To feel a bit scared about what Chris Evans just said about something happening in America to make the economy crash here and it all being a total and utter disaster?

[mameulah]

Genuinely feel a bit shaken up. Did anyone else hear it?

Wouldn't be the first time OP!

Think it's pretty disgusting that these Republicans feel no qualms about using these tactics purely to further their vendetta against Obama.

Tea party, anyone?

In itself, the shutdown wont really affect the outside world in the short term, border controls are still working so anyone travelling to the US will still get in.

The time it might start to affect us is in the medium term as taking the spending power from public sector workers might see a dip in the US economy which will affect their ability to buy from us. Such uncertainty also weakens the Dollar on the international markets which makes our exports to the US more expensive, the US is a significant market for the UK so there is a danger it could affect our recovery.

The big thing the pessamists and apocalypse peddlars are talking about is what might happen when the US hits its self imposed debt (and in effect borrowing) ceiling on the 17th October. This might result in the US defaulting on a bond it issued a year, two years or even 10 years ago (this is incredibly unlikely to happen). That would mean that puts all other US bonds into doubt, investors often use these bonds as security to raise finance - if your security and ability to get your money back is suddenly in doubt you become a bad risk and borrowing becomes super expensive. This has the effect of putting interest rates up and in reality, this is probably the main effect we would see over here - it might be quite a sharp rise in interest rates.

In reality, a bond default by the US is EXTREMELY UNLIKELY TO HAPPEN as they would cut spending on another part of their budget first before defaulting on foreign debt.

So, whilst at absolute worst case scenario it is scary, it is so unlikely you can probably stop hiding under the bed . The governmental deadlock is unlikely to drag on that long and they will probably just vote a bigger debt ceiling.

It is an unseemly kerfuffle and one which shows politicians in their worst light but apocalyptic - no

I had an email from my market analyst this morning about this. The feeling is that whilst there will be a gut reaction in the market which will cause a big hit this will be temporary. In essence a whole lot of middle aged men have thrown their toys out of the pram they will have climb out of the pram and collecting their toys otherwise the damage to the pram will be to great.
Any market effect is likely to be very short term and in medium and long term the analysts feel there will be virtually no change.
Yes if you were hoping to make a big killing in the market in the next 7 days it is unlikely unless you have short sold on the right day.

It was Chris Evans on his Radio 2 breakfast show this morning. I heard it, he was mainly talking about the shutdown and the possibility of the US defaulting if it is not sorted out by 17th October. It was quite refreshing to hear a serious subject discussed in a normal way by two non-experts instead of heavy subjects being confined to the likes of the Today programme on Radio 4. These things may affect us all and your choice of media may leave you ignorant of this kind of news if places like Radio 1 and 2 stick to the "Breakfast is for light chat and humour only" attituide all the time.

Wont they just print some more money or add many many 0000000s to something, if it all goes belly up on the 17th? I used to pay much more attention to this sort of thing a few years ago, but have rightly or wrongly got a bit blase lately.

Can I just point out that I work in local government, in a front line service, and I have to take 2 days compulsory unpaid leave as part of the package of cuts that the council have decided on. And they have the cheek to tell us when we should take this compulsory unpaid leave. Upthread someone mentioned that public sector organisations are sailing close to the wind with their budgets, this is very true in Children's Services, which impacts on the safety of children. I think OP is right to worry about the ripple effect of US economic policy. Its worrying how their actions can destabilise just by virtue of intense media coverage affecting market confidence.

If Chris Evans says it, it must be 99% true. Still need it confirmed by Bob Carolgees though.

DH was teasing about my dad being out of work, but Dad works for state govt. so he's okay. For now...

I like the meme going around on FB that reads, "Just think. 2 weeks ago we had enough money to bomb Syria".

It's just really stupid. Grown adults who are supposed to be working for the people throwing big tantrums to prove a point.

AND I can't walk the dogs in my favourite park today.

So what is the WORST case scenario?

Absolute worse case scenario is that the US defaults on its loans.

This starts a run on the Dollar (anyone owning dollar bonds will try to sell them as fast as possible).

Dollar plummets in value against other currency's. As most (from my understanding) global bonds/stocks/shares are held in dollars this will wipe billions off the value of companies globally which could lead to their collapse.

Many Governments also "own" US debt, so a default could leave them short of funds.

Disclsimer - I'm not an economist, this is just my best guess!

This happened 17 years ago op.

Frankel. But it wouldnt actually do that would it? They love their power much to much to let that happen. So they will print their way out, until they cannot print anymore, and the US$ is worthless. As in not worth the paper it is written on. And up to the end they will say that it will be ok, just so they can try and hold onto their power for as long as possible. Same with Brussels and the Euro, unless the country of Germany or its people or both refuse to go that route.. That is the way I see it. I could be wrong I suppose? Disclaimer, I am not an economist either.

When will the dollar drop? We're going to MA in 2 weeks and I want a favourable exchange rate...

My understanding is that the issue is the mythical "debt ceiling". Unless Congress/the Senate (I forget which) approve the raising of the debt ceiling the Government will run out of money to repay the loans. I don't think quantative easing (printing more money) applies in this instance.

Yes it does look to be about the debt ceiling. Even less chance of anything drastic happening imo. Most will be much too scared to not raise it, again imo.