Boatman: Washington needs to get its act together
There are many things going on in the world today that could have a major impact on financial markets.
Some will be positive and some will be negative. The government shutdown occurred Tuesday and neither side is budging.
As usual, there is enough blame to go around. Washington does not seem able to do anything other than kick the can down the road. Without a continuing resolution, non-essential services will not have funding to pay employees or pay their bills. There will probably be a 30- or 45-day extension to try and reach a compromise.
If the shutdown is only a few days, the market will not be as affected as with one that lasts several weeks. Some analysts think that could cause a 7 percent drop.
The new employment report is due out on Friday. If that is delayed, there could be even more of a market hit. Times like this demonstrate why your non-market money can never be in the market and your market money must always be in. No one can time the market and most people miss big swings because they do not believe this.
The bigger battle will most likely come in a couple of weeks when the debt ceiling is reached. The government does not have authority to borrow money without an extension being passed.
The government needs to keep borrowing because of all of the deficit spending. To get a scope of the size of the borrowing, visit www.usdebtclock.org.
It is unclear how the government can prioritize its hundreds of thousands of invoices. While the President insists that he will not negotiate, he will have no choice but to negotiate on some issues.
That is the only way there can be any agreement.
Possible changes to quantitative easing by the Federal Reserve have increased volatility in the stock market.
There has been a lot of downward pressure on stock prices and we are witnessing bigger daily swings than there have been for some time. Questions about who will be the next Fed chief are also causing concerns. Obamacare moves into a new stage.
Many companies are not hiring new employees and are reducing hours of part-timers because of the cost. More and more companies are discontinuing retirees' health care and moving them to the exchanges. The latest is Walgreens.
There are some positive things happening in the world.
If Syria follows through on its commitment to destroy its chemical weapons, the world will be a better place.
This will take time and be very complicated with a civil war going on in that country.
The U.S. is having discussions at a high level with Iran for the first time since the hostage crisis during Jimmy Carter's presidency.
This could help bring down oil prices and the cost of gasoline. Oil companies are currently switching to the winter blend, which is also lower cost and Americans drive less in the fall and winter so demand is lower. These lower prices will help the economy since consumers will have more money to spend on other things.
Washington needs to get its act together soon.
Problems cannot be solved by pretending that they do not exist. We are spending too much money and have too many costly policies and unanswered questions for companies to hire new employees.
The best way to get out of economic problems is to have robust growth.
Gary Boatman is a certified financial planner and a local businessman who serves as president of the Monessen Chamber of Commerce.