"A brief shutdown would have some negative economic effects and could create political blowback on the GOP. But it would cause far less long-term damage than a default, which would likely send interest rates sky-rocketing, crush the stock market, devastate business and consumer confidence, and probably send the nation’s economy hurtling back into recession if not depression.
“The economic damage created by a government shutdown doesn’t compare to that of breaching the debt limit,” said Mark Zandi of Moody’s Analytics. “Breaching the limit would be an economic disaster. Perhaps Republicans feel that gives the threat of breaching the limit more leverage. Or perhaps some don’t believe the impact of breaching the limit would be that bad. But to be frank, I’m as perplexed as you are. Fortunately, I’m not asked for advice on political strategy.”
In the best-case scenario, investors would come to believe that “we have totally incompetent politicians who are unwilling to pay the bills when they are due,” said Michael Obuchowski of North Shore Asset Management.
http://www.politico.com/story/2013/09/wall-street-gop-are-you-nuts-97425.html?hp=t2_3
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