Credit agencies warn of bond 'death spiral' if credit limit not raised

The pressure on House Republicans to play ball on raising the debt ceiling is becoming very intense. Last week, Speaker Boehner hosted a closed door session with the entire GOP caucus during which experts outlined the dire consequences to the economy and the budget if August 2nd came and went with no increase in the debt limit. Yesterday, if was one of their own - freshman Rep. Nan Hayworth - who brought in people from Moody's and Standard and Poors to give lawmakers the lowdown on the effects of a failure to increase the debt ceiling. Politico: House Republicans were cautioned Thursday in a closed door meeting with credit rating agency officials that a "death spiral" in the bond market was one of the possible outcomes in the event of default. One official warned of a worst-case scenario in which a default on the nation's credit could result in a rapid drop in bond values, sparking chaos in the markets - a dramatic warning as Washington worked on a possible deal on deficit reduction...(Read Full Post)

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