As US default nears, investors shrug off threatPublished 11:03am Tuesday, October 15, 2013
NEW YORK — Warren Buffett likens it to a nuclear attack. Economists warn that government spending on programs like Social Security would plunge. The Treasury says the economy would slide into a recession worse than the last.
Yet you wouldn’t know that a U.S. debt default could amount to a nightmare from the way many companies and investors are preparing for it: They aren’t. The assumption seems to be that in the end, Washington will find a way to avert a default.
“Doomsday is nigh, and everyone shrugs,” said Nicholas Colas, chief market strategist at ConvergEx Group, an investment brokerage in New York.
Brian Doe, a wealth adviser at Gratus Capital Management in Atlanta, has 35 clients who’ve entrusted him with $50 million for safekeeping. He isn’t losing sleep over a potential default. Neither are his clients, apparently. Not one has called him about the issue, he said.
“I’ve not done anything,” he said. He puts the odds of default very low.
“We are not taking actions based on the worst-case scenario,” Marcello Ahn, a fund manager in Seoul said.
That worse case is inching closer. The Treasury says it will run out of money to pay its bills if Congress doesn’t increase its borrowing authority by Thursday.