US default could be 'catastrophic': Treasury
WASHINGTON (AFP) - The US Treasury has warned of a disastrous outcome if Congress's refusal to raise the country's borrowing ceiling forces it to default on obligations.
It said that the fallout could include returning to a recession as deep as that of 2008-2009, if the US's borrowing power is not increased by October 17, when it forecasts the government will exhaust its cash and be unable to pay all its bills.
"In the event that a debt limit impasse were to lead to a default, it could have a catastrophic effect on not just financial markets but also on job creation, consumer spending and economic growth," the Treasury said in a report on Thursday.
"Credit markets could freeze, the value of the dollar could plummet, US interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008 or worse."