Top Economist: Even Brief Default Will Cause New Recession And Blow Recovery

Top Economist: Even Brief Default Will Cause New Recession And Blow Recovery ‘Out Of The Water’
http://tpmdc.talkingpointsmemo.com/2011/06/top-economist-even-brief-default-will-cause-new-recession-and-blow-recovery-out-of-the-water.php?ref=fpblg

(snip)
Moody's chief economist, and former McCain economic adviser Mark Zandi is forecasting GDP growth of 4 percent by the end of the year and into next. But in response to a question from TPM, he told reporters at a breakfast meeting hosted by the Christian Science Monitor that his forecast would be "blown out of the water," if Congress fails to "reasonably gracefully" raise the national borrowing limit.

If Congress fails to raise the national debt limit by early August, the Obama Treasury Department will have to choose between defaulting on obligations to the country's creditors -- triggering higher interest rates and perhaps damaging the country's credit rating for months and years to come -- or freezing outlays to contractors, entitlement beneficiaries and others who are also expecting prompt payment as well. In either case, the macroeconomic impact will be staggering, according to Zandi.

"I think we go into recession and my forecast would be blown out of the water," he said. "I think if we get to August 2nd and there is no debt ceiling (increase) and there has to be significant spending cuts, I think even if Congress and the administration reverse themselves days later, I think the damage will have been serious and we'll probably be thrown into a recession."

Additionally, Zandi noted, "The cost to taxpayers would be enormous, because we would nail tax revenue and spending would increase because of the automatic stabilizers in the budget. So it would be just the wrong thing for the economy and the wrong thing for trying to address our long-term fiscal issues."

in Syria when he tortured that little boy, killed him, delivered him to his parents with his penis cut off vs. publicized that Syrians who quit demonstrating would get amnesty the very next day.

Don't fall for it. The Syrians didn't and look at what the stakes are for them.