'Terrifying worldwide panic' looms

Global markets eye America anxiously as political deadlock in Washington makes a default more likely.

Investors are being forced to endure yet another episode of Nightmare on the Potomac, says Randall W Forsyth in Barron's. On 1 October America's federal government shut down after Congress failed to agree to renew the government's spending authority, which was due to expire as the tax year ended on 30 September.

The discretionary spending covered by this mandate ceased on Tuesday, with almost one million public-sector workers going unpaid. "Mandatory" spending on essential public services, including benefit payments and those relating to protecting life or property such as air traffic control was not affected. This "dysfunction" isn't new, as Morgan Stanley pointed out. Disagreements between the main parties in Congress have led to 17 shutdowns in the past 40 years. Most have lasted a few days, with the longest stand-off, in 1995, lasting 21 days.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
MoneyWeek

MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.