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The Debt Talks: Asia and the Heat of the Moment

It's the heat of the moment in the debt limit talks. And for the moment, this is all about Asia.

As in when the Asian markets open for trading Sunday.

Electronic S&P futures trading begins at 6 pm ET Sunday. Nikkei futures also go hot at six. Trading in Treasury futures starts a half hour later.

Tokyo opens at 8 pm ET Sunday, followed by the Hang Seng Index in Hong Kong at 10 pm ET.

And this is all ahead of the Dow opening Monday morning at 9:30 am ET.

When it comes to the United States avoiding a default and a catastrophic credit downgrade, it's all about the global markets now. House Speaker John Boehner (R-OH) has been bracing for this for days. And it all started Friday.

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"I'm happy warrior," quipped Boehner as he entered a closed-door session about the debt limit with rank-and-file House Republicans early Friday.

The Ohio Republican was girding for battle, with an eye toward Asian markets Sunday night.

During the Friday session, Boehner reminded Republicans it was essential to settle the debt ceiling issue by July 27, several days ahead of the drop-dead default date of August 2. But the speaker also lauded the GOP's much-heralded Cut, Cap and Balance (CCB) plan to solve the debt crisis. CCB slashes $111 billion, restricts spending to a percentage of GDP and approves a debt ceiling hike contingent upon both chambers of Congress okaying a balanced budget amendment.

Just a day earlier, most lawmakers anticipated staying in Washington for weekend sessions on the debt ceiling. But then leaders scrapped those plans as no one had any solution to raise the debt limit and secure deep spending cuts.

The House finished voting late Friday morning and lawmakers then filed out of the Capitol and into Washington's record-breaking July inferno.

The House remained in session for a while as a few members trickled to the floor for "Special Orders" speeches. "Special Orders" are presentations where members from both parties can speak for up to an hour, on virtually any subject of their choosing. Backbenchers who lack a political bullhorn often take advantage of Special Orders They use Special Orders to draw attention to an issue or advocate for a policy change important to them. Sometimes, it's just a chance to be seen live on C-SPAN.

Rarely does a member of the House leadership appear during Special Orders. But just before the House gaveled out for the week, John Boehner materialized on the floor for a brief moment. Boehner again extolled Cut, Cap and Balance, this time in public and live nationwide on C-SPAN.

This was a strategic move by Boehner. Success was uncertain. But the Ohio Republican knew he had to rally the troops, ala Shakespeare's Henry V in the famous speech before the Battle of Agincourt.

"We're in the fourth quarter here!" Boehner told the House. "We're fighting for jobs. We're fighting for the country's future and we're fighting for the American people."

About all Boehner didn't do in that speech was say "Once more unto the breach, dear friends..."

And then Boehner went dark. It was only 12:17 pm. The House adjourned. The Senate adjourned. And the Capitol grew eerily quiet. Too quiet. Especially with so much at stake with the debt ceiling.

A walkabout around the Capitol complex unearthed few lawmakers as most were already flying back home. Email traffic slowed to a crawl. The phones fell silent. And yet the debt clock ceiling ticked.

Something wasn't right.

Would there be another White House meeting? Were backchannel negotiations about to secure a compromise?

And for a couple of hours, Capitol Hill hibernated. It felt like a lazy afternoon in the middle of a long Congressional recess.

At 4 pm, the markets closed. The Dow lost a modest 43 points to finish at 12,681. But the market up for the week. NASDAQ rose 24 points. The S&P 500 gained a point.

And shortly after the markets closed for the week, Boehner's staff quietly summoned a group of reporters to the Speaker's Office for a hush-hush background briefing.

At 5 pm, Boehner's staff unveiled a "Dear Colleague" letter in which the speaker announced he was withdrawing from the White House talks and intended to craft a deal with fellow Congressional leaders instead of the president. The speaker later likened his negotiations with the White House to "dealing with a bowl of Jell-O."

Boehner then phoned the president to inform him of his decision. Around 6 pm, a seething President Obama stormed into the White House briefing room and upbraided Republicans. At 7:15 pm, the speaker returned the favor at the other end of Pennsylvania Avenue with a press conference of his own.

All of these theatrics unfolded after the markets shuttered for the week, two full days ahead of when the Asian markets would begin trading again Sunday night.

