Decision time ahead.

Well, here we are again heading towards a potential crisis point which let's face it was so predictable. Politicians in the US continue to argue and stand their ground on the issue of the budget, the debt limit and of course what appears to be holding it all up, the politics behind "ObamaCare". In the meantime the markets have gone cold, some profits have been taken. They have been falling session after session but no strong message has yet been sent to Washington that if this goes to the wire and beyond, crisis awaits.

According to Obama the votes are there to pass a clean bill, which would mean that they could then argue and negotiate afterwards for as long as it takes. The impasse appears to be that the President won't negotiate under threat and he won't back down on his health initiative, while elements of the Republican opposition see this as their chance to put a line in the sand and get what they want. The end result appears to be stalemate in the face of disaster that awaits elsewhere if an agreement isn't reached in the next week or so.

Chances are it will be a disaster if there is no agreement as history shows that ultimately markets will throw a hissy fit to get what they want, but this goes slightly deeper than what has gone before. If the US were to default, even if it is only a technical default, then trust will go, the chances are the rating agencies will come out with US downgrades and the stock markets will crash. Maybe some on the Republican side can live with this out of principle, but will their voters and what about their financial backers? The Republican Party might be feeling some heat right now from those that back them to get a deal done, otherwise the money that finances them will drain up. Unless of course, you believe in conspiracy and that the financial elite want this crash and the crisis to come to further their ends.

There is a general view that while the markets have been falling recently an agreement is ultimately expected, because the alternative is pretty dire. Sooner or later the politicians, or enough of them, will cobble together some agreement that will stop the immediate crisis, but in reality simply pushes things further down the road. Nevertheless this should be enough to at least placate the markets for now.

In the meantime, hold on to your hats.