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How are Americans preparing for a possible default?

Chained to debt

Steve Chiotakis: Republican House Speaker John Boehner's plan to cut the federal deficit won't get a vote today -- after other GOP House members said the plan doesn't cut enough. That adds to the anxiety that a debt deal won't be reached before the Treasury department says the country could default next week. The federal government that would take big hit with higher borrowing costs -- and local governments could be affected as well.

From Portland, Kristian Foden-Vencil of Oregon Public Broadcasting reports.


Kristian Foden-Vencil: 'The Coin Cottage' is a storefront in Portland. Owner Paul Rigby mostly buys and sells rare old coins. But he says, this summer, small time speculators are paying the bills.

Paul Rigby: I have clients that come in that are buying gold, silver, precious metals because of their concern about the debt.

Gold is seen by some as the safest investment.A debt downgrade would make everyone¹s loans more expensive. So, many are locking-in their mortgages now. Or so says real estate agent Jeff Bale.

Jeff Bale:They've been sitting on the fence watching properties and are deciding now to write the offer with the hopes of getting into contract and locking an interest rate.

And then there are cities and local governments. They have to get loans to build roads and schools. The city of Portland is scheduled to issue $43 million dollars worth of bonds next week. But treasurer Eric Johansen says he might hold back.

Eric Johansen: If there's some uncertainty there and sales are getting pulled nationally, then we might just pull back and wait for this issue to get resolved.

Maryland and California have both put off bond sales recently because of debt worries.

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Rather than focusing on stocks and bonds as possible indicators of the marketplace reactions to the debt limit / default crisis, just follow the dollar - euro exchange rates. Along with the price of gold, the dollar - euro spot rates clearly reflect an international marketplace reaction to the Congressional stalemate.

I don't believe there will be a default. But, if people are frightened into cashing out of the market, the blame will lay directly on the shoulders of the media. Their non-stop hyperbole and hand wringing about why those silly Republicans won't just do whatever Obama wants has served mainly to frighten people who don’t understand what is really happening. They act like a partial government shutdown has never happened before.
You guys must have been really disappointed when the market didn't crash Monday morning.

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