IMF Predicts Global Crisis if U.S. Cannot Agree on Debt Ceiling Solution

As MexBizNews reported today, "A loss of investor confidence in U.S. debt could have "universally large and negative" effects on the rest of the world, the International Monetary Fund said this week in its annual assessment of the U.S. economy."

The IMF delivered its warning as the White House and Congress struggled to reach a deal to increase the federal government's borrowing limit before an Aug. 2 deadline.

A downgrade would be "very damaging for both the US economy and the rest of the world" by hitting stock markets and pushing interest rates higher, IMF senior adviser Rodrigo Valdes told reporters. It would be new territory for U.S. debt, so "there's a lot of uncertainty," he said. "Nobody really knows what would be the true effect."