US debt ceiling: "A huge financial calamity" (UPDATED)

GlobalPost

"A huge financial calamity."

Those aren't words you normally like to hear.

That's especially true if they're spoken by the most important person in the world's largest economy.

But you know it's serious when the typically opaque Fed Chairman Ben Bernanke speaks clearly.

And that's just what he warned yesterday as Washington and the world braces for what could be an economic disaster if Congress and President Obama don't figure out a way to keep the U.S. government from defaulting on its debts.

That warning by Bernanke followed another one by ratings agency Moody's, which uttered a terrifying statement in the dullest language possible:

Moody’s Investors Service has placed the Aaa bond rating of the government of the United States on review for possible downgrade given the rising possibility that the statutory debt limit will not be raised on a timely basis, leading to a default on US Treasury debt obligations. On June 2, Moody’s had announced that a rating review would be likely in mid July unless there was meaningful progress in negotiations to raise the debt limit.

Standard & Poor's has also reportedly raised the stakes.

It privately told lawmakers that it "might cut the U.S. credit rating if the government fails to make any of its expected payments—including Social Security checks—even if it makes all its debt payments," the Wall Street Journal reported today.

It appears the ongoing talks to raise America's debt ceiling — a move that would allow the U.S. to stave off default — are not going well. 

Here's how the New York Times reported the situation:

And the latest bipartisan negotiating session on Wednesday evening ended in heightened tension. Republicans said Mr. Obama had abruptly walked out in an agitated state; Democrats described the president as having summed up with an impassioned case for action before bringing the meeting to a close and leaving.

Across Washington, officials were weighed down with a sense that they were hurtling toward a crisis. Grim-faced lawmakers spent the day shuttling from meeting to meeting in search of a way out of the fix.

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