Aug 8, 2011|
watching Wall Street
Automatically Generated Transcript (may not be 100% accurate)
US markets open and over a little than a half hour from now financial planners Tony had -- front or wealth management is with us on the WB him live on good morning Tony. According to how tightly have you sensed your seatbelt ready for a bumpy ride today or not. Well -- like I do think pregnancy apparently a bumpy -- -- bumpy gave probably a bumpy week and I just record for a little bit. More about building over the foreseeable future for the financial markets. Tony can you explain to us and our listeners how all this credit downgrade. Will really affect the US ability to borrow money through the selling of government bonds or otherwise. It's not going to affected all. We have a I really don't expect it we're going to see much of the move. In interest rates. And you know SMP has also kept their their eyes strain short term debt and the treasury bills of the United States so. I think it's gonna be picking up a whole lot of I think what's happening today with you know futures dropped maybe. You know to the to a quarter percent of this morning is more reflection of what's going Europe and the -- potential future of the Euro. Then the the debt downgrade. Tony what does an average government bonded treasury bond cost which is most popular. Well you know I guess it depends you know we here in terms of five short term financing you know we tend to enhance the you know treasury bills you know leave for the six months the you know the the one year that they of people look at I don't think there's a lack of thirty year about. The benchmark tend to be -- the tenure. -- when you're looking at -- at the yield -- if you look at it two year treasury to take a quarter percent. Ten years you know within two and a half percent so they just that pain and a whole a couple of right now. Is is there a way to know how much of the market trouble we're seeing is because of this downgrade. And how much of it is the trouble in Europe Italy Spain etc. My senses He easily you know it if maybe you know somewhat take equally weighted ended the reason is that over the past seven years and so we have not yet. -- Decker downgrade of US. Credits. And so it truly is unprecedented we really don't know and that uncertainty you know it's gonna -- America it's a little bit but the you know the European situation is. You know is a real concern the other thing I think we have to look for. If there's a tendency of binary agencies to converge on the ratings so recipe came out this now. The apps are you know the foreseeable future we're gonna see Moody's and -- ending up doing this. Then we're going to get it was the year at December. You know -- committee from congress which is going to have to come up with some additional cuts. If that it would do they have -- of these being sequestered sequestration. Which isn't cut. Other -- be forced. That is going to be problematical for the markets and if they don't like the way that his work they're probably gonna be looking -- an additional downgrades. Tony if you had to venture a guess. Where we're going from here will take years to -- a monster climb out of this. Odd claim out of luck -- were. What type in terms of the debt rating. It's probably going to take maybe seven to nine years. Before the debt rating. Ends up being restored to Tripoli. A level in the event that we actually end up doing what response to do. In terms of this. -- the big problem I see right now -- Is there is a tension between wanted to get elected reelected. And wanted to do what -- should be done for the country. Right now from the president on down there are more interest in getting elected rather than being honest with the public and saying -- over promised. There's going to be pain on the tax side there's going to be pain of the spending side. But the only way you're going to turn around is if we make almost in the center radical departure from what we've sold you over the past fifty years. And -- once he's -- going to do it I do think the markets are gonna put intense pressure on them they're rating agencies are going to while also. In the end they are going to have to make you change because they're gonna be out of office if they don't. Are you optimistic. I would never sell America short. You know I would never sell America short and we have tremendous assets we have tremendous work ethic tell you what we've got a lousy bunch of politicians and their cool. Are putting their personal interest ahead of of what's working for the country in other words. He -- the people and say. I wanna preserve the benefits you -- if the rating agencies and telling you you know the trajectory around with spending they have. You know is going to you know put -- in in in that severe economic trouble bottom line is. When our debt to GDP ratio goes it's ninety. We end up getting a natural slowing of the academy which is our ability to pay for these programs. Now nobody -- to cut programs. Polly wanna do is to be in you know -- just want to be sustainable position and we can't do that it's academies week. And that the programs that are pushing the policy if they're pushing right now. You know are really anti growth and we need some of the command there. To give a smart growth for the -- effects I would -- -- you. I would prefer that they raise my taxes -- -- -- -- -- I would prefer that they raised by Texas today. So that we can get get off the table and really start talking about what the real problem -- which is a massive growth in an entitlement. All right Tony good stuff this morning thanks for joining us. Okay guys you have a great day. YouTube Tony -- gore is a certified financial planner with the -- wealth management in Amherst.