Copyrighted Image? DMCA | Pat Choate points out that a portion of the over $200 trillion in derivative bets depend on the U.S. not defaulting on its debt. The loss the U.S. debt's current credit rating will turn fair value accounting upside down and adversely affect the financial positions of many domestic and international businesses, which in turn will cause even more derivative bets to go against our financial services industry.
In addition, in the aftermath of the 2008 melt-down, most lenders reset loan covenants to be more onerous to American businesses, especially small businesses. The default on these covenants will set off a chain of layoffs and downward business spiral, all in an environment with little resources or political will for rescues or bailouts. President Obama shouldn't think twice about using his constitutional authority to pay the legal debts of the United States and avert a default. |
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