S&P Analyst Chambers: Debt Default Would Be Worse Than 2008

Wednesday, 16 Oct 2013 12:11 PM

By Dan Weil

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If the government defaults on its debt, the crisis would be bigger than that following Lehman Brothers' collapse in 2008, says John Chambers, chairman of the Sovereign Rating Committee for Standard & Poor's.

"It would be worse than Lehman Brothers in my judgment, and I think it's needless," he told "CBS This Morning."

The Senate is putting finishing touches Wednesday morning on a bill that would re-open the government and increase the debt ceiling. If an agreement isn't implemented by Thursday, the Treasury Department says it may have to begin defaulting on its obligations.

Editor’s Note:
Obama Donor Banned This Message (Shocking)

"There already is damage," he noted, adding that for every week the government is shut down, S&P predicts it is cutting 0.3 percent off of fourth-quarter GDP.

Chambers maintains that Congress will pass a debt/budget deal. But he says there are ways for President Obama to avoid a default, even if Congress doesn't raise the debt ceiling.

"One option he could have, which is dangerous but maybe the one that would be the most palatable, is to invoke the 14th Amendment [which requires payment of government debt] and just issue debt in defiance of Congress," Chambers said, according to Politico.

"If worse comes to worse, I think he can invoke the 14th Amendment and suffer the consequences of Congress' actions, which would entail trying to impeach him."

Robert Reich, former Labor Secretary under President Clinton, said Tuesday he now sees default as a real danger, which he didn't several days ago.

"It's not the old game of Democrats and Republicans," he told Yahoo.

"You've got a minority of very extreme right-wing Republicans who are willing to sacrifice the full faith and credit of the United States to get their way."

Editor’s Note: Obama Donor Banned This Message (Shocking)

Related Stories:

Slate's Yglesias: GOP Should Offer to Eliminate the Debt Ceiling

El-Erian: Congress' Antics Are Not Mere Flesh Wounds for Economy

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