Market Notes The downward slide in the Dow Industrials seems to have found support at the psychologically critical 15000 level. But unless Congress can come to a budget agreement and raise the debt limit, I don't think this level will hold. The elevated VIX means that investors are far from certain that an outcome is imminent and we could see the mighty Dow retest its late August low of 14760--and soon.
Let's hope that Congress will be able to work out a budget deal and raise the debt ceiling, but what if they don't? PIMCO's bond guru, Bill Gross, was quoted recently as saying the probability of the US defaulting on its debt is a million to one or even a billion to one. But CNBC's market madman Jim Cramer thinks that it could be as low as four to one--and that's scary. If the US can't meet its debt obligations, it could raid your savings and retirement accounts in order to pay its bills. I do think that investors should strongly consider putting part or all of their retirement accounts out of easy reach of the government by transferring them to a foreign entity along with diversifying into foreign stocks and currencies. (See this article for more info.) If you have a lot of cash tied up in American dollars, you may want to diversify that into a physical basket of foreign currencies and keep these currencies tucked away in your fire-proof basement safe. I'm truly hoping that the worst case scenario does not play out, but I'd rather err on the side of paranoia than be left with an essentially worthless retirement account denominated in devalued dollars.