No matter how you look at all the changes occurring in Washington, we will need to change the way we do business and invest going forward.  We will need to plan based on the outcomes of the following issues:

• The government shut-down due to the inability of Congress to balance the budget and/or raise the debt ceiling, turmoil looms for many U.S. citizens not to mention government employees. 
• The new health care act, many employers are in a quandary about how to offer benefits and how to budget for them. 
• The Federal Reserve Board’s position on Quantitative Easing III. 

U.S. Fiscal Policy has been shoved to the back burner until Congress actually ran out of time.  We were overly concerned about Fed Chairman Bernanke’s announcements and the stock market reaction to them, that no one was minding the mint in the meantime.  Hence we are faced with all the ramifications that come with putting the government on hold.  This conjures up nightmares for seniors on benefits and government workers who don’t know when they should report to work.  Needless to say this has a negative effect on the economy in general.  Even though this has happened before with little or no side effects to the business owner or investor, we are ready for the financial roller coaster to stop.

The next big concern is how to sidestep a default on government bonds.  The S&P already downgraded our credit rating and the next step if there is a payment missed would be a default status.  This does not bode well for our global image or the fact that this could cause yields to soar.  Rising yields we are already familiar with from last quarter when interest-bearing investments dropped in value to support a higher yield.  Fixed income investors could suffer an additional decline in asset value should there be concerns of a default.

The Affordable Care Act (ACA) was scheduled to take effect on October 1.  There is still no concise information available for those who want to apply for coverage and no clear avenue of funding for the program.  This is likely to be delayed again given these issues.  Again, this has become a political yoyo where people in need of health care can’t get answers and employers are facing new budgets themselves for 2014 and do not know how to plan.

The Fed’s tapering concerns may be taking a back seat temporarily while Congress is dealing with these other issues.  Chairman Bernanke’s term expires in January 2014.  Currently one front runner has dropped out of contention for the job and the pros and cons of Janet Yellen or other possible candidates have not been hashed out in the markets yet.  Investors don’t be surprised if good economic data equates to a lower stock market in anticipation of the Fed seeing an opportunity to begin tapering their bond purchases.

As last month’s article identified, we are in for lots of changes this fall and so far, not many of them appear to be positive.  It is hard to run a business, household or investments with prudence when we don’t see a similar initiative in Washington. It is important to plan well for continued fluctuations as we work through these issues.

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Patricia Kummer has been an independent Certified Financial Planner for 27 years and is President of Kummer Financial Strategies, Inc., a Registered Investment Advisor in Highlands Ranch, 4 year Top Wealth Manager 5280. She welcomes your questions at www.kummerfinancial.com or call the economic hotline at 303-683-5800.Any material discussed is meant for informational purposes only and not a substitute for individual advice.