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Experts Say History is a Guide to Government Shutdown
CINCINNATI (Paula Toti) -- The DOW Jones closed slightly higher today but stocks have been getting battered in recent days with the stalemate in Washington.
Families are starting to worry about everything from their investments to social security checks. Local 12's Paula Toti has been looking into what we might expect as things drag on.
Mary always was out spending money today, We have to keep going like we always do and Im not worried yet.
To some extent the government will keep going past the 17th no matter what according to Jason Jackman at Johnson Investment Counsel.
Our personal view is the US Treasury will not default on treasury obligations. Once they get to that point there's enough revenue coming in to cover debt service on treasuries. But not enough to pay everything the government owes.
And when the government has to start prioritizing there are things to worry about.
Probably the stock market and veterans, people getting monthly allotments and not paying their bills.
Jackman says a big test will be the October 23 social security payment.
Very political power keg with social security so the political will be there to make the payments.
The uncertainty will likely continue to hammer stocks. The market dropped 20 percent during a similar situation in August 2011. Still, Jackman says there's little you can do.
If you try to sell in your retirement account it could pop right back up when a deal is struck in Washington.
And while some have predicted a big spike in interest rates, Jackman doesn't see that either for rates more than a month out.
And if mortgage rates move up he doesn't expect it to be by much or for long. He is worried about a tired American public.
You're starting to see an impact on consumer confidence and business confidence that can show up in a real indicator in the months ahead.
Mary is tired of the bickering and expects it to go down to the wire. Then everything will be settled and they won't talk about it for a while and go on to some other problem.
Jackman doesn't think the government will default on paying its treasury obligations. That is the issue some fear will literally rock the world economy. And even though it's been said the government has never failed a payment he says that's not true, it was in 1979. However investors were made whole on that interest payment in a few days.