OK, people--Talk me down here on the bond & stock markets--

[Jackpine Radical]

I just suggested to someone that they may want to get their retirement money out of the markets if they can.

I believe that a default on or about Oct. 17 would have disastrous consequences in the markets, and one ought to be thinking about putting their money someplace very safe at least for a while.

Better no interest on money in an insured bank account (or in my case credit union) than living through 1929 Redux--or 1929 on steroids. There will be a worldwide market crash if we default.

Bonds have always been relatively safe in the past, but the inviolable floor has always been US Treasury notes. If we once default on T Notes, the world will not regain confidence in them again for generations. I'm not a financial expert, but I do imagine that the bond market will go all squishy if the T Notes blow up.

On the other hand, maybe the Republicans are not quite crazy enough to drive the clown car off that cliff. That's the bet you have to make here, because we're all in the trailer they're pulling behind the clown car.

Am I nuts? (Well, I know a lot of people already have an opinion on that, but just on the topic of investment.)

[TreasonousBastard]

1. I don't think anyone knows what will happen...

The Chinese have huge Treasury holdings, so it may end up being their call-- and they prefer not to go broke or crazy.

Check the price of gold-- that's pretty safe and goes up when the rich feel queasy. It's not heading skyward at the moment, so not that much "smart money" seems to be worried.

[NoOneMan]

2. Who knows if the default will happen (I doubt it)

But the market is looking for an excuse to fall (and for special people to take profits). The QE tapering hasn't materialized yet so its still bloated as hell. I sold off my pitiful holdings months ago, and was wrong then. Who knows. In any case, its one thing or another and we will see a big dip.

[Cal Carpenter]

3. Sort of a self-fulfilling prophecy, innit?

If everyone panics and pulls their money out, the market plummets...

[NoOneMan]

7. People don't decide to up and panic for nothing

Its all part of the system. Its not the fault of the panicers, but those inciting the fear and panic in the population. That started before this OP.

[Cal Carpenter]

9. I understand what you mean

and I knew I was taking a chance with my post since I didn't add a few paragraphs qualifying my comment, but I was too damn lazy. I'm surely not blaming anyone for divesting from the stock market, for any reason, any time.

[liberal_at_heart]

4. I'm not sure I would be advising anyone to do one thing or the other with such a large amount of

money. That should be a personal decision based on how much risk you're willing to take on by either being in or out of the market. You can lose a lot of money by being in the market. You can also miss out on a lot of money if you're out of the market. Let people decide for themselves.

[Mojorabbit]

5. I just had to cash everything in for medical bills but

am reccing to see what others say.

[Uncle Joe]

6. I wouldn't advise for the people to panic because that will only create a self-fulfilling prophecy

of a rapidly shrinking dollar while also creating an upward momentum on the T-note and other interest rates as a result.

I do believe it would be wise that if you have enough savings to have a % perhaps 10-15, of it in precious metals; silver, gold or platinum as a hedge against instability.

My gut feeling is that the Congress will not be so stupid (I know that's asking a lot of the Republicans) to not raise the debt ceiling, causing a default and according to my interpretation of the 14th Amendment the debt must be paid.

If the Congress doesn't raise the debt ceiling, they are De Facto creating questions as to the validity of the nation's public debt and in violation of the Constitution.

http://en.wikipedia.org/wiki/Fourteenth_Amendment_to_the_United_States_Constitution

Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

Having said that the closer we get to the final date without resolution of an increase in the debt ceiling, the growing uncertainty will only serve to create increasing amounts of volatility in the market with a negative effect against the dollar and other federal debt obligations.

Thanks for the thread, Jackpine Radical.

[Benton D Struckcheon]

8. What can you do with a 401k?

The "safe" stuff is one of two things: money market funds or bond funds. But if there is a default, anything can happen: money market funds can "break the buck", bonds can collapse.
Outside a 401k you could buy VIX calls as a hedge, or gold, but gold collapsed in 2008 during the crisis, so it's not a slam dunk.
Even just selling everything in an account outside a 401k may not work: if the broker you use deposits the funds in a money market, you've still got that risk.

[SheilaT]

10. Perhaps a little history will be comforting.

On September 11, 2001, the stock market in NYC never opened because of a little messiness that day I'm sure you know about. The market remained closed the entire week, not re-opening until the 17th. That week the market fell 14%, over 1300 points. Every bit of that loss was recovered and then some in the next 30 days.

Maybe if you're in a position to hold short positions you'll do well. But otherwise, I certainly intend to keep my stocks as they are. I am not 100% invested in stocks anyway. Probably no one should be.

There are a number of people here who are convinced the market will totally crash and never recover, or not recover for many years. I don't happen to think that will happen. Just my opinion, compared to other opinions.

[B Calm]

11. +1

[liberal_at_heart]

12. I hold that opinion as well. I just don't have money to put in it anymore, and since I don't have

enough to put in it anymore and it is not enough to retire on I might as well use it to try and better my circumstance now.