US default could be 'catastrophic': Treasury

A US default on its obligations forced by Congress not raising the country's borrowing ceiling would have catastrophic effects, the Treasury warned Thursday.

With the government likely to exhaust its cash reserves around October 17, the Treasury said being forced into non-payment of any of its obligations -- and in particular its debt -- would spark turmoil in financial markets and possibly send the country back to a recession as deep as that of 2008-2009.

Fear to dog investors for years: Arne Holzhausen, German economist

NEW YORK: Investors around the world have retreated from risk before. But this time is different.

So says Arne Holzhausen, a senior economist at Allianz, an insurer based in Munich. He says what's keeping people from returning to taking chances with their money is not just a fear of loss, but a mistrust of the financial system. His prediction: Investors will remain cautious for several years to come.

Depending on your view, Holzhausen is qualified either to understand this new cautious world, or to exaggerate its impact. A German, he shares with his countrymen a reluctance to gamble with money even in the best of times. He also has seen the damage when the appetite for risk swings from one extreme to the other: He lived and studied in Japan in 1989-1990 when overconfident investors pushed stock prices to a record, then in 1994-1995 after many had sold at a loss and the economy had entered a two-decade slump.

Euro bulls take heart from ECB currency talk, tighter liquidity could push euro higher

LONDON: After what was seen as a lukewarm protest against a strengthening euro by European Central Bank chief Mario Draghi last week, financial markets are gunning for more gains for the single currency.

On the face of it, the bank has done much on actual policy to lay the ground for a halt in the currency's gains, allying an extremely cautious view on the euro zone's recovery to a promise to pump yet more money into the banking system if market interest rates show even a hint of rising.

But many in financial markets are more interested in the contrast between President Mario Draghi's line on the currency last Wednesday and what the bank said when it was last this strong in February.