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Wall Street to Washington: Don't mess around on the debt ceiling!

July 14, 2011 |  7:25 am

The financial industry is weighing in loudly Thursday morning against politicians who have refused to lift the United States' debt ceiling and threatened investors with default on U.S. Treasury bonds.

JPMorgan Chase & Co. Chief Executive Jamie Dimon said in a conference call with analysts: "It’s not the kind of thing that I think people should play with."

Congress has until Aug. 2 to allow the government to increase the amount of federal debt above $14.3 trillion. Republican congressional leaders have said they will not approve an increase in the debt ceiling unless Democrats agree to big cuts in government spending.

As of Thursday morning, talks appeared to be at an impasse.

Dimon had particularly strong words for analysts and politicians who have said that not raising the debt ceiling is a reasonable policy option.

"No one can possibly say, who is semi-rational, can say that there is no chance of catastrophic outcome. Therefore, why would you take that risk?" Dimon said.   

Meanwhile, Bill Gross, the founder of the West Coast investment firm PIMCO, took to the pages of the Washington Post with his colorful writing style to give a similar warning.

"The debt ceiling must be raised and not be held hostage by budget negotiations," Gross wrote. "Don’t mess with the debt ceiling, Washington. Bond and currency vigilantes will make you pay."

Both warnings came after Moody's announced Wednesday that it was putting the U.S. AAA credit rating under review, as it had promised to do a month ago.

-- Nathaniel Popper