Washington and international officials have raised the alarm on a potentially disastrous clash over the US debt limit as Democrats and Republicans remain no closer to reolving the budget feud that has shut down much of government. If Congress fails to raise the borrowing cap by mid October, the US could default on its obligations for the first time and send shock waves across the world.
International Monetary Fund chief Christine Lagarde says: "The government shutdown is bad enough, but failure to raise the debt ceiling would be far worse, and could very seriously damage not only the US economy, but the entire global economy." And the US Treasury has also warned that failure to raise the debt ceiling could spark a new recession even worse than the one Americans are still recovering from.
So why are Republicans set on taking the US to the brink of financial catastrophe again? Paul Krugman says the party's delusional wing either don't understand what is at stake, or don't care. Read more...
