IMF chief calls on U.S. to raise borrowing limit

WASHINGTON (AP) — The International Monetary Fund’s new chief foresees “real nasty consequences” for the U.S. and global economies if the U.S. fails to raise its borrowing limit.

Christine Lagarde, the first woman to head the lending institution, said in an interview broadcast Sunday that it would cause interest rates to rise and stock markets to fall. That would threaten an important IMF goal, which is preserving stability in the world economy, she said.

The U.S. borrowing limit is $14.3 trillion. Obama administration officials say the U.S. would begin to default without an agreement by Aug. 2.

“If you draw out the entire scenario of default, yes, of course, you have all of that — interest hikes, stock markets taking a huge hit and real nasty consequences, not just for the United States, but for the entire global economy, because the U.S. is such a big player and matters so much for other countries,” she said.

Lagarde, who took over as managing director July 5, also addressed the fallout stemming from the sexual assault charges filed against her predecessor, Dominique Strauss-Kahn.

Strauss-Kahn resigned in May after he was accused of attacking a hotel maid in New York City. He has denied the charges. New York prosecutors have admitted in recent weeks that their case has weakened and that the accuser has lied about many aspects of her background.

Lagarde, a former French finance minister, told ABC’s “This Week” that the scandal caused “a very strange chemistry of frustration, irritation, sometimes anger, sometimes very deep sadness” among the IMF’s 2,500 employees.

Lagarde said she would be on her “best behavior all the time.”

“When it comes to ethics and whatever I do, I always think to myself, would my mother approve of that,” she said. “And if she did not, then there’s something wrong.”

President Barack Obama and congressional leaders from both parties planned to meet Sunday evening at the White House to resume negotiations on a debt deal.

House Speaker John Boehner, R-Ohio, said Saturday that the talks should aim to reduce the deficit by about $2 trillion over 10 years. That’s about half the size of a more ambitious deal that Obama floated last week.

Republicans are insisting on deep spending cuts as a condition of voting in favor of raising the debt ceiling. Obama and congressional Democrats are insisting that more tax revenue should be part of the mix.

Lagarde did not address the European debt crisis or the IMF’s recent aid to Greece. On Friday, the IMF’s board approved a $4.2 billion loan to Greece, the latest installment of a bailout package intended to prevent the struggling nation from defaulting on its debt.

The IMF has 187 member nations and lends money to countries with troubled finances.

  • jdw

    Yes, we must raise our dept limit so that the lazy elite people in the EU can continue to have their 3 or 4 months off from work and to continue to work less than a 40 hour work week and continue to get free health care and education and retire before they turn 60! Americans pay for their defense, we subsidize their medications by paying a higher price for them here and they keep saying we are crude and boring!

  • MartyS

    The Obama’s were guests on the Oprah show. Michele told the audience she gives her husband an allowence because Barack spends too much money.

    Barack spent too much money. So the nation wants him to get an allowence again, Coco.

  • pairofpants

    FIRST we get years of liar O’BAMA and the MEXICAN GOVERNMENT meddling in the affairs of United States like Texas and Arizona and Wisconsin.
    ADD liar Janet Napolitano spreading fantasies about our “secure” southern border never being safer (exactly where do you sleep at night, Janet?).
    NOW this IDIOT trying to extort dollars from American taxpayers to save us from “real nasty consequences” if the U.S. fails to raise its borrowing.
    HAH! As if we haven’t already suffered real nasty consequences. Bring it on!

    Be warned patriots, these cultural Marxists (and their professional propagandists) are after all of our male babies.

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  • tinteardrop

    Suggest that this ‘Imogene Coca’esque broad go DIAF!

  • fourleafclover

    Get lost Christine Lagarde. We’ll stay out of your business and you stay out of ours. I despise the UN and IMF and the EU can stick it as far as I’m concerned. They’re a bunch of socialist leaches.

  • oldguy5

    The USA should get the hell out of both the UN and the IMF – hell we finance over 50% of each one of these organizations.

    I’m tired of other people from other countries telling us what to do then calling us name for not doing more.

    I say screw them all!!!!!!!!!

  • centexan

    Default is not the only option of not raising the debt limit. And worrying about what the IMF thinks is not a high priority.

  • dennisl59

    I’m going to keep it real simple for this french lady pissant: You’re not an American Taxpayer so mind your own business and F-OFF!

  • doncicciofitipaldi



    • thephranc

      The only ignorance I see on the issue is from economically illiterate liberal trolls like you who think that not being able to borrow more means not being able to pay back what has already been borrowed.

      • doncicciofitipaldi

        LOL. WE HAVE TO BORROW MORE IN ORDER TO PAY WHAT WE HAVE ALREADY BOUGHT!!! AND YOU CALL ME ILLITERATE!!!! Man……….where do they spew out high-school degrees these days?

        • thephranc

          No we dont have to borrow to pay for what we already bought.

          The best part about idiots like you is that you are too stupid to understand how much of a moron you actually are.

      • richardhead

        Then hear it from one of President Reagan’s and President Bush’s guys.

        “In that sense, raising the debt limit is about paying for past expenses, not controlling future ones. For Congress to refuse to let Treasury raise the cash to pay the bills that Congress itself has run up simply makes no sense.”

        Here’s the site where he blogs.

        • thephranc

          Tell me why it matters that he is one of Reagan’s or Bush’s guys?

          • richardhead

            Because you won’t believe “economically illiterate liberal trolls”.
            Which economist would you prefer I look at.