On September 22, the United States debt ceiling was raised to $15.045 trillion. Given the Congressional “super” committee’s failure to come up with short-term spending cuts, that limit will be reached in January.
When that happens, markets could be headed for another monster fall, given the way confidence in American economic leadership has eroded since August.
Moody’s recently issued the United States another warning about the conducting of its fiscal matters.
Fundamentally, the economy continues to drift. As an article in the Financial Times by Robin Harding and James Politi pointed out, businesses only reported 120,000 new jobs last month and unemployment only declined because people are leaving the work force.
A new crisis of confidence could finally force the U.S. government shutdown that global traders dreaded over the summer.
That could have catastrophic short-term economic effects — but might also finally motivate law makers to get serious about the budget.
The world’s flight to Treasury debt (NYSEARCA:UST) has been a safe haven for Washington. A move to gold instead could eliminate that source of support.
Emerging Money provides insightful and timely information about the increasingly important world of Emerging Market investments. CNBC Emerging Markets Contributor Tim Seymour leads the team of Emerging Money to bring you cutting edge global news and analysis.