U.S. stocks rounded out a six-day slide on Friday as tempers flared in Washington D.C. After this weekend’s spectacular showdown between the House and the Senate, rival parties, and rivals within parties, analysts predict an even bigger jolt to the markets when trading floors open on Monday.
But it’s not October 1st, the much ballyhooed date of the government shutdown, that has investors spooked — it’s October 17th, the day the government runs out of money to pay back its loans and risks default.
The specter of a deadbeat Uncle Sam is fanciful, for sure, but no longer inconceivable in light of the recent display in partisan brinksmanship. A growing chorus of market-watchers told the New York Times that they can no longer take the risk of default completely off the table. One analyst has even put the risk at 40 percent. The other 60 percent he chalked up to “blind faith” in the government. Whether Congress can restore that faith will depend on its ability to work a miracle and agree on a budget before October 17th.