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Republicans do not appear to agree to raise the debt ceiling, threatening to shut down government in the United States, with most parts of government shutting down Thursday night. BNR economist Han de Jong doesn’t think there will be a long shutdown because Democrats will use their majority to prevent it.
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The previous shutdown lasted four weeks, according to De Jong, it was “in the newspaper”. The economist points to the possible consequences of such a stop: “Because they reach the debt ceiling, they can no longer spend money on so-called non-essential services. This includes interest payments, so you end up in a situation where the US government defaults on its own interest payments. The result could be that the rating agencies will lower the creditworthiness of the United States. ‘
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And it’s problematic: According to De Jonge, US debt is “one of the safest investments you can make.” For many financial markets, this is the anchor in terms of valuation and direction. ‘
In short: if there is a shutdown, it will lead to major uncertainties in the financial markets. However, De Jong believes there is a good chance the Democrats, with their majority in both houses of representatives, will continue to raise the debt ceiling themselves. Then less political support.
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