Roubini: U.S. debt ceiling fight is a potential 'financial catastrophe' - Yahoo Finance

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Expect fiscal marketplace and economical chaos to ensue if U.S. lawmakers don't find a solution connected the indebtedness ceiling this clip around.

"If determination was adjacent a impermanent default connected the U.S. debt, it would truly beryllium a fiscal catastrophe," NYU prof and economist Nouriel Roubini told Yahoo Finance Live astatine the World Economic Forum (video above). "So if you default connected the debt, home and overseas investors successful the backstage assemblage are not going to bargain your bonds, and you'll person a spike successful involvement rates."

Lawmakers took 1 measurement toward that script connected Thursday.

The national authorities officially reached its $31.38 cardinal indebtedness limit. In turn, that triggered the Treasury Department to utilize its "extraordinary measures" to sidestep a debilitating indebtedness default.

"Failure to conscionable the government's obligations would origin irreparable harm to the U.S. economy, the livelihoods of each Americans and planetary fiscal stability," U.S. Treasury Secretary Janet Yellen wrote successful a memo to the House of Representatives connected Jan. 13.

Yellen said Treasury's bonzer measures volition apt beryllium exhausted by aboriginal June, putting unit connected lawmakers to find a indebtedness ceiling solution that has proven challenging successful the past.

The U.S. famously mislaid its AAA recognition standing for the clip ever by S&P successful aboriginal August 2011 amid a contentious indebtedness ceiling statement that astir triggered a authorities shutdown.

Newly elected freshman Rep. George Santos (R-NY), facing a ungraded implicit his resume and claims helium made connected the run trail, points to the ceiling of the House Chamber arsenic helium talks with Rep. Jim Jordan (R-OH) and Rep. Marjorie Taylor Greene (R-GA) during a 9th circular of votes for the caller Speaker of the House connected the 3rd time of the 118th Congress astatine the U.S. Capitol successful Washington, U.S., January 5, 2023. REUTERS/Evelyn Hockstein TPX IMAGES OF THE DAY

The S&P 500 (^GSPC) mislaid astir 12% from aboriginal July 2011 done the extremity of August arsenic investors voiced their interest connected the country's indebtedness situation.

Roubini says officials request to debar a akin concern astatine each costs, particularly arsenic the U.S. system contends with sluggish economical maturation and stubbornly precocious inflation.

"It would beryllium brainsick and a full catastrophe for the U.S.," Roubini added connected immoderate imaginable indebtedness default.

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