Debt Limit/Government Shutdown and the Annual Meetings of the World Bank/IMF

Beginning this Friday, October 11 and through the weekend, the World Bank and the IMF will be holding their annual meetings in Washington, DC. This is a very large event, and, in addition to government officials from around the world, a large group of private sector bankers and other individuals employed in the financial sector will be attending various meetings, conferences, and seminars in Washington. The World Bank/IMF will be offering seminars beginning tomorrow, October 8, to participants, press, and guests. Some large banks and other private organizations will hold their own events, including the Institute of International Finance.

It is likely that many of those present will be talking among themselves and some publicly about the government shutdown and the potential for a U.S. government default. While the financial and government types who will be in Washington have many disagreements, including the appropriate response of governments to economies mired in slow growth or recession, the outlook for the euro, the advisability of increased financial regulation, bank capital requirements, etc., almost all of them will agree that a U.S. government default on its debt could well be catastrophic for the world economy. The press will likely take note as this critical mass of well-informed commentators and market participants make their views known. The pressure on Speaker Boehner and the House Republicans will increase.