Investors wait for answers as debt crisis looms

President Barack Obama meets with Congressional leaders regarding the debt ceiling, Wednesday, July 13, 2011. in the Cabinet Room of the White House in Washington. From left are, House Speaker John Boehner of Ohio, the president, Senate Minority Leader Mitch McConnell of Ky., and Senate Majority Whip Richard Durbin of Ill, (AP Photo/Charles Dharapak)
July 13, 2011 12:00:00 AM PDT
In Washington the clock keeps ticking on the deadline to raise the debt ceiling -- the government's ability to borrow money. If a deal isn't made soon, the nation's credit rating will suffer, and if that happens, the economy could take a terrible hit.

ABC7 wanted to find out how the debate in Washington impacts average investors -- people who've invested in stocks and bonds for their retirement or for their kids' college. In San Francisco's Financial District, ABC7 bumped into a couple of big players in the investment world.

A fellow who manages a couple of billion dollars says he's not worried. Louis Navellier, a money manager, believes Congress will come up with a deal to raise the debt limit.

"And the treasury market isn't panicking, yields aren't going higher, no one is believing Mr. Geithner's bluff that they would stop making the interest payments so the markets are not reacting to it," Navellier, of Navellier and Associates, said.

Prominent San Francisco investment banker Jack Berquist thinks so too.

"I don't think most investors are that concerned about what's happening right now," Berquist said.

But Bay Area financial advisor Bruce Dzieza says his clients that are about to retire are starting to worry.

"We did have a long term client leave us a couple weeks ago because she just could not understand how this will play out in her favor," Dzieza said.

The woman liquidated her stock account and put the money in real estate, a move that will cost her about $100,000 in taxes.

The head of Willow Creek Financial says he's trying to calm his clients, but the Internet and the 24 news cycle doesn't help.

"Since 2008, people are way more emotional and emotions are running their investment decisions, more than even, I've been doing this 27 years and have never seen it like this," Dzieza said.

In Washington D.C., White House spokesperson Jay Carney is also trying to calm the waters.

"Contrary to, you know, some of what you hear in the public sphere, there is momentum towards achieving significant deficit reduction," Carney said.

But the momentum for a deal isn't evident from what congressional negotiators are saying.

"If these debt negotiations have convinced us of anything it's that we can't leave it to the politicians in Washington to make the difficult decisions they need to get our fiscal house in order," Senate Minority Leader Mitch McConnell said.

Tea party favorite Rep. Michele Bachmann, R-Minn., said today she doesn't think there is a crisis.

"Well, I'm 'no' on raising the debt ceiling right now," she said.

And despite Carney's reassurances about momentum, there are reports President Obama ended Wednesday's meeting with congressional leaders by warning them not to call his bluff. He said it may bring down his presidency but he's not going to yield on his demand that Republicans need to give on the tax issue as Democrats appear willing to give on spending cuts.


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