There are multiple debates as to why Boehner pushed back on Friday. The speaker asserts that the White House "moved the goalpost" when it came to revenue in the legislation. It's also clear that Boehner never had the votes to move anything else through the House besides Cut, Cap and Balance. Regardless, Boehner had to solidify his standing with rank-and-file Republicans, hence the Shakespearean speech Friday afternoon. Boehner also knew he couldn't withdraw from talks with the White House in the middle of a trading session. Otherwise, the markets could have plummeted. So he waited for the markets to close. Boehner believed a weekend of hard work with fellow Congressional leaders could forge a pathway to raise the debt ceiling and trim spending.

So Boehner jumped.

Boehner and President Obama are both avid golfers. Both are smokers, although Mr. Obama quit last year. But when it comes to legislation, Boehner has far more in common with Senate Majority Leader Harry Reid (D-NV), House Minority Leader Nancy Pelosi (D-CA) and Senate Minority Leader Mitch McConnell (R-KY). Like Boehner, all are legislative engineers, masters of tailoring legislation to glide through their respective chambers. Each is a savvy negotiator with an "inside game" that appeals to rank-and-file members. There's a reason why they are all veterans of maneuvering hallmark legislation across the finish line. No Child Left Behind in the case of Boehner. Health care reform for Pelosi. Plus, it is widely believed that the skills of Boehner and Reid averted a government shutdown earlier this year.

So on Friday, Boehner wanted to make a public stand, get troops out of Dodge, wait for the markets to close, implode the process and start anew with Congressional leaders. During a conference call with House Republicans Saturday afternoon, the GOP leadership reasserted the goal to prepare a framework of legislation Sunday afternoon to soothe the Asian markets, to say nothing of the Dow. The goal was to prep the package for debate in the House mid-week.

That was the plan until Saturday evening. The "Big Four" Congressional leaders convened in Boehner's office around 5:30. The session finished in 50 minutes.McConnell escaped unnoticed. Pelosi pushed her way back to her office through a swarm of reporters, taking a back entrance just off Statuary Hall in the Capitol. A moment later, Reid followed Pelosi, also ducking in through the back entrance.

Reid hunched over on a couch in Pelosi's office, his head down. The leader gripped a cell phone to his ear like a barnacle. Finally he departed unnoticed. And a bit later, a small group of reporters tracked Pelosi as she walked to an awaiting Capitol Police SUV by the Capitol's carriage entrance.

Pelosi sounded as though mid-week was her goal, too.

"If we're going to be on time, we have to have something soon," she said, noting she has barely had a chance to talk with her husband, Paul. "We're so completely immersed. Ask my husband. He's called so many times."

And just before she pulled the door closed to the black Suburban, Pelosi indicated that taxes were still the stumbling block in the talks.

"If we're talking about debt reduction, one option is to do something in two tiers. And I don't think we can accomplish that on deficit reduction without revenues."

As the Big Four discussions began, Congressional aides suggested they might put out a joint boilerplate statement later. But hopes of that dissipated when Reid's office zapped out an email around 8:15 pm, signaling that the lawmakers accomplished virtually nothing.

And like with Pelosi, revenue remained the biggest hurdle.

"I am deeply disappointed in the status of negotiations with my Republican colleagues," Reid began. "I hope that Speaker Boehner and Leader McConnell will reconsider their intransigence. Their unwillingness to compromise is pushing us to the brink of default."

And so the clock ticks. The Asian markets await, as does the Dow on Monday morning. Meantime, credit rating agencies are prepared to downgrade the U.S., even if they cut a deal before August 2.

Lawmakers all over Capitol Hill remain spooked about TARP, a failed vote in September, 2008 on a financial rescue package. As the bill went down to defeat in the House, the Dow cratered in tandem with the vote. In the end, the Dow plunged 777 points, the largest one-day point drop in history.

The House approved a revamped TARP bill a few days later.

But on that TARP vote, the market judged Congress in real-time.

There's no deal now, even if the goal was to forge something before Asian trading Sunday night. And if lawmakers can't concoct a pact soon, the market will judge them like TARP. Wall Street doesn't get the first crack now. This time, it's Asia in the heat of the moment.