“A US default would lead to global recession” – Corriere.it

A US default would threaten the gains we’ve worked so hard for in recent years to recover from the pandemic, and trigger a global recession that would set us far behind. US Treasury Secretary Janet Yellen said this during a press conference in Niigata, Japan, where the meeting of G7 finance ministers and central bankers will be held from today 11 May until Saturday 13. A situation that, he added, would also risk undermining the global economic leadership of the United States and raising questions about the ability to defend our national security interests.

The political battle

These are the usual parliamentary political skirmishes that see a Congress with a Republican majority pitted against a Biden presidency from the Democratic party and which revolve around the thorny issue of raising the federal debt ceiling. Pushing US debt negotiations to their already dangerous limit for the economy, both the US and the world, added Treasury Secretary Janet Yellen, after former President Donald Trump defended a narrow-minded strategy. razor on the subject. Democrats and Republicans in Congress are currently unable to agree on raising the US debt ceiling, and a prolonged standoff could lead to a US default this summer, the likes of which we have never seen. Simply flirting with this situation can have significant costs for the US economy, Yellen warned, speaking from Japan, where she is at the G7 finance ministers and central bankers meeting.

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As we learned in 2011, the mere threat of default can lead to a deterioration in our credit rating and a weakening of consumer confidence, he added. A payments default would be an economic and financial catastrophe in the United States, with worldwide repercussions, he continued Yellen, insisting there is no good reason to create a crisis and recalling that Congress has already raised or suspended the debt ceiling some 80 times since 1960.