US treasury secretary Lew says a default would be awful for markets

Treasury secretary Jack Lew has dismissed a popular alternative to a debt ceiling raise for the US and suggests that a default on debt interest payments could wreak financial havoc.

Lew says that the possibility of the US failing to pay what it owes will hurt stocks, short-term Treasury securities and the dollar. Not great news as much of the global financial system is based upon the idea that the US is as safe as it gets for investors.

He's slammed the idea of prioritisation - that the US could prioritise paying debt interest payments - as having the potential to cause "irrevocable damage" and an "irresponsible retreat from a core America value ... Presidents and Congress have always honoured all of our commitments".

Yet Lew says the President has not ruled out a shorter solution to the debt ceiling - but he does warn that the US' politicians are now playing in overtime after the US "hit the debt limit in May".

Now Lew worries that it's hard to tell when the government has run out of money (as the data just isn't available on spending and borrowing while the shutdown continues). So he says there could be some miscalculation problems.