Are Politicians Really Going to Allow a Default?

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Who knows for how long, but there was a time, lasting perhaps centuries or more, when the majority believed that planet Earth was the center of the universe.

Yesterday, when I picked up my 1^st-grader from school, she brought home a library book named “Galileo Galilei” and I thought to myself about this genius, who showed the world one of its most profound truths, only to be scorned by what was then the most powerful and influential institution in the world.

Luckily, he was a truth-shower and revealed to the world, at great personal cost, a scientific observation that could not be refuted.

The Sun is at the center of the system, the one that the other planets are gravitating towards.

The Sun shines on planet Earth and our entire way of life relies upon it. We have no plan B for this reality.

In the past 41 years, the Sun of the global financial system has been U.S. Treasury debt.

All other assets trade at some multiple of the safety investors feel about the assurance that Washington will make good on its obligations and liabilities and pay its creditors the coupon payments and interest they are owed.

Courtesy: Zerohedge.com

We don’t know of a time in the past 41 years that investors looked into the abyss and even thought it possible that they’d wake up tomorrow and hear that the U.S. is not paying its debts.

In two weeks from now, on June 1^st, this game of chicken with the debt ceiling will come to a showdown.

The United States of America can obviously pay its creditors; that’s not the issue at hand…

Think about it this way; pretend that you have a favorite restaurant that your family has been to for ages. Your grandfather ate there and took everyone to enjoy, then your dad and now you.

The restaurant has always fed you well, treated you nicely and serviced you with utmost respect.

In turn, you paid the bill without fail and without question.

Over the years, though, when the bill arrived, your dad began arguing about little things, like being charged for some of the children’s meals as if they were adults, and about the returned meals.

Never, though, had it reached the point where the tone of voice was raised and a manager had to be called to resolve the matter.

It’s not a matter of having the money to pay, because you’re good for it.

One day, the waiter recommends a special bottle of wine from the cellar and you order it, but when the bill comes, you realize that it’s an $800 bottle and you think that the waiter should have said so at the outset.

You’re pissed. There’s not much you can do, but you’re livid and begin causing a riot at the table, screaming at the waiter and the shift manager and request to speak with the owner.

They all apologize and ask that you kindly pay the bill and promise that they’ll make sure to tell you next time, even though the waiter said it was a very expensive bottle and that its price is north of $600 and you enjoyed it thoroughly and had no issue with its taste.

The mood has turned sour and the table is kind of embarrassed and surely the next time you visit the place, it will not be the same welcoming attitude, because 30 years of goodwill is out the window, but finally, after all the commotion, you pay.

Not paying America’s bills is equivalent to the sun not rising in the morning; Congress better solve this, or else.

Best Regards,

Lior Gantz
President, WealthResearchGroup.com