October 11, 2013
The United States is set to hit a debt ceiling on October 17 and if Congress doesn’t raise the Treasury’s ability to issue debt, the world’s largest economy would be left unable to pay its bills. At the moment, it does not appear that the situation will reach that¬†drastic climax. Republicans in the US House of Representatives on Thursday (10.10.2013) said they would vote for a bill raising the debt limit and provide enough money to fund the government for six weeks. One condition of such a bill, however, would be the opening on negotiations with President Barack Obama on the ongoing federal government shutdown.
This news was enough to boost markets in Europe with Germany’s DAX index seeing its largest one-day gain in a month’s time. International Monetary Fund head Christine Lagarde and World Bank leader Jim Yong Kim also commented on the serious international consequences a US default could have.
Serious global damage
Lagarde said that if the United States cannot pay its bills it would cause “serious damage not only to the US economy but also to the global economy.” She called on US officials to get the “fiscal house of the United States¬†put in order” and to carefully manage an exit from currently “highly accommodative monetary policy.”
This article was posted: Friday, October 11, 2013 at 11:13 am