No deal yet on debt crisis. How will Asian markets and Wall Street react?
Washington’s self-imposed deadline to do something credible on the debt crisis before the Asian financial markets opened on Sunday passed in silence. "There could be extreme turmoil in markets," says one expert.
Washington’s self-imposed deadline to do something credible on the debt crisis before the Asian financial markets opened on Sunday passed in silence, marked only by camera crews vainly chasing rumors up and down the empty stairwells of the Capitol.
Both Speaker John Boehner (R) of Ohio and Treasury Secretary Timothy Geithner have cautioned that Congress needed to act this weekend to reassure markets. But with bipartisan deals off the rails and new partisan plans still in the works, Congress fell short of that goal.
In the Bush years, the reaction from the Asian markets often drove the timing of decisions – from the rescue of AIG and Bear Stearns to the failure to prop up Lehman Brothers in 2008.
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“[Treasury Secretary Henry] Paulson always tried to get things done before the Asian markets opened, and Geithner has raised that perspective again,” says Michael Greenberger, a professor at the University of Maryland and former director of trading markets of the Commodity Futures Trading Commission.
“I’m not sure failure to reach agreement today [Sunday] will be a signal for a selloff, but as the week goes on, more and more investors will be concerned,” he adds. “There’s definitely a worry that people are going to want to dump their stocks. There could be extreme turmoil in markets.”
Speaker Boehner spoke with his caucus at 4:30 on Sunday and urged members to stay united. There are no secret negotiations with the White House, nor is it possible to cut a “grand bargain” with this president, he told call participants. Earlier, he told “Fox News Sunday” that if a bipartisan plan is not possible, “I and my Republican colleagues in the House are prepared to move on our own.”
House Republicans have not released details of the new plan, but Boehner said it would involve a two-stage process: a short-term hike in the debt limit with immediate spending cuts, then a second hike with a more robust package of cuts.