It may feel like Déjà vu for Delaware County investors. The federal government’s feuding over a shutdown has dominated the news—and a larger issue looms in the upcoming “Fiscal Cliff 2.0.” As the federal debt ceiling approaches in mid-October, some view the potential political standoff over raising the debt ceiling as a Congressional bluff, but citizens of Delaware County and beyond— need to recognize that the dangers are real. Even if a default is avoided, the agreed-upon resolutions may have their own negative consequences.
Whatever the outcome, the cloud of uncertainty created by Congress will impact the financial markets. The threat of another fiscal cliff will likely steer industries into more conservative spending, significantly slowing investments in new facilities, and jobs. This could spell disaster for our fragile recovery, cramp the recent success in the markets and create disaster for those who have just begun to recover their losses from the Great Recession.
Going over the cliff presents a slew of additional problems, beginning with the U.S. defaulting on its debt payments, which will hurt the global economy. The territory is decidedly uncharted, and while it’s unlikely, even the possibility will be a drag on markets internationally.
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