Game of Chicken – US Debt Ceiling

The current game of chicken going on in the US Congress is good for media and may be financially profitable. I think most participants going into this negotiation concerning the debt ceiling thought that it would be a foregone conclusion that there would be some sort of settlement on the matter, but both parties seem to be sufficiently entrenched in their positions.

There is about a weeks’ worth of time before the US Treasury runs out of room to borrow money (via extraordinary measures), and then another couple weeks before they run out of cash entirely. This undoubtedly would create a market crash if this occurred and would result in a very large buying opportunity.

In other words, now is a good time to pick candidates for purchase in the event they are wholesale-dumped into the marketplace when other institutions realize that their T-Bills aren’t going to actually mature at par value.

It will likely not happen, but one can always hope – it is only at times when institutions and funds are forced to liquidate holdings that you can make the greatest gains from the market.