Tuesday, July 26, 2011
Should retirees panic about the value of their assets if the government defaults?; Toomey introduces bill to prioritize payments if default
Should retirees cash in their 401(k)’s now just in case of default? ABC World News Tonight mentioned one Wall Street Analyst today who said, he would listen to older clients who wanted to get out of everything.
Jim Cramer’s Mad Money, however, takes a rather benign road, here.
Another speaker on CNN said that the administration, in case of default, might pay “by the clock”, randomly, bills as they come in. That could mean that Aug. 3 Social Security checks go out (because they come up quickly) but Aug. 10 do not (my date). I think this would provoke litigation from the AARP and others (including me), and a federal court might well force the government to meet the Trust Fund obligations and sovereign bond debt first. There are also law professors who say that without an extension the Treasury can still borrow to reimburse the Trust Fund.
Senator Toomey, of PA, introduced a bill today to prioritize payments by law in case of default, to protect bond holders, Social Security, military, and veterans. It is called the Fiscal Integrity Act, descriptive story here.
Ron Paul of Texas, 6 days ago, talked about destruction of our currency, and hints at repudiation.