With the postponement of the Greek crisis, investor attention isturning to the next possible crisis, the growth of U.S. debt limit, to14.300 billion dollars by the deadline of August 2 after which the state will not be able to borrow to honor payments according toCNBC.
The U.S. government reached on May 16, the maximum of indebtedness and Treasury authorized extraordinary actions, allowing the government being able to borrow until August 2. Thereafter, the government will not be entitled to borrow and will not honor their obligations, including debt service.
According to the U.S. President, Barack Obama, August 2, marks the date when the Treasury will exhaust all financial maneuvers available to make payments, CNBC notes.
U.S. could continue to honor its debts and after that date, but should give up certain obligations such as payment of social benefits, unemployment insurance or to pay soldiers, according to television station. No matter how disastrous such a situation would be for affected families, would pale in comparison to the problems generated by a reaction of financial markets.
With the approach within 2 August, prospective investors in Treasury debt, especially foreign central banks may require higher yields to compensate for increased risk of default. U.S. federal authorities are likely the only thing that kept the U.S. so far away from the disaster that lower financing costs.
"Any increase of 0.1% interest paid by the state over the projected deficit will increase by another 130 billion dollars in the next decade", according to research firm notes Bernstein Research.
More and more analysts say the same thing - that American politicians are unable to reach a compromise. It is possible that adoption of the program of austerity measures in Greece last minute political leaders have encouraged the U.S. to lead the way dispute over the debt limit increase and spending cuts. Whatever the reasons, failure to raise the debt ceiling would be very dangerous for the U.S. economy but also the global.
On a scale of 1 to 10 events with negative impact, a intrarare default in the U.S. would be very close to the maximum, CNBC notes.
