World Leaders Press the US on Fiscal Crisis

Leaders of the World Bank and the International Monetary Fund warn that US failure to raise a debt ceiling and make payments on its debt will disrupt a global economic recovery underway since 2009. “Participants at the meetings remained on edge, given the gravity of the threat,” report Annie Lowrey and Nathaniel Popper for in the New York Times. The bankers and economists can only speculate about the subsequent fallout from willful refusal to pay the debt, but all agree: Trust in the United States would decline. Lowrey and Popper explain how short-term government bonds are plentiful and behind many financial transactions for pricing assets and making payroll: “If the value of that debt was suddenly drawn into question, markets could quickly seize up.” The US quarrel over paying bills is political and not from a lack of resources to make payments. Many analysts agree that consequences would be most dire for developing nations and likely raise borrowing costs for all. – YaleGlobal