There's still no consensus in Washington on raising the debt ceiling to prevent the United States from defaulting. The Senate compromise is plodding along and the House is on a kamikaze mission. But, there is a consensus in the financial markets that not reaching a deal will have a serious impact. And, that's going to really suck for anyone with a 401-k.
WSJ:
Meanwhile, in the U.S., there were few signs of a breakthrough in Washington's debt negotiations, which weighed on sentiment. Even though most investors consider the chance of a government default to be small, the mere thought spurs anxiety.Lehman had a devastating impact on the markets. It wasn't small. On September 14, 2008, we found out Lehman was liquidating. The Dow dropped over 500 points on September 15, 2008 (that was also the day John McCain, who had taken the lead in a number of polls in early September, told us, "The fundamentals of our economy are strong.")
"A U.S. default [is] an unthinkable event," said Anthony Conroy, head trader for equities at BNY ConvergEx. "It would make Lehman look like a very small event."
Perhaps, the knowledge that one's 401k will tank (again) might make this drama in DC seem real to people. Cause that's what's on the financial horizon for the rest of us if the debt ceiling isn't raised.
