How much would debt default damage US? History offers clues.
In negotiating a last-minute deal before the United States runs out of money to pay all its bills, the White House and Republicans in Congress are playing with fire of uncertain heat.
Every day without a deal takes a toll on financial market confidence, as a possible debt default draws near. The Treasury says that, perhaps as early as June 1, it can no longer assure that all federal bills will be paid, unless Congress raises the nation’s debt limit to allow resumed borrowing.
In one scenario, the politicians reach agreement in time and the damage to America’s reputation remains minimal. In another scenario, talks fail and investors worldwide unload U.S. Treasury bills and notes in a fire sale as the government fails to make all its obligated payments. Stock markets plunge, interest rates surge, and the
