Dow lost 198 points on Wednesday closing at 12,302. Most Asian markets closed down on Thursday. In the Wall Street Journal, experts indicated that the Asian markets have not yet priced in a U.S. default indicating a dramatic result should Congress be unable to come to an agreement.
S&P claims it was "misquoted"
S&P's Chairman, while testifying before Congress on Wednesday, indicated that they were "misquoted", according to the Washington Post. It was believed that an S&P research report dated July 14 had indicated that the debt needed to be cut $4 trillion for the U.S. to avoid a credit downgrade. S&P indicated that it will not make decisions until a plan has been agreed upon.
States worried about potential U.S. default
Thirty five percent of state revenues come from the federal government. Generally these funds are used for repairing roads, bridges and infrastructure. States are beginning to identify projects to put "on hold" should the U.S. default on its payments, according to the USA Today. Additionally, five states would most likely suffer a credit downgrade should the U.S. default. Those states include Maryland, Virginia, New Mexico, South Carolina and Tennessee, according to Moody's.
U.S. government prints 70 million checks per month
The Washington Post indicates the government prints 70 million checks per month which is equivalent to 27 payments per second. Is it an efficient machine? or an overly large centralized government? You decide.
U.S. Healthcare costs to hit $4.6 trillion in 2020
In a report released by Medicare's Office of the Actuary, the U.S. healthcare cost is expected to exceed $4.6 trillion by 2020. That is equivalent to $13,710 for each man, woman and child in the U.S. Today that per capita cost is $8, 650 and total U.S. healthcare costs are at $2.7 trillion, according to the Associated Press.
Banks threatened by default
The Wall Street Journal indicates that banks are concerned about the impact a government default would have on their primary overnight funding vehicle, the repo. Repos are generally supported by U.S. Treasury bonds. Failure of these bonds to support overnight lending or dramatic increases in collateral will stifle lending.
Fed Beige Book confirms economy worsened in recent months
The Commerce Department collects information from 12 Federal Banks every few weeks. In the report covering the period May 28 to July 15, the Associated Press reports that 8 out of 12 regions indicated that growth had slowed. The worsening economy was blamed on high unemployment, weak home sales and a slowdown in manufacturing. Other indicators confirm these findings since businesses reduced orders for airplanes, autos, heavy machinery and other durable goods and the unemployment rate increased to 9.2%. Consumer spending did improve slightly during June.
Credit Suisse to lay off 2000 employees
Another large bank is laying off employees, according to the Financial Times. Credit Suisse will lay off 2000 employees after its revenue plunged 59% in the 2nd quarter.
Dunkin' Donuts IPO brings positive market news
Dunkin' Donuts IPO on Wednesday closed up $8.85 per share landing at $27.85, according to the Wall Street Journal. The expected range was expected to be $16-$18 per share due to the company's heavy debt load. Dunkin' Donuts is a large purveyor of coffee drinks, donuts and ice cream (through its Baskin Robbins brand) and is exceptionally popular in states east of the Mississippi River.
Rural America population declines to a historic low
"A long, long time ago....I can still remember..."...In 1910, 72% of the U.S. population lived in small rural communities. The 2010 census indicates, according to the Wall Street Journal, that only 16% of the U.S. population lives in small towns today...resulting in shuttered downtowns and for many, a "ghost town" atmosphere. This is especially true in the Great Plains states, northern Texas, Appalachia, Arkansas and Mississippi, where many young adults have left, leaving just an aging population. Since 2000, metro areas have grown 11%. The large population centers live in the suburbs...where 51% of the U.S. population currently lives.