Santa Fe Las Campanas Market Report

The U.S. debt ceiling debate continues to dominate the news – different day, but same story.  Unfortunately, all of this enormous time spent in Congress, as well as the implied financial uncertainty, has created some angst in the markets.  Consensus among the economists, though, is that the U.S. isn’t in true financial trouble, but the debates seem to be a political arm-wrestle  – as both parties are posturing for the 2012 elections.  If the government shuts down for a day or two, the default would be temporary, according to most economic analysts.  James Holt, VP of BlackRock Investment Mgmt., referred to the government shutdown during the Clinton administration, observing “despite the ‘gloom and doom’ about the gov’t shutdown at the time, a year later, Americans produced their first budget surplus in decades…”.  In the meantime, expect rates to bounce around somewhat until Congress and the President can “agree to agree”.