US Default Would 'Blow Lehman Out of the Water'
US has 23 times the debt
By Ruth Brown, Newser Staff
Posted Oct 7, 2013 5:45 PM CDT
The Capitol in Washington is seen under an overcast sky at dawn.   (AP Photo/J. Scott Applewhite)

(Newser) – If you think we saw a global financial disaster with the collapse of Lehman five years ago, just wait and see what happens if the US government defaults on its debt, warn financial experts. Lehman was $517 billion in debt—the US owes $12 trillion. The unprecedented event would cripple stock markets around the world, increase borrowing costs, freeze the repo market, sink the dollar, and plunge both the US and other countries into recession—possibly depression, reports Bloomberg. "If we miss an interest payment, that would blow Lehman out of the water," says a former George W. Bush administration Treasury official.

America's largest creditor seems to agree. China's vice finance minister today asked that "the US earnestly take steps to resolve" the debt crisis, "to ensure safety of Chinese investments in the United States and the global economic recovery," reports Reuters. "This is the United States' responsibility," he said, raising the 2011 deadlock that led to the US' credit rating being downgraded. "We hope the United States fully understands the lessons of history."

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Showing 3 of 131 comments
Econ_101
Oct 11, 2013 2:56 PM CDT
Three times in four days the House voted to fund EVERY dpt., agency and program of the government, except obama care. And the DEMOCRATS in the SENATE shit canned every one of those bills. Then, who is truly shutting down the government ??
Crotalus
Oct 8, 2013 2:09 PM CDT
Why the FRICK does the USA have a in the red balance of between 12 and 15 TRILLION DOLLARS, we have money, we can manufacture right here in our own country (if Boehner a$$ wipe lobbyists would let us) We need to pay off our own GD FRIGGIN DEBT ASAP. Washington needs to get its head out of its ass.
Pragmatist
Oct 8, 2013 12:25 PM CDT
Not making good on debt interest payments is not an option that has even a semblance in hell's chance in happening... with or without an elevation of the debt ceiling. The author is simply crying "Wolfe" here... needless sensational agitation. Now don't misunderstand me... other payments, but certainly not debt interest payments, will be stymied...and there will be repercussions from that... but nothing even close to what this sensationalism piece portrays.