Stock markets around the world are plummeting as Republicans
expanded their demands from delaying or defunding the Affordable
Care Act to more budget reductions from Medicare and Medicaid.
House Speaker John Boehner said yesterday that he will not allow a
vote on a so-called "clean" increase to the statutory debt limit
without any strings attached.
"We're not going to pass a clean debt limit increase," Boehner said
in a television interview yesterday. "The votes are not in the
House to pass a clean debt limit. And the president is risking
default by not having a conversation with us."
Investors are bracing for a protracted fight over the next 10 days
before the Treasury can no longer pay for past bills.
Before the opening bell, futures were down sharply.
(INDEXDJX:.DJI) futures were off 0.77% at 14,882 while futures
contracts on the
(INDEXSP:.INX) sank 0.81% to 1,671.10.
(INDEXNASDAQ:.IXIC) futures fell 0.77% to 3,209.75.
If the US falls into technical default, China, the biggest foreign
holder of Treasuries, will be greatly affected. China's Vice
Finance Minister Zhu Guangyao publicly urged Congress to do the
"The United States is totally clear about China's concerns about
the fiscal cliff," he said. "We ask that the United States
earnestly takes steps to resolve in a timely way before October 17
the political [issues] around the debt ceiling and prevent a US
debt default to ensure safety of Chinese investments in the United
States and the global economic recovery."
) analysts told clients that if the Treasury is forced to cut back
on spending drastically, it would cut 4.2% off of annualized GDP.
In companies news, the shutdown is also affecting the military
industrial complex. Last week,
) said that it will furlough about 2,000 employees for Sikorsky
aircraft, but cancelled after the government ordered the military's
400,000 civilian employees to return to work.
) will go through with furloughing 3,000, however.
(TYO:9201) made its first purchase from Airbus rather than the
). JAL ordered 31 A350 planes from the European manufacturer.
Boeing had long held dominance in the Japanese market, but the 787
Dreamliners had problems with batteries that caused them to be
) is looking for options apart from the $4.7 billion offer from
Fairfax Financial Holdings, according to a
. The smartphone company is in talks with
(SAP) to discuss selling itself in whole or in part. It will also
(OTCMKTS:SSNLF) by next week. The tech companies might be
interested in BlackBerry's patents and servers. It is possible that
the original deal to bring the company private will fall short of
Disclosure: Minyanville Studios, a division of Minyanville
Media, has a business relationship with BlackBerry.