Morning Money Memo…
Fasten your seatbelts. This could be a wild week for financial markets. Futures dropped sharply this morning with investor worries about the threat of a U.S. government debt default. Unless there’s a deal this week to raise the debt ceiling, business leaders, economists and stock market professionals are convinced there would be catastrophic consequences. Your 401k plan to take a severe beating. Interest rates on government bonds, mortgages, credit cards and other loans could jump.
Global leaders are freaking out at the prospect of a U.S. default. IMF Director Christine LaGarde spoke of “massive destruction the world over” if the U.S. government doesn’t pay its bills. If there is a breakthrough on the debt ceiling, however, look for gains. When there were signs of progress, the Dow Jones industrial average rose 111 points Friday, bringing its two-day gain to 434. Its jump on Thursday was the biggest this year.
The partial shutdown of the federal government is now into its 14th day. If it drags on there may be a severe impact on job creation. “It could definitely have an impact on employers and if they’re going to hire for the remainder of the year,” warns Michael Erwin of careerbuilder.com. Continued uncertainty may have a big impact on hiring decisions as businesses plan for the future.
Green power is a growing trend in the auto industry. Ford Motor Company and the University of Michigan are opening a new battery research and manufacturing lab. They hope that new facility will speed the development of batteries for electric and hybrid cars. The center, on the university’s campus in Ann Arbor, will bring together battery makers, car companies and researchers who will test new batteries for prototype vehicles.
New questions are being raised about Google’s plan to include users’ names and personal photos in advertisements it sells to businesses. Massachusetts Sen. Ed Markey wants a government investigation into Google’s change of its terms of service agreement. Starting next month users who don’t opt out could have their reviews of restaurants and other businesses used in advertising. Markey says Google shouldn’t take consumer posts and turn them into product endorsements. He wants the head of the Federal Trade Commission to look into whether this new policy violates Google’s earlier settlement with the agency
Richard Davies Business Correspondent ABC News Radio abcnews.com Twitter: daviesnow