As debt-limit deadline nears, investors show growing concern about a U.S. default

Friday, October 11, 2013

As debt-limit deadline nears, investors show growing concern about a U.S. default

The Washington Post

Video: During a news conference Tuesday at the White House, President Obama stressed the importance of raising the debt ceiling.

By Lori Montgomery and Zachary A. Goldfarb, Published: October 8 E-mail the writers

Concern deepened in financial markets Tuesday about the potential for a U.S. default as President Obama and House Speaker John A. Boehner clashed publicly without breaking an impasse over how to reopen the government and pay the nation’s bills.Short-term borrowing by the Treasury Department became twice as expensive Tuesday as it had been the day before, one of the most significant signs of alarm in the bond markets since the financial crisis of 2008.

The stock market, meanwhile, continued the steady slide that began in mid-September, when Boehner (R-Ohio) embraced a right-wing strategy for using the budget battles to try to dismantle Obama’s signature health-care initiative. The Standard & Poor’s 500-stock index fell 20.67 points to 1,655.45 on Tuesday. The Dow Jones industrial average dropped nearly 160 points to 14,776.53 and has lost nearly 6 percent of its value since hitting a one-year high Sept. 18.
In a hastily planned news conference at the White House, Obama warned that default would be “insane, catastrophic, chaos,” and demanded that Boehner take the weight of that threat off the U.S. economy.
Once that happens, Obama said, “I am happy to talk with him and other Republicans about anything.” But Obama said he also told Boehner in a telephone call Tuesday morning that “having such a conversation, talks, negotiations shouldn’t require hanging the threats of a government shutdown or economic chaos over the heads of the American people.”
An hour later, Boehner fired back that Republicans will not yield until Obama comes to the bargaining table.
“I didn’t come here to shut down the government, and I certainly didn’t come here to default on our debt,” Boehner told reporters at the Capitol. But Obama, he said, is seeking “unconditional surrender by Republicans” before “he’ll sit down and talk. That’s not the way our government works.”
Both men spoke in calm tones, striving to appear reasonable. But with the shutdown in its second week and a critical deadline for government borrowing just eight days away, anxiety was building in Washington and on Wall Street.

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