July 29, 2011

As we approach the August 2nd deadline, Congress continues to astound us with their incompetence and inaction. The latest Boehner bill wasn’t even brought to the House floor for a vote.

We still believe that the Federal government will be able to avoid default, but it will probably lose its AAA credit rating. 

We are going to lay out what we think is the most likely scenario:
                                                 

    • There will be some compromise to allow the debt ceiling to be increased.
    • The ceiling will only be increased by about a trillion dollars.
    • The whole issue will have to be revisited within 6 to 12 months.
    • There will be a downgrade of U.S. debt from AAA to AA.


Any action short of a $3 to 4 trillion bill will have enormous repercussions. We will discuss that in more depth in future articles.
 

Maybe we should just turn off the TVs, radios, and smartphones until next Tuesday, then hope we will wake up to a brighter day!

Stay cool and stay tuned!


Sincerely,

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Edward J. Kohlhepp, Jr., CFP®, MBA

 

To read our previous newsletters on the debt ceiling issue, click here http://www.kohlheppadvisors.com/pages/kohlheppUpdate.aspx?LinkID=109337&spid=94786 and scroll to the bottom to view our archived newsletters.

 

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