Wall Street ‘Vastly Underestimating’ Risk Of US Debt Default

1 Jun

From Forbes magazine’s Robert Lenzner in StreetTalk:

“I was up in Wall Street  this week,” (renowned NY Times columnist) Brooks said. “They’re vastly underestimating the source of political risk here. We could have a major problem, I think, either this summer or the next couple years. And I’d be worried about investing too much in the market. That’s my financial advice.”

And Lenzner’s take on this?

I have to admit Brooks woke me up. I had blithely been assuming a deal to raise the debt limit would get resolved at the last minute–the classic American way…

It’s a future scenario few of us want to contemplate. A runup to possible default will not be positive for the stock market. Even if default is avoided then the notion that Wall Street doesn’t get the crisis means there’s too much denial of reality in stock prices. I’m with David Brooks.

We can now add Forbes’ Robert Lenzner and the New York Times’ David Brooks to “foreign powers”, Wells Fargo senior economist Mark Vitner , CDS traders and investors, Ronald Reagan’s budget director David Stockman, the Wall Street Journal, the U.S. Treasury, Southern Cross Equities’ Charlie Aitken, ANZ chief Mike Smith, global currency expert Savvas Savouri, ABC’s Inside Business and Business Spectator Alan Kohler, credit rating agency Standard & Poors, CNBC, Deutsche Bank, and Barack Obama.

All agree that Barnaby was right when he forewarned of the risk of US debt default back in 2009 (“Barnaby Warns of Bigger GFC“).

Apologies please, Messr’s Swan, Tanner, Henry, Stevens, and assorted mainstream media “experts”. You were all wrong.

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