As bad as the US government shutdown is, there’s an even more dire showdown in Washington, DC over the Debt Limit, and if it threatens an upheaval to the world economy as bad or worse than the crash of 2008.

Unless the debt limit is raised, the US stops paying the bills on the debt it has already incurred, and that will reverberate throughout the globe because so many countries, corporations and institutions depend on the full faith and credit of the US government.  Conservative republicans are refusing to raise it hoping to extract policy concessions out of the White House.  Perhaps they don’t understand what the debt limit is; perhaps they’re really cynical enough to hold the world economy hostage.

International Monetary Fund (IMF) managing director Christine Lagarde says failure to raise the US debt ceiling would be a far worse threat to the global economy than the current shutdown.

But President Barack Obama is ruling out a constitutional maneuver to force ultra-conservatives in congress to extend the US debt limit, as republican threaten to take their refusal to act right up to the 17 October deadline.

“The administration does not believe the 14th amendment gives power to the president to ignore the debt ceiling,” said White House spokesman Jay Carney.

“The fact that there is significant controversy around the president's authority to act unilaterally means that it would not be a credible alternative to Congress raising the debt ceiling and would not be taken seriously by the market.”