As debt-limit deadline nears, investors show growing concern about a U.S. default

By Lori Montgomery and Zachary A. Goldfarb, WashPost, Published: October 8

Concern deepened in financial markets Tuesday about the potential for a U.S. default as President Obama and House Speaker John A. Boehner clashed publicly without breaking an impasse over how to reopen the government and pay the nation’s bills.

Short-term borrowing by the Treasury Department became twice as expensive Tuesday as it had been the day before, one of the most significant signs of alarm in the bond markets since the financial crisis of 2008.

The stock market, meanwhile, continued the steady slide that began in mid-September, when Boehner (R-Ohio) embraced a right-wing strategy for using the budget battles to try to dismantle Obama’s signature health-care initiative. The Standard & Poor’s 500-stock index fell 20.67 points to 1,655.45 on Tuesday. The Dow Jones industrial average dropped nearly 160 points to 14,776.53 and has lost nearly 6 percent of its value since hitting a one-year high Sept. 18.

In a hastily planned news conference at the White House, Obama warned that default would be “insane, catastrophic, chaos,” and demanded that Boehner take the weight of that threat off the U.S. economy.

(More here.)