Another bad market day

So much for Wall Street ho-humming the debt ceiling issue. The Dow fell 160 points, which means that the blue chip index has dropped around 1,000 points in the past three weeks. That's about a 6.4 percent fall - well below what would be considered a full-fledged market correction - but the declines no doubt reflect growing concerns about the possibility of a U.S. default. And yet investors don't appear to be freaking out, which, perversely, might create a greater sense of urgency in Washington. Indeed, a small but vocal group of Republicans, mimicking the nonsense coming out of conservative talk shows, say that the failure to raise the debt ceiling wouldn't be that big a deal. From NYT columnist Andrew Ross Sorkin:

Almost bizarrely, the market's reaction -- or lack of one in this case -- may actually contribute to an outcome everyone has been railing against. The ruinous potential for a default has had Wall Street leaders screaming from the rooftops: "Whatever circumstances and disagreements got us to this current unhappy juncture, there is no way that our government leaders can allow the full faith and credit of the United States of America to be jeopardized. This is an issue that affects every single citizen, from veterans to Social Security recipients to government bondholders to all taxpayers, and threatens to derail an already fragile economic recovery," James P. Gorman, the chief executive of Morgan Stanley, said in an e-mail to his employees, urging them to contact their representatives in Washington. Goldman Sachs put it this way: "A very short delay past the October deadline -- for instance, a few days -- could delay the payment of some obligations already incurred and would create instability in the financial markets." He added, "This uncertainty alone could weigh on growth."