I’ll be writing this summer about the US ability (and struggles) to sell bonds and finance the debt, particularly as QE2 ends and the Chinese bubble bursts (at some point in the future).
This article talks in depth about an issue we may see more of in the future–US debt being downgraded. This is from a German, not US, rating agency, but it could be just the beginning.
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I happen to agree personal consumer debt has been a huge problem for our country and will continue to be a major factor in the next crisis.
What can you do?
Get your personal debt under control and as low as possible. If you need help with strategies around this, please let me know me.
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This article takes a contrarian view, particularly on the debt, which I want to present to you.
He argues there are “diamonds in the rough”, which is almost always true.
I’m still quite negative on municipals in general, but it’s good to see the other point of view.
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Europe continues to be sick and will slow down the global economy.
The worst with Europe is not over. It’s the end of the beginning, not the beginning of the end.
What does this mean for you?
I’m not a fan of a large holding in Europe. Internationally, though, I continue to be impressed with some of the emerging markets out there. Irritatingly, Europe is being forced to address many fiscal imbalances we have here in the United States, but they’re just a number of years ahead of us in addressing them.
I continue to have a minimal to zero exposure to Europe for my clients.
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The first quarter was a bumpy ride for US Treasuries (as I mention in my video which you should have listened to already), and essentially ended flat to slightly negative.
Much of what will happen in the next quarter will be dependent on the ending of quantitative easing in June and whether the Federal Reserve increases interest rates.
What to do? Stay tuned and be diversified. Too much of an allocation to any category can be negative. Too many Treasuries may lead you to lose purchasing power because you’re not staying up with inflation.