The Government Shutdown Will Be Avoided?

The Government Shutdown Will Be Avoided

As anticipated, the American Government was saved at the eleventh hour. Following an agreement between Republicans and Democrats, the nation’s borrowing limit will be raised until the 7th of February and the Government will reopen until the 15th of January. As the top priority of the Republicans, it has been decided to maintain the sequesters’ constraints.

The American officials promised to come up with a long term debt plan by 15th of December, in order to avoid this kind of situations for the future. Now that the promises have been made, nothing was left but to expect the Senate and the Congress to pass the agreement.

The relief of the markets was expressed by the intraday highs of the American Indices but still the reluctance of investors is visible, as this episode questions the confidence in the Unites States’ Government. The level of uncertainty also touched historical highs and seems to remain on an upward trend. Pessimistic voices already occurred, reinforcing the idea that each such chapter brings the American economy closer to a collapse that at some point in the future will be unavoidable. As the mistrust sprouts in the investors’ portfolios, the triple A rating of America looks now as an unfair vote of confidence. Investors expect now the rating agency to take in consideration the recent events.

A positive signal was send by the Bank of American Corp which posted higher than expected profits in the third quarter. The increased was calculated at 32%, registering a very productive activity and strategic management of its assets during the financial crisis. The Bank’s officials are expecting for the next quarter the mortgage loan production to fall.

 

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