Today's Coming Crisis Movie

Tuesday, July 26, 2011

Obama urges compromise to avoid "reckless" default

President Barack Obama on Monday called on divided congressional leaders to compromise and break a deadlock over raising the debt limit that he said risked a "reckless" national default.

Obama made the appeal in an address to the nation as Democratic and Republican leaders remained at loggerheads over divergent debt plans that have highlighted the ideological gulf between them. Even if default is avoided, as most expect, the impasse has raised fears of an unprecedented downgrade of America's gold-plated credit rating.

As the clock ticks toward an August 2 deadline to act on raising overall borrowing authority so the nation can pay its bills, the stalemate is rattling investors worldwide, sending stocks and the dollar down and pushing gold to a record high.

But market reaction so far has fallen short of the panicky sell-off some politicians had feared after weekend talks broke down.

In his address, Obama spelled out the severe economic consequences of a default or a credit ratings downgrade resulting from failure to strike a deal to raise the $14.3 trillion debt limit and reduce the budget deficit. (more)