This Debt-Limit Standoff Could Be Really Disastrous
Markets and the economy are in no way prepared for the shock that failing to reach a deal would deliver.
Look out.
Photographer: Al Drago/BloombergI have one message for those observing or involved in the standoff over raising the US federal debt limit: Be afraid, be very afraid. At this point in the financial and economic cycle, the consequences of failing to reach a deal would be particularly dire.
The risk that a political impasse will force the US government to renege on its obligations keeps rising as time marches on with no negotiation or progress. Worse, both sides’ positions appear to be hardening. House Speaker Kevin McCarthy’s ability to pass a budget bill (by the thinnest of margins) has strengthened Republicans’ belief that they can win concessions from the Biden administration — concessions that are actually anathema to the latter.