5 quotes about the debt ceiling that will totally freak you out
"This would be a financial collapse and chaos unlike anything anybody has seen before." Oh, is that all?
Every day the government shutdown continues is another day that Congress postpones solving another problem with far greater potential hazards for the economy: The debt ceiling.
Unlike the shutdown, which analysts estimate will take a 0.2 percentage point chunk out of the GDP for each week it goes on (or less, now that furloughed workers will likely receive back pay), failure to raise the debt ceiling could result in a true financial catastrophe.
The debt ceiling is the highest amount of money the U.S. government is legally allowed to borrow to pay back its creditors for bills. Uncle Sam borrows money to pay interest on the national debt, Social Security and Medicare benefits, and a lot more. Failure to reach a debt-ceiling agreement in 2011 resulted in S&P downgrading the U.S.'s credit rating — causing "a clear and deep dent in U.S. economic and market data," said Matt Phillips at Quartz.
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Economists say this time could be even worse. A sampling of terrifying prophecies:
Prepare for a "financial apocalypse," says Yalman Onaran at Bloomberg.
You should find the prospect of a debt default "terrifying," says Matt Yglesias at Slate.
Mark my words, says economist Justin Wolfers: This would plunge the U.S. into a recession.
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Expect "chaos unlike anything anybody has seen before," warns Arizona State professor Dennis Hoffman.
Here's the scariest thing, says Derek Thompson at The Atlantic: No one knows how bad it will be.
And a counterpoint (sort of), from Warren Buffet.
Last week, the legendary investor told Squawk Box that if Democrats and Republicans fail to reach an agreement in time, that would be "pretty damn dumb." But he doesn't see that happening. "The market is not gonna fall apart, because [investors] expect Washington will only act irrationally for a certain length of time," he said.
We'll have to see.
Carmel Lobello is the business editor at TheWeek.com. Previously, she was an editor at DeathandTaxesMag.com.
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