US default would spark 'major crisis': Bernanke

A US debt default would spark a "major crisis" and send shockwaves through the global economy, US Federal Reserve Chairman Ben Bernanke said Wednesday.
If the US does not raise its borrowing ceiling by August 2 and is forced to stop servicing its debt commitments, it would "throw the financial system into disarray and have an enormous effect on the global economy," he told members of Congress.
Bernanke told the House Financial Services Committee that the US could continue to make payments on debt principal and interest if the ceiling is not raised.
But the alternative would then be to slash domestic spending by as much as 40 percent because of income restrictions, which could bring economic growth to a standstill.