CSPAN has archived today's Obama press conference on the debt ceiling negotiations. Watch the video here.
The Treasury Deptartment says that if by August 2nd the debt ceiling isn't raised, the U.S. could start defaulting on its ample debt, an unprecedented occurrence that many analysts say would result in a global financial cataclysm. From the Reuters Money blog today:
A default on U.S. debt will make the 2008 debacle look like a Simpson’s episode. Interest rates will soar through the roof. Everything from mortgage rates to adjustable credit card financing will skyrocket. Payrolls may be imperiled along with Social Security and Medicare payments. Think economic crash and burn — in a big way.
If the credit rating of U.S. debt is downgraded from AAA, that will automatically signal to the global bond market that investors should demand higher yields for taking more risk. Standard & Poor’s has put the U.S. on its ominous “CreditWatch” status and will downgrade unless a debt deal is struck soon.
Money moves exponentially faster than politics these days. If bond managers get even a whiff of actual default, they will move their funds out of U.S. Treasuries at the speed of light. That tsunami may devalue anything measured in dollars, including U.S. stocks; corporations would then fire even more people and halt capital investment. Unemployment would hit Depression-era levels. Americans would wistfully recall the days of nine percent joblessness.
Some conservatives, however, do not agree, which is one reason an agreement has so far been elusive. An opinion piece on the Fox News site today, for example, is called "Seven Myths About the Looming Debt-Ceiling 'Disaster."
- What is the debt ceiling, and does the United States really need one? (Slate)
- Behind Battle Over Debt, a War Over Government (NY Times)
- As White House talks falter, Senate works on agreement to raise debt limit (Washington Post)
- White House Ponders What to Do If Debt Ceiling Isn’t Raised (Wall Street Journal)