{"id":75962,"date":"2013-10-04T12:58:59","date_gmt":"2013-10-04T11:58:59","guid":{"rendered":"http:\/\/rinf.com\/alt-news\/breaking-news\/debt-doomsayer-treasury-forecasts-back-to-2008-recession-or-worse-if-us-defaults\/75962\/"},"modified":"2013-10-04T14:50:00","modified_gmt":"2013-10-04T13:50:00","slug":"debt-doomsayer-treasury-forecasts-back-to-2008-recession-or-worse-if-us-defaults","status":"publish","type":"post","link":"https:\/\/rinf.com\/alt-news\/latest-news\/debt-doomsayer-treasury-forecasts-back-to-2008-recession-or-worse-if-us-defaults\/","title":{"rendered":"Debt doomsayer: Treasury forecasts \u2018back to 2008 recession or worse\u2019 if US defaults"},"content":{"rendered":"
The US government default caused by the ongoing budget standoff in the Congress could have a “catastrophic\u201d effect on the country’s economy, which would be felt for decades, the Treasury Department said in report.<\/div>\n

The US government went on partial shutdown this Monday after the
\nDemocratic-led Senate turned down repeated efforts by the
\nRepublicans to pass a budget, constraining the implementation of
\n\u2018Obamacare’ \u2014 a healthcare law, which the president considers a
\ncenterpiece of his political legacy.<\/p>\n

If the Congress fails to raise the $16.7 trillion federal
\nborrowing limit by October 17, the government could begin running
\nout of money to pay its bills, which would result in an
\nunprecedented US debt default.<\/p>\n

\u201cIn the event that a debt limit impasse were to lead to a
\ndefault, it could have a catastrophic effect on not just
\nfinancial markets, but also on job creation, consumer spending
\nand economic growth \u2013 with many private-sector analysts believing
\nthat it would lead to events of the magnitude of late 2008 or
\nworse, and the result then was a recession more severe than any
\nseen since the Great Depression,\u201d<\/i> the Treasury said in a
\nreport on Thursday.<\/p>\n

The consequences of the default, which include high interest
\nrates, reduced investment, higher debt payments, and slow
\neconomic growth, would also be sustainable and \u201ccould last for
\nmore than a generation,\u201d<\/i> the department warned.<\/p>\n

The Treasury said the \u201cwe may be starting to see some
\ntentative signs that the current debate is affecting financial
\nmarkets,\u201d<\/i> with the crisis already shaking the Wall Street
\nwhere the Dow Jones Industrial Average dropped 136.66 points
\n(0.90 per cent) to 14,996.48 on Thursday.<\/p>\n

The Treasury also noted that the negative spillovers from an
\n\u201cunprecedented\u201d US default would \u201creverberate around the world\u201d
\nas \u201ccredit markets could freeze, the value of the dollar could
\nplummet, US interest rates could skyrocket.\u201d<\/p>\n

The International Monetary Fund has also sounded the alarm over
\nthe American debt crisis, which is putting the world economy
\nunder threat.<\/p>\n

\"Security<\/p>\n

IMF chief Christine Lagarde stressed that it is “mission
\ncritical”<\/i> to urgently find the way out of the stalemate \u2014 as
\nshe arrived in Washington for the next week’s IMF and World Bank
\nmeetings.<\/p>\n

\u201cThe ongoing political uncertainty over the budget, over the
\ndebt ceiling doesn’t help. The government shutdown is bad enough,
\nbut failure to raise the debt ceiling would be far worse and
\ncould very seriously damage not only the US economy, but also the
\nentire global economy,\u201d<\/i> she said.<\/p>\n

According to Lagarde, the economic growth in the US has already
\nbeen hurt by excessive fiscal consolidation, and will be below 2
\npercent this year before rising by about 1 percentage point in
\n2014.<\/p>\n

Congressional action remains the only way to avoid the US
\ndefault, an unnamed Treasury official told the reporters.<\/p>\n

He stressed that the Treasury Department has no plans of using
\nthe Constitution’s 14th Amendment, which says that the validity
\nof the US public debt \u201cshall not be questioned,\u201d<\/i> to get
\naround the debt limit.<\/p>\n

But there are no signs that the budget dispute will be solved
\nbefore being dragged into a second week, with all of the
\ngovernment’s non-essential workers sent home due to the
\nshutdown.<\/p>\n

Obama has refused to negotiate on raising the debt ceiling with
\nthe Republicans, saying that offering concessions would set a
\npoor precedent for future heads of the White House.<\/p>\n

“If we screw up, everybody gets screwed up. The whole world
\nwill have problems,”<\/i> he said in his emotional speech on
\nThursday, adding that the debt default would throw the US economy
\nback into a recession.<\/p>\n

The president stressed that Republican House Speaker John Boehner
\ncould bring the government back to work \u201cin just five
\nminutes\u201d<\/i> by passing a temporary operating budget, but he’s
\nnot doing it because \u201che doesn’t want to anger the extremists
\nin his party.\u201d<\/i><\/p>\n


\n“Take a vote, stop this farce and end this shutdown right
\nnow,”<\/i> he urged the Republicans.<\/p>\n

Meanwhile, the Congress may pass a measure on Friday, which will
\nsee federal workers receive back pay for the period when they’ve
\nbeen out of the office due to government shutdown.<\/p>\n

Members of the House of Representatives and Senate have filed
\nbills that would ensure all federal employees receive retroactive
\npay for the duration they’ve been off work.<\/p>\n

Copyright: RT<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The US government default caused by the ongoing budget standoff in the Congress could have a “catastrophic\u201d effect on the country’s economy, which would be felt for decades, the Treasury Department said in report. The US government went on partial shutdown this Monday after the Democratic-led Senate turned down repeated efforts by the Republicans to […]<\/p>\n","protected":false},"author":1,"featured_media":75963,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[487,52,18],"tags":[],"class_list":{"0":"post-75962","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-breaking-news","8":"category-money","9":"category-latest-news"},"_links":{"self":[{"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/75962","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/comments?post=75962"}],"version-history":[{"count":0,"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/75962\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media\/75963"}],"wp:attachment":[{"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media?parent=75962"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/categories?post=75962"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/tags?post=75962"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}