Tags: Treasury | default | catastrophic | dollar

Treasury Says Default Has Potential to Be Catastrophic

Thursday, 03 October 2013 09:35 AM

A default caused by Congress failing to raise the $16.7 trillion federal debt limit “has the potential to be catastrophic,” the U.S. Treasury Department said in a report.

“The U.S. dollar and Treasury securities are at the center of the international financial system,” according to the report. “A default would be unprecedented and has the potential to be catastrophic: Credit markets could freeze, the value of the dollar could plummet, U.S. 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.”

Postponing a debt-ceiling increase “to the very last minute is exactly what our economy does not need,” Treasury Secretary Jacob J. Lew said in the report. Lew has said the Treasury projects that it will exhaust its “extraordinary measures” to stay under the debt limit by Oct. 17 and will then have about $30 billion in cash on hand.

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A default caused by Congress failing to raise the $16.7 trillion federal debt limit "has the potential to be catastrophic," the U.S. Treasury Department said in a report.
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2013-35-03
Thursday, 03 October 2013 09:35 AM
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