The Daily Beast
by Zachary Karabell
July 25, 2011
The D.C. debt debacle has the markets poised to plunge today. Zachary Karabell on how it might require a Wall Street mini-crash to prompt action—and why the U.S. would lose anyway.
For the past few weeks as the debt-ceiling crisis has intensified in Washington, financial markets have been acting on the assumption that a deal will be done. This weekend, that changed.
House Majority Leader John Boehner’s decision Friday evening to walk away from the table (surely not coincidentally after the U.S. markets closed for the weekend) acted as the proverbial smelling salts that snapped global markets out of what had been a pleasant dream that all will be well before it’s too late. As the folly continued, slow-motion, across the weekend, governments and market makers throughout the world seemed finally to realize what some had long suspected: saner heads do not control Congress—and may not prevail.