US stand-off on debt runs risk of disaster for us all
Published 30/07/2011 | 08:55
THE stand-off between President Obama and Congressional Republicans over plans to raise the US debt ceiling would be funny if it weren't so terrifying. If the two sides are unable to reach a compromise, the US could default on its debts as soon as next Tuesday.
As the possessor of the world's main reserve currency and the lynchpin of the global financial system, a US default could have disastrous consequences for all of us.
US government bonds, or Treasuries as they are technically known, have long been the benchmark against which all other bonds, both public and private, are measured. If the US defaults and loses its triple-A credit rating, what will replace Treasuries?