Tag Archives: U.S. Government

Impacts of the U.S. Budget Freeze

With the U.S. government failing to reach agreement on budgetary issues and on raising the debt ceiling, there is considerable discussion of what this would really mean.  From what I have read, the issues are quite straightforward.  If the U.S. government does not raise the debt ceiling, the Treasury will not have sufficient funds available to meet all of its obligations, starting sometime in mid-October.  For the time being, many government workers have been furloughed and services suspended.  Continue reading

Government Default: The Market vs. The Media

One of the more interesting things that I have noted in recent weeks is the dramatic disparity between the way that the media and politicians discuss the probability and potential fallout of the U.S. not raising the debt ceiling and/or defaulting on its obligations, and the way that the markets are reacting to the debate. 

 Just this morning (July 28), CNBC had the striking headline “If US Defaults, Stocks Fall 30%, GDP 5%: Credit Suisse.”  That certainly sounds bad and it makes for a dramatic story.  The story goes on to say that Credit Suisse sees a default as a low probability event, but also outlines a series of other lesser bad outcomes that may occur, such as the possibility that no budget deal is reached but the U.S. does not default (in which case they predict between a 10%-15% decline in stock prices). 

Another great headline: Continue reading