ALJAZEERA: A U.S. government default on its obligations forced by Congress not raising the country’s borrowing ceiling would have catastrophic effects on the economy, the Treasury Department warned Thursday. The warning came on the third day of a partial government shutdown, which was brought on by House Republicans’ refusal to pass a budget bill free of amendments that would have delayed the Affordable Care Act.
If Republicans in the House of Representatives continue such brinkmanship in the coming debt ceiling debate, the results could be devastating.
With the government likely to exhaust its cash reserves around Oct. 17, the Treasury said being forced into nonpayment of any of its obligations — and, in particular, its debt — would spark turmoil in financial markets and possibly send the country back to a recession as deep as that of 2008-09. The consequences for the world economy could be grim as well… (more)
