2023 United States debt-ceiling crisis: Difference between revisions

2023 United States debt-ceiling crisis (view source)

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 * Stock prices would be cut almost in one-third at the worst of the selloff, wiping out $12 trillion in household wealth.
 * Treasury yields, mortgage rates, and other consumer and corporate borrowing rates would spike, at least until the debt limit is resolved and Treasury payments resume. Even then, rates would not fall back to where they were previously
+There reasoining comes from these factors:
+* Loss of confidence in consumer, business, and investor confidence. Loss of confidence leads to decrease spending and investing, and credit growth from financial institutions
+* Even a few weeks default would mean severe gov spending cuts per week, and the hit to the economy as these government spending cuts cascade through the economy would be overwhelming
+* Uncertainty will push interest rates higher even after the debt ceiling is resolved, due to the fall in confidence in the US risks-free status. In 2011, the  Treasury debt even lost its AAA rating from the credit rating agency Standard & Poor’s due to governance concerns raised by the political dysfunction.
+* They are taking into account the economy is already slowing and probably going into recession, so the timing is already very bad for this to happen. If we add these additional factors to an already slowing economy, the economic risks become greater
 == 2011 Debt Ceiling Episode ==
 == References ==