Stocks would crash 'violently' even if US avoids immediate default: Dudley

"I have one message for those observing or involved in the standoff over raising the US federal debt limit: Be afraid, be very afraid," said Dudley, who previously served as president of the New York Federal Reserve."At this point in the financial and economic cycle, the consequences of failing to reach a deal would be particularly dire."

Meanwhile, the White House has maintained that it will only agree to a"clean" deal that lifts the debt ceiling without any spending cuts or other conditions. , Dudley said. Instead, it's more likely that the Treasury would prioritize payments on government debt, while federal workers would have to wait to be paid."Even if prioritization averted an immediate default on Treasury securities, the damage would be vast. Markets — still dealing with the consequences of a rash of bank failures — would be shocked, having expected the usual last-minute deal," Dudley wrote.

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