The city's major birthing hospitals have stopped sending new moms home with baby formula, to encourage breastfeeding.
With only three days left to avoid a potential default,world leaders are urging American lawmakers to reach a deal to extend the debt ceiling.
Over the weekend, IMF chief Christine Lagarde spoke on NBC’s Meet The Press about the consensus among world financial leaders regarding the possible impact of a U.S. default: “If there is that degree of disruption,” Lagarde told David Gregory, “that lack of certainty, that lack of trust in the U.S. signature, it would mean massive disruption the world over, and we would be at risk of tipping, yet again, into recession.”
Andrew Hilton, director and joint founder of the Centre for the Study of Financial Innovation, told Here & Now‘s Jeremy Hobson he doesn’t think there will be a default, but if there was, it would be “armageddon.”
JEREMY HOBSON, HOST:
From NPR and WBUR Boston, I'm Jeremy Hobson.
ROBIN YOUNG, HOST:
I'm Robin Young. It's HERE AND NOW. In a few minutes, Chicago's Lars Peter Hansen, one of the three American winners of the Nobel Prize in Economics today, we'll get his view of the economy and the looming possible default.
HOBSON: But first to that possible default. There are just three days left for Congress and the White House to reach a deal to avoid it. Global financial leaders are raising red flags, urging a swift end to the stalemate in Washington. Finance ministers and central bankers from around the world met in the capital this weekend.
Christine Lagarde, who heads the International Monetary Fund, told NBC's "Meet the Press" that other issues at the meetings were brushed aside so attendees could focus on the potential default.
(SOUNDBITE OF TV SHOW, 'MEET THE PRESS')
CHRISTINE LAGARDE: One thing was certain around the table. It was that if there is that degree of disruption, that lack of trust in the U.S. signature, it would mean massive disruption the world over, and we would be at risk of tipping yet again into recession.
HOBSON: For more on this we're joined by Andrew Hilton, a former World Bank economist and director of the Centre for the Study of Financial Innovation, that's a London think-tank. Andrew Hilton, welcome.
ANDREW HILTON: Thank you.
HOBSON: Well, how worried are you that the president and congressional leaders will not be able to reach a deal in time and that the U.S. will default?
HILTON: I don't think there's any chance that the U.S. will default. I don't think Thursday is quite as absolute a deadline as people are talking about. There's $30 billion in the pot. The Treasury has all sorts of options. There are always ways to finesse it for a few more days, perhaps even a few more weeks.
HOBSON: A few more days or a few more weeks, but what you're saying is that they would eventually reach a deal?
HILTON: They will eventually reach a deal. I mean, if they don't eventually reach a deal, we have Armageddon.
HOBSON: Well, tell us what Armageddon means to you and to the major economies of the world first of all.
HILTON: Well, America is the safe haven. It's the safe haven in the galaxy of problems that we all face. There is nowhere more safe than the United States. There is no security more secure than American security. So if indeed there were to be something which was consensually regarded as a default on American securities, that will be catastrophic for China, which holds 2 billion of them, it will catastrophic for Japan, which holds pretty much the same amount, even for the UK and for Europe, all of which hold huge amounts of American promissory notes.
HOBSON: What do you mean it would be catastrophic? What would happen?
HILTON: Suddenly the U.S. would refuse to pay. It would refuse to acknowledge the value of those securities, and the market value of them would slump. If it fell by, let's say, 20 percent, that would be a loss to China of something going on for $500 billion, which would be, you know, astronomic and just simply unacceptable.
Plus if there were to be a formal default, financial markets around the world would seize up because those same securities are used as collateral in almost every financial market from here to kingdom come.
HOBSON: What about emerging markets that may not hold a lot of U.S. debt but are obviously connected to the global economy, as all countries are?
HILTON: Well, quite a lot of them do hold a lot of American debt. So they would be hurt straightaway. They're also, as you say, well plumbed into the international financial system. And if indeed the Americans, the United States was to default or, you know, there was some real foul-up in the American financial system, and interest rates went up, then money would flood out of the emerging markets looking for a home. And the emerging markets would be hit very hard.
So they are worried both because of the value of the holdings that they have of American securities and also because of the impact that higher interest rates and the rest of the world would do, the impact that that would have on their economies.
HOBSON: Andrew Hilton, what about the long-term impact of this? Even if we get past this latest crisis in Washington, what has been done to U.S. economic credibility with these crisis-after-crisis-after-crisis situations?
HILTON: Well, fortunately the market has a very short memory. A generation in the market is probably about nine months. So we forgive and forget. So I think we will recover. We will recover our faith in the U.S. and again, three or four years down the line, will be disappointed.
There is no alternative at the moment to the dollar. We've talked about it for 20, 30 years. It used to be at one stage something called the SDR, then it became the euro. Now they're talking about the renminbi, the Chinese currency, as an alternative to the dollar. In the end there's only one dollar, and it's the U.S. dollar.
HOBSON: Andrew Hilton is the director of the Centre for the Study of Financial Innovation, that's a think-tank in London. Andrew Hilton, thanks so much.
HILTON: My pleasure. Transcript provided by NPR, Copyright NPR.