U.S. debt default could be ‘real nasty’

Tuesday, July 12, 2011
By Paul Martin


The International Monetary Fund’s new chief foresees “real nasty consequences” for the U.S. and global economies if the U.S. fails to raise its borrowing limit.
Christine Lagarde, the first woman to head the lending institution, said in an interview broadcast Sunday that such a failure would cause interest rates to rise and stock markets to fall.
That would threaten an important IMF goal, which is preserving stability in the world economy, she said.
The U.S. borrowing limit is $14.3 trillion. Obama administration officials say the U.S. would begin to default without an agreement by Aug. 2.

“If you draw out the entire scenario of default, yes, of course, you have all of that – interest hikes, stock markets taking a huge hit and real nasty consequences, not just for the United States, but for the entire global economy, because the U.S. is such a big player and matters so much for other countries,” she said.

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