International bankers and foreign investors have an ongoing need for U.S. dollars, but cannot simply order them from the U.S. Treasury department in the way U.S. banks do. Therefore, they buy them on currency exchange markets. The prices on those markets have risen in anticipation of a default on Oct. 17. “This isn’t reflecting a change in risk outlook, or a major fundamental risk to the economy or financial system, but a liquidity crunch based around one particular day,” said Chris Clark, rates strategist at broker-dealer ICAP in London.
Some Republican members of the House of Representatives have proposed prioritizing interest payments on U.S. debt as a way to mitigate the effects of a payment default caused by failure to raise the debt ceiling.
Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:
Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.
Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers: