CEOs are continuing to raise forceful warnings about the government shutdown and possible default on U.S. debt.
Alexander "Sandy" Cutler of Eaton, speaking this morning to CNBC from Cleveland:
[We] seem to be getting to a point where there's at least a coalition coming together to postpone the debt ceiling. I think any economically intelligent person cannot find any solace in the fact we might have a debt crisis where we can't pay the country's obligations. So, I'm encouraged by that. Obviously, a lot of work to be do over the next 24 to 48 hours.
It's critical as we start to address the fundamental issue which is not the continuing resolution, it's not the debt ceiling, but it's the fiscal crisis here in this country and needing to find a way to reduce our debt....
While we're talking about shutting down the government respectively in the U.S., the rest of the world has not shut down. The rest of the world is moving forward. But they've got significant questions about our country and our ability to really convert the promise of democracy into the promise of strong economic growth. And that's obviously a condition we all have a big stake in, and it is really important that every one of us be in contact with our legislators urging them to find solution.
Appearing on "CBS Morning News" Monday, Larry Fink of BlackRock, Inc., said even talk of a default is "bad enough." Fink called a short-term solution on the nation's debt "just unacceptable" because he doubts a resolution can be made and because people will begin to defer decisions on purchases and other planning.
It's like somebody going to the bank after having a car loan or mortgage loan and going to the bank and saying, 'I'm not going to pay you. Now do you think the next time you're going to need a loan, that bank is going to give you that money? And so we're a country that's very dependent. About 25 percent of our debt is dependent on foreign sales, and so China and Japan are principally large owners. What I worry about is that narrative is going to harm us long-term....
We know that individuals defer their decisions. The bigger issue is CEOs. CEOs are not going to invest in those jobs. They're not going to invest in plants and equipment. They're going to hold back. And so here we are. We have a very, you know, unquestionably poor job economy, and we're only going to make it worse.
Nick Akins of American Electric Power, interviewed by Bloomberg TV on Oct. 8 and reported by Power Engineering. The electric power industry spends more than $90 billion a year and is very sensitive to the cost of credit, Akins said.
It’s unfathomable that we are actually getting to this point; and for those of us who are heavily capital intensive we are very focused on debt and the cost of debt. We have to be concerned about our ability to acquire debt and the cost of that debt.
And real-world consequences? From a Bloomberg's report today on Citigroup's earnings announcement.
Citigroup Inc. (C:US) is bracing for a possible U.S. default by avoiding some short-term Treasury investments amid what Chief Executive Officer Michael Corbat called “a dangerous flirtation with the debt ceiling.”
Corbat made the remark during a conference call today to discuss third-quarter results at New York-based Citigroup as lawmakers struggled to meet a deadline for avoiding a U.S. default.
The Motley Fool also rounded up comments from BRT-member CEOs: Klaus Kleinfeld of Alcoa, Lloyd Blankfein of Goldman Sachs, Jamie Dimon of JPMorgan Chase and Ken Chenault of American Express.
Earlier posts on the CEO reaction: