‘Doctor Doom’ issues global market crash warning – RT Business News
US default would be disastrous, says leading economist Nouriel Roubini
The failure of the US government to agree on raising the debt ceiling risks hitting markets and hurting confidence in the dollar in the longer term, warned Nouriel Roubini, renowned economist and professor at the New York University.
“They can arrive at the last hour before there is an agreement”, Roubini told Bloomberg TV on the sidelines of the Qatar Economic Forum in Doha on Wednesday. “Or it’s possible they won’t come to an agreement.” If that doesn’t happen, the market will crash,” he said.
According to Roubini, who predicted the 2008-09 financial crisis and was dubbed “Doctor Doom” by Wall Street, geopolitical tensions and deteriorating economic relations between the United States and China could become a major challenge for the world economy this year.
Warnings of a US debt default have mounted, with Treasury Secretary Janet Yellen saying America’s chances of paying its bills after June 1 are “rather weak.” If Congress fails to reach an agreement on increasing the nation’s borrowing limit by $31.4 trillion by then, she warned, it will be forced to default on “a few bills” shortly after.
The debt ceiling, set by Congress, represents the maximum amount the federal government can borrow to pay its debts.
President Joe Biden and Republican lawmakers are struggling to reach an agreement to prevent a default. On Monday, the U.S. leader and House Speaker Kevin McCarthy again could not agree on how to raise the cap with just ten days before a possible default, but vowed to keep talking.
Republicans call for public spending cuts before approving higher limit, while Biden insists on a “to do the housework” increase without linking the two issues.
“We reiterated once again that the default is not on the table and the only way forward is in good faith towards a bipartisan agreement,” Biden said in a statement after the meeting, which he called “productive.”
The United States has come close to breaching the debt ceiling several times before, including in 2011, when lawmakers agreed to raise the ceiling just days before the country ran out of borrowing capacity. The subsequent downgrade of the country’s debt by ratings agency Standard & Poor’s caused the stock market to crash, with the Dow Jones falling 17%.
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