The US Debt Crisis...A $14.3 Trillion question!

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Feb 11, 2007
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WASHINGTON — As efforts to avoid an unprecedented U.S. default entered crunch time Friday, President Obama faced growing tensions with senior congressional Democrats, who are angry at White House concessions to Republicans and at being left out of the talks.
With the clock ticking toward an Aug. 2 deadline to raise the U.S. debt ceiling, Obama and the senior Republican in Congress, House Speaker John Boehner, worked toward a plan that could include up to $3 trillion in spending cuts but might leave tax reform for later, congressional aides said.
Friday is essentially the start of crunch time. The White House initially set a July 22 target for a deal that would leave enough time to get it through the legislative process. But it has backed off that timeframe in recent days with both sides still far apart on the issues.

If Congress fails to raise the debt ceiling in time, the United States would default on its obligations, possibly plunging the country back into recession and sparking a crisis in financial markets worldwide.
Story: Debt ceiling uncertainty puts states at risk The main obstacle remained the issue of tax increases that Obama's Democrats demand and Republicans vehemently oppose.

There were conflicting accounts of how and when higher revenue might kick in, and the White House vowed there would be no deal without this.
Negotiations have seesawed between competing and even conflicting options, and leaders on both sides face resistance within their own ranks to some ideas now gaining traction.
But alarm was expressed most loudly Thursday by Democrats, who have complained about what they see as Obama's willingness to make concessions on social spending cuts. Democrats will also be unhappy if the president agrees to no immediate tax increases.

'Heated' party lunch
Privately, top Democrats expressed their frustrations at White House budget director Jacob J. Lew during a "heated" party lunch, The New York Times reported.
According to The Washington Post, Sens. John F. Kerry (Mass.), Barbara A. Mikulski (Md.), Maria Cantwell (Wash.) and others demanded that Lew explain what the president was doing in his talks with Boehner.
Following the tense 45-minute meeting, Mikulski turned to her colleagues and said, "I haven’t seen a meeting like this in my 35 years in Congress," the Post reported.

"The president always talked about balance: There had to be some fairness in this, this can’t be all cuts," The New York Times quoted Sen. Harry Reid, the Senate majority leader, as saying as he left the meeting with Lew. "The caucus agrees with that. I hope the president agrees with that, and I’m confident he will."

Video: Ryan: No one wants to see the US default (on this page)The budget talks dispute has brought long-simmering tensions between the White House and Capitol Hill Democrats to the surface.
“It would concern me greatly if these folks — the Tea Party group — have been able to convince the president to go along with a deal that basically gives them everything they want but yet still takes away from those who are our most vulnerable," Rep. Elijah E. Cummings (Md.), a former chairman of the Congressional Black Caucus, told The Washington Post.

Awaiting health care details from 'Gang of Six'"The people that I’m talking about, when you’re talking about Medicaid, Medicare and Social Security — and I’m sure they're all mixed up in there in this $3 trillion — those are people, a lot of whom are in my district, who have no alternatives," he told the Post. "They’re not the guys who own the planes; they’re not the ones who fly off to Paris for vacation."

The focus is on what congressional sources say is shaping up as a wide-ranging package of deficit cuts over 10 years, something many in Washington hope will help save America's triple-A credit rating.
Rating agencies have threatened a U.S. bond downgrade without a comprehensive deficit-cutting deal.
But confusion has grown amid a patchwork of proposals aimed at finding what a senior Democratic aide called the "magic formula" for resolving the crisis, which has dominated Washington's agenda for weeks.
"Frankly, we've looked at a half a dozen fallback plans, none of which are all that appetizing," Boehner — struggling with Tea Party lawmakers largely opposed to any compromise with Obama — told conservative talk-show host Rush Limbaugh.

General fears defense cuts
Meanwhile, Obama's nominee for Army chief of staff, Gen. Raymond Odierno, cautioned lawmakers Thursday against slashing defense spending too deeply.
Odierno told members of the Senate Armed Services Committee that the United States has a history of shrinking its military too quickly after conflicts, only to have to rebuild later.
"We must avoid our historical pattern of drawing down too fast and getting too small," said Odierno, former commander of U.S. forces in Iraq. "As we make difficult resource decisions, we must be thoughtful in understanding the risk we incur to our nation's future security."
Committee members expressed anxiety over the coming cutbacks, but generally agreed there was no avoiding them.

"We're the Armed Services Committee, so I suppose we understandably feel a special protectiveness of the military budget," Sen. Joseph Lieberman, I-Conn. told Odierno and other nominees for key military posts. But he added, "Everybody has to give in this crisis."
Republican Sen. Tom Coburn (Okla.) unveiled a deficit reduction plan earlier this week that included $1 trillion in defense cuts, much of it through changes to the military's healthcare system, reducing the nuclear weapons force structure and canceling or delaying arms programs.

Another package of proposed cuts, by the so-called Gang of Six senators, came under fire from the chairman of the House Armed Services Committee, Buck McKeon. The California Republican warned that it included $886 billion in national security cuts and said he opposed it.

Despite the gulf between the two sides, reports that negotiators were starting to
close in a debt deal helped fuel a rally in U.S. and world stocks on Thursday.
"There will be plenty of haggling over the details of all these plans in the days ahead," Obama said in an appeal for compromise in a USA Today opinion piece. "But right now, we have the opportunity to do something big and meaningful."

But crucial to the success of any deal will be Obama's ability to retain the loyalty of his own party.
Asked by The Washington Post on Thursday whether she felt the White House was "working off the same page" as her, Sen. Dianne Feinstein, D-Calif., responded simply: "No."
 
Roman Empire fall, British Empire fall, Germany-Japan fall, now is time for USA to go DOWN big time. Nilipokuwa mdogo sikuweza kufukiria hata siku moja kwamba USA inaweza kuanguka kutokana na ubabe iliokuwa nao. Sasa hivi tunashuhudia kuanguka kiuchumi, influence duniani, ya USA. Nani aliesababisha/anaesababisha kuanguka kwa USA?

Sababu ya kwanza vita. Vita imeimaliza USA, tangu 1942 vita vya dunia USA ilianza kuanza kujiingiza ktk siasa za dunia bila ya mpangilio wowote. Baada ya vita vya dunia, USA iliweza kutumia hela nyingi kama vile ile program yao ya kuwasaidia kiuchumi nchi za Ulaya Marshall Plan. Hizi hela zilikuwa zinatumiwa bila ya mpangilio wowote kwa sababu ya kuwasaidia ndugu zao "Wazungu" wa Ulaya.

Baadaye vita vya Vietnam, Korea, Gulf, Cold War, Iraq, Afghanistan policy nk. vimeweza kuitia USA ktk madeni makubwa sana ambayo mpaka leo ndiyo yanayoimaliza USA.

Sababu nyengine ya kushuka kiuchumi kwa USA ni kushuka kwa revenue kutokana na tax cut-break kwa wealth people. Nchi ina matumizi makubwa lakini kipato ni kidogo, kitu kinachofanya kuwa na budget deficit kila mwezi. Na sasa hivi wealth people hawataki kulipa kodi kubwa, kitu kilichasababisha kuanzishwa chama cha "matajiri" so called Tea Party. Tea Party wanapinga any tax increase kwa rich. Hii ni hatari kwa nchi.

Jambo jengine, competitive advantage. USA hawana tena competitive advantage ktk labor kama vile ilivyokuwa zamani. Viwanda vingi vinaondoka USA na kwenda nchi zengine kutafuta cheap labor ili kumaximize profit zaidi. Hivi viwanda vingi kati yao ni kampuni za Kimarekani. Kwa nini hawataki kuwekeza Marekani ili waijenge nchi yao kiuchumi? Faida ndogo, sheria nyingi za nchi.

Tatizo jengine linaloiangusha Marekani ni emerging market China, Brazil, na India. Hizi nchi zinapopulation kubwa, wasomi wengi, cheap labor. Je Marekani anaweza kushindana na hizi nchi sasa hivi? No. Hawa jamaa wanatengeza kila kitu duniani sasa hivi. Market ya Marekani imeshuka sana kulinganisha na hizi nchi. Uchumi wao unakuwa vizuri kuliko Marekani.

Historia inaanza kujiandika, Marekani inaanguka. Marekani ni taifa changa sana kulinganisha na mataifa kama China. Umri wa Marekani ni kama miaka 200 na ushehe. Good bye "Ex-Super Power"
 
Nakubaliana na uchambuzi wako Mkuu Shamu. Vita hasa ya Iraq imekuwa ya gharama kubwa sana. Vita ile ilisemekana ingegharimu $30 million tu lakini hadi sasa imeshatumika zaidi ya $1 Trillioni and counting. Halafu wana vituo vingi sana vya kijeshi ambavyo vina gharama kubwa sana kuviendesha na pia kuliendesha jeshi lao ni gharama kubwa sana lakini wako ambao pamoja na budget deficit kubwa waliyokuwa nayo hawataki kabisa bajeti ya jeshi ipunguzwe hata senti na pia wapo ambao hawataki kuona kodi hata kwa wale ambao wapo katika kundi la matajiri iongezwe. Wasipokuwa makini uchumi wa USA utaanguka vibaya sana na cha kusikitisha ni kwamba uchumi wa US ukianguka utaathiri pia uchumi wa dunia nzima.

Ronald Reagan's September 26, 1987 radio address,
Congress consistently brings the Government to the edge of default before facing its responsibility. This brinkmanship threatens the holders of government bonds and those who rely on Social Security and veterans benefits. Interest rates would skyrocket, instability would occur in financial markets, and the Federal deficit would soar. The United States has a special responsibility to itself and the world to meet its obligations. It means we have a well-earned reputation for reliability and credibility – two things that set us apart from much of the world.
​
 
[h=1]Barack Obama warns Americans will suffer without debt crisis deal[/h]President engaged in talks with Republican leader to negotiate deal, which would mean $3tn cuts in federal spending
Obama-Takes-Part-In-A-Tow-007.jpg

Barack Obama addresses the University of Maryland meeting on Friday, warning of an urgent need for a deal on US debt. Photograph: Alex Wong/Getty Images


Barack Obama has warned of drastic consequences if America does not reach a deal on the debt crisis facing the country, saying: "If we do not solve it, every American will suffer."
With only 10 days left until the deadline, Obama and the Republican leader in the House, John Boehner, have been engaged in behind-the-scenes talks trying to negotiate a compromise. But a deal is still in doubt, facing fierce resistance from diehard Republicans in Congress – elected last year with the help of the Tea Party movement – and from left-leaning Democrats.

Speaking at a public meeting in Maryland on Friday, Obama said defaulting on its debt was not an option. "We have never defaulted on our debt and we are not going to do it now," he said. A default would be a major embarrassment to the US, with some economists warning it could trigger a new worldwide recession.
The US chamber of commerce expressed nervousness over the prospect of America's credit rating being downgraded.

A deal would see more than $3 trillion slashed from federal spending over the next decade, including farm subsidies, military spending, social security and basic medical insurance.
Federal payments to state governments could also be hit. State governors are laying down emergency plans, with California, among others, looking for alternative sources of borrowing to tide it over. Banks and businesses are also working feverishly preparing for worst-case scenarios.

The crisis is the biggest test of wills yet between Obama and hardline Republicans endorsed by the Tea Party movement. It dwarfs the stand-off earlier this