Goldman Sachs warns of 'real risk' that US could 'default'

Wall Street markets are increasingly concerned about the controversy among US congressmen over the government's debt ceiling. On October 6, Goldman Sachs warned clients that the US Congress may not increase or suspend the public debt ceiling before the deadline of October 18.

Goldman Sachs warns of 'real risk' that US could 'default'
Goldman Sachs warns of 'real risk' that US could 'default'

Goldman Sachs said the possibility of a "loan default appears to be a real risk", although the lapse would be "short-lived".

Of interest is the warning from Goldman Sachs that comes ahead of news that Senate Republican leader Mitch McConnell is considering giving Democrats two ideas for tackling the debt limit. labour. In which, one option would be to raise the public debt ceiling in the short term.

Meanwhile, US Treasury Secretary Janet Yellen warned that if the US defaulted on its debt, the economy could completely fall into recession, when the deadline for raising the debt ceiling on October 18 was approaching. Previously, she warned that the US would no longer have the financial resources to meet its debt payment obligations after October 18 if Congress did not raise the public debt ceiling.

According to Goldman Sachs, one of the most likely options for resolving the debt crisis is to increase the independent debt limit through mediation, a process that Democratic leaders oppose.

Economists say one of the big downsides here is that the debt crisis will force Democrats to specify a new amount for the public debt limit, nearly $31 trillion, instead of just debt suspension.

Goldman Sachs said that if the US Congress misses the debt ceiling deadline, the Treasury Department will continue to pay the principal and interest on the bonds but will stop other payments that Americans rely on every day.

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