Facing Debtgeddon

EXTRACT: Yet the clock is ticking, and if an agreement to raise the US debt limit - or some other sort of deal - is not reached by August 2, then the US will suffer a catastrophic default and the US treasury will run out of money to pay ‘non-essential’ bills and wages (schools, parks, libraries, etc). An occurrence that would have seemed unimaginable only a few months ago. Such a default would lead to interest rate rises and, disastrously, the possible downgrading of the US’s triple-A status with the credit rating agencies - according to Standard and Poor, there is a “50-50 chance” of that happening over the next few months. Such an eventuality could send the entire US economy into a deep recession, and would set off an almost immediate global chain reaction effect: it could even herald an unprecedented economic slump. Thanks to the dual debt crisis, we are now facing what some have called ‘eurogeddon’ and ‘dollargeddon’. They might not be exaggerating.
In which case, British chancellor George Osborne can wave goodbye to his ‘recovery’ plans - already turning to dust. The preliminary GDP estimate for April to June showed the economy growing by a mere 0.2%. Although this was slightly better than some of the gloomier forecasts, it is rather lower than the 0.5% growth seen in the first quarter, which came after a 0.5% decline in the fourth quarter of last year. Rather unpersuasively, to put it mildly, the Office for National Statistics attributed some of the “weakening in growth” to a range of one-off events: the royal wedding, the additional bank holiday, the unusually warm April, the impact of the Japanese tsunami on global supply chains ... Excuses, excuses - not for nothing has Ed Balls, the shadow chancellor, accused Osborne and the government of being in a state of “total denial” about the economy.
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