|By Mark Davis, The Kansas City Star|
|McClatchy-Tribune Information Services|
Businesses and investors said their plans had changed little despite the threat that Uncle Sam may run out of borrowing room
For a while Thursday, the urgency appeared to have passed as
Late in the day, President
Then there's the reality that a default on the federal debt would be so calamitous that there simply would be nowhere to hide.
"I don't know what you'd do," said
Financial markets, which had turned jittery, welcomed the reports earlier Thursday that a deal was possible. The Dow Jones industrial average jumped 323.09, or 2.2 percent, to 15,126.07.
But all the angst could resurface Friday if it appears the impasse will continue.
The irony is, the closer
It happened that way in
Why? Investors know that should Uncle Sam decide not to pay, he still will be able to pay. Even if he paid late.
Americans have gotten used to worrying about
Starting with the
"There's a frustration with the entire process," said
Bankers hear the same story.
"In my opinion, the debt ceiling is the big issue, and we have a lot of customers asking about that," said
Some businesses had taken out a bit of insurance ahead of the debt ceiling dealings Thursday.
Jorgenson said they increased their lines of credit at
"They're building a treasure chest in the event they need it," Jorgenson said, "if the government is a bad actor."
This month's debt ceiling drama at least came amid a more stable economic recovery than the one two years ago.
So looming crisis or not, it was mostly on with business at area businesses, said
"We've got several clients who are having their best year ever," Ketter said.
What? Me worry?
The Dow Jones industrial average had tumbled 6 percent from record highs a month ago before rebounding Thursday.
It got much worse in 2011, when the Dow shed 15 percent between late July and early October. Even then, the Dow regained all its lost ground by February.
Investment advisers said trying to play a
"When you try to invest on
Still, a few professionals decided to hedge their bets.
Fidelity Investments said its money market funds no longer own any U.S. Treasury securities that come due in late October, the period a default would presumably disturb.
Fidelity's funds still hold a lot of other U.S. Treasuries, but fund managers won't have to worry about delayed collections from Uncle Sam.
A Reuters report said some other fund families similarly sought to avoid Treasuries that might not pay off on schedule because of the impasse.
Otherwise, Treasuries remain the safest investment out there as far as money managers are concerned.
And that means, he said, that the market for new Treasury borrowings and resales of existing Treasury securities would remain strong even in the face of a short-term default.
"I can't create a case where Treasuries trade at distressed levels," he said.
Standard & Poor's Corp., which cut
"This sort of political brinkmanship is the dominant reason the rating is no longer AAA," said a
Missing any debt payments would trigger a "selective default" rating for Uncle Sam until the missed payments were made up, S&P said. Then the agency would rate Uncle Sam anew.
In other governments' defaults, S&P said it came out with new ratings in the range of CCC+ to
U.S. Treasuries didn't escape unscathed from the government's proximity to its debt ceiling.
For example, rates on Treasuries that come due
Consider the extra interest just another bit of insurance ahead of what still may be a debt ceiling deadline next week.
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