More than likely, the debt ceiling debate will come down to the 11th hour.
But let’s just assume the Congressional circus can’t get an agreement together.
For one, “A default would also seriously impact the global economy, which relies on the relative stability of the United States. The Committee for a Responsible Federal Budget projects that interest rates would increase and investment into Treasury securities would stop, impacting people’s car loans, credit cards, and more,” says Time magazine.
Analysts say markets could crash. The economy will plunge into recession. The Washington Post, says federal workers could be furloughed. Social security checks won’t go out. Borrowing costs would explode higher. The dollar would plummet. And, “the $46 trillion bond market would also tremble, as the values of existing Treasury bonds collapse due to higher yields on new ones. And businesses would likely halt expansion — driving stocks down even more.”
Oh, and according to the White House, stocks could drop 45%. Imagine what would happen if millions didn’t receive their social security checks. Or if stocks really fell 45%.
You’d see absolute madness among consumers.
Personally, I don’t think any of this will happen. Neither said of the political aisle can be do dumb to let it happen. Again, more than likely this goes to the 11th hour.
But until we get word all is well, markets will remain wildly volatile. And while you can always jump into defensive stocks, or high-yielding stocks, you can also bet on volatility, with:
ProShares Ultra VIX Short-Term Futures ETF (UVXY) — The ETF was designed to match two times (2x) the daily performance of the S&P 500 VIX Short-Term Futures Index.
iPath S&P 500 VIX Short-Term Futures (VXX) — The VXX ETN provides exposure to the S&P 500 VIX Short-Term Futures Index.
ProShares VIX Short-Term Futures ETF (VIXY) — ProShares VIX Short-Term Futures ETF provides long exposure to the S&P 500 VIX Short-Term Futures Index, which measures the returns of a portfolio of monthly VIX futures contracts with a weighted average of one month to expiration.