April 2011 Market Update

April 2011 Market Update





While the media is warning of the dire implications of a possible government shut-down if Congress cannot agree to a budget amount – a crisis of much larger proportion is looming not far off.


Treasury Secretary, Timothy Geithner has been warning, since January, that congress must address the issue of raising the debt ceiling or risk a financial meltdown of the proportion of 2008. “The consequences of that would be catastrophic. It would make the crisis we went through look modest in comparison. You will shake the basic foundations of the entire global financial system,” said Geithner.


Congress has until May 16th, 2011 to raise the ceiling above the current limit of $14.29 trillion    or default on its’ financial obligations. This means interest will not be paid on the massive amount of treasury obligations outstanding and effectively declare the country bankrupt. International money markets will be rocked and no one can anticipate the extent nor the duration of the results since this has never happened before.


Geithner begged congress to have this done by the end of the first quarter 2011. That deadline passed unnoticed.


“Thousands of businesses will fail and unemployment would rise dramatically as a result of the default,” Giethner said. “It is inconceivable that Congress will not act in time.”  Unfortunately, we are getting used to conceiving the inconceivable.


My goal is not to worry you, but forewarned is forearmed. Our investments in high quality corporate bonds and short term treasuries are the best place to be in dangerous times like these.  Please call if you are concerned.