Word: default
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Rockefeller finally stopped being a team player when he broke with the President over New York City. The split was not acrimonious. When Rocky was quoted as saying that default would be a "catastrophe," the President mildly reprimanded him but did not order him to stop speaking out. White House aides, on the other hand, were more emphatic. Donald Rumsfeld, said a Rocky sympathizer, was "jumping up and down." Already miffed because the President had backed Rocky's plan for a $100 billion energy independence authority, Treasury Secretary William Simon joined the sniping. As the pressures mounted, Rocky decided...
...newest and most immediate worry is the impact of a default by New York City, which could happen practically any day now. President Ford, who has vowed to veto any congressional attempt to help the city avoid bankruptcy, insists that financial markets have already discounted a default and so the impact could be contained without serious damage to the economy...
...disputed by a host of critics who fear that a default could abort the recovery. Robert Nathan, a member of TIME'S Board of Economists, says that if New York goes under, the shock waves in money markets will drive up borrowing costs for many states and municipalities, forcing them to cut services and spending and hike taxes, and drastically harm the economy. A New York bankruptcy would also wipe out much of the value of $2 billion worth of city securities held by banks round the country. Though the Federal Reserve has pledged to lend the banks enough...
...greatest worry was that default would retard American-and hence international-economic recovery. Said a high West German official: "President Ford obviously does not understand the implications. A bankruptcy would, at the very best, endanger the U.S. economic rebound and most likely erode faith overseas in the American Government's economic seriousness. The question is whether, after a default, the banks will have the money-and the nerve-to provide the loans U.S. business needs to fuel the economic recovery." Warned Kurt Richebacher, general manager of the influential Dresdner Bank: "Default would have a considerable impact abroad on confidence...
...chief of Manufacturers Hanover Trust of New York shouldered somberly and authoritatively through these familiar waters. He is Gabriel Hauge, and he bore the message to beware of New York City's default and urged federal help. Hauge was a master of the elbow squeeze, the whispered message-first to Alan Greenspan, chairman of the Council of Economic Advisers, then to Arthur Burns, chairman of the Federal Reserve. It was an intense warning, but applied under the full protocols of the court: ideas contend...