Monday, May 16, 2011
America risks unravelling the world’s financial system should the country fail to increase its legal borrowing limits, President Barack Obama has warned.
The warning from The White House comes as the US moves ever closer to a $14.3 trillion debt ceiling, which Congress needs to increase in a matter of weeks to prevent the government defaulting on its borrowings for the first time in history.
Given US government debt, or Treasuries as they are known, are considered the safest asset in financial markets and held by investors and central banks around the world, few want to imagine the consequences of a default.
“If investors around the world thought that the full faith and credit of the United States was not being backed up, if they thought that we might renege on our IOU’s, it could unravel the entire financial system,” President Obama said at a town hall meeting late yesterday.
This article was posted: Monday, May 16, 2011 at 2:10 am