The debt ceiling and budget discussions are once again gaining popularity in the news as October draws near. At current debt levels, the United States can continue servicing its debt until approximately October or November this year. Beyond that, an increase in the debt ceiling would be required, but Congress is having a hard time agreeing on spending cuts to justify the raise.
Repercussions of potential war with Syria
The potential attack on Syria took an unexpected turn when Russia (RSX) decided to back up Syria in case of an attack by external forces. This may actually reduce the risk of war with Syria, since I doubt Obama intended war with Russia when he asked Congress to approve the air strikes.
I’ll limit my comments since I’m not a political analyst, but what I can tell you is that the higher the chance of war with Syria, the higher the chance that bond prices will fall. China (FXI) and Russia (RSX) hold 25% of the United States’ foreign debt, so it’s probably wise not to upset them. While Russia has moved some of its navy-heavy muscle close to Syria, a financial attack would hurt the U.S. more than a military one.
Luckily, it seems likely that Congress will shoot the proposals down.