The United States Treasury, the International Monetary Fund and various economic experts around the world have warned the American Congress that a failure to raise the debt ceiling could lead to catastrophic impacts around the world.
The warning comes as the US government remains shutdown, with the Republicans and Democrats having failed to reach an agreement regarding a budget.
The Treasury has said a default would be “unprecedented and has the potential to be catastrophic”.
“Credit markets could freeze, the value of the dollar could plummet, US interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008 or worse.”
IMF chief Christine Lagarde has said in a speech it is “mission critical” the issue is resolved.
“Failure to raise the debt ceiling … could seriously damage not only the US economy but the entire global economy.”
US Treasury Secretary Jack Lew has said “no one knows” what the consequences would be if the United States defaulted on its debt.
Air New Zealand has announced it will raise its stake in Virgin Australia to 25.9% after approval from the Foreign Investment Review board.
“We are fully supportive of the Virgin management team and strategy which provide an ideal complement to our own network and, importantly, an opportunity to participate in the Australian market with a respected partner,” Air New Zealand chief executive Christopher Luxon said in a statement.
The Australian sharemarket has opened lower this morning after more losses from the United States, where investors are still worried over the possibility of the country defaulting on its debt obligations.
The benchmark S&P/ASX200 index was down 25 points or 0.5% to 5209.6, while in the United States the Dow Jones Industrial Average fell 136 points or 0.9% to 14,996.5.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
