gold, go straight for the TP It is more "divisible" than gold

 

[novaman]

In this scenario, TP will buy you just about anything as well - through barter. Skip the gold, go straight for the TP It is more "divisible" than gold

Okay I'll trade ya

 

[FIREd]

As heard from a well-respected Swiss banker on Swiss TV a few months ago:

"If the US goes bankrupt, there will be nowhere to hide"...

 

[Cruising2022]

You guys are crazy!! I'm sick of these tin-foil hat theories!!!

The mainstream is that we came just 3 hours from this scenario, and we're not out of the woods yet. Revealed: The day the banks were just three hours from collapse | Mail Online I would argue that it is tinfoil to believe and trust in the otherwise (that this would never happen to the USA).

Edit: that was an UK link. USA was no less safe: http://www.tribbleagency.com/?p=4166

 

[tomintucson]

You guys are crazy!! I'm sick of these tin-foil hat theories!!!

Ladelfina is having a bit of fun with the board... Nice to hear from you again, Ladelfina. It seems that you no longer have a desire to put a lot of energy into in-depth economic discussions on this board. From the quality of your past posts, I'd guess it's because you decided you had better ways to spend your time. Good job maintaining your humor.

Tom

 

[Independent]

With the continued bloating of the national debt, talk of another bailout bill/stimulus package, a new administration coming in with many promised new programs, my fear is that the US could cease to be able to meet its debt obligations and go bankrupt in the next decade.
Any thoughts on an investment portfolio designed to protect yourself in case such an event happens?

I think you need to define "cease to be able to meet its debt obligations". Do you mean:
1) We'd have to raise taxes or reduce benefits to balance SS and Medicare?
2) The US would just say "your treasury securities are worthless"?
3) The US would print money so it can pay off the treasuries with greenbacks (okay, new colors may not be green)?

My guess is that (1) has very little impact except for looking for tax efficient investments (hard to predict since tax laws would be changing).
(2) isn't going to happen, since (3) is a better choice for the gov't.
(3) is the way it would probably play out. For mild inflation it's the same old prescription - real assets, real estate, TIPS, stocks that would just ride the inflation escalator (e.g. food stores). For hyper-inflation it's real assets, historically gold has been good.

What I read tells me that our current troubles are creating problems all over the globe, so I'd expect some sort of world-wide recession/depression if the US got into hyper-inflation. Maybe I'd take the chance that some other currencies will hold up better than the dollar and diversify into some of them.

In spite of trying to think seriously about this, I think "mild inflation" is the likely scenario.

 

[REWahoo]

Cruising and Tom, please note this is an old thread that Novaman resurrected yesterday. The Ladelfina post you are responding to is more than four months old (11-08-2008).

 

[tomintucson]

Oops, thanks for that. Ladelfina had some fun with us back in November 2008. When all we had to worry about was a roughly 30% drop in equity values. The glory days.

 

[Dennis]

Well not so sure about the US Gov't, but States and Cities should.. It's going to be the only way to Break those Unions and Those Outragious pensions we're Locked into..
Costing an average of 30% of a the Budget? expected to rise to 40% by 2015?
and the same with the Teachers unions.. Their pensions are just plain Ridiculous..

Wonder why the USPO went private... It was the only way to break them up..
Wonder why The unions Don't want us to Privatize alot of things?
let alone Allow You to Transfer your Kids out of PS and into Private one's?
It's a Real Mess...and maybe Bankruptcy IS the Only way out..?

It works for Business and didn't California and other states do it in the past?

 

[shotgunner]

Now we have a US Senator floating an idea of this being possible.

Washington Times - Gregg: Deficits could bring bankruptcy

 

[Dawg52]

Now we have a US Senator floating an idea of this being possible.

Washington Times - Gregg: Deficits could bring bankruptcy

I don't think it's impossible. And if does happen, I guess that means FDIC insurance is meaningless? What about SS? I need someone to cheer me up.

 

[W2R]

I don't think it's impossible. And if does happen, I guess that means FDIC insurance is meaningless? What about SS? I need someone to cheer me up.

Cheer up, Dawg. Most of us have income coming in from so many different sources that it is unlikely they would all freeze up at once.

Besides, if the government goes bankrupt, it would affect everyone (it seems to me). The country and all aspects of our lives would be in shambles, and our currency would be worthless. So, getting or not getting a SS check wouldn't make much difference one way or another.

Feel better?

(I don't think there are world bankruptcy laws that cover entire countries, although I really have no knowledge of world economic practices... but either way, I doubt the USA will go bankrupt.)

 

[FinanceDude]

Two words................Variable Annuities

As long as they are backed by the requisite amount of Swiss francs, I am in. I vote for Austrailia, they seem to like Americans......

 

[cashflo2u2]

Everybody is focusing on the liability side of the USA balance sheet. What about our assets? Couldn't we sell something, like Alaska or Hawaii or something like that?

 

[JohnDoe]

Can we sell Washington DC? That would be my vote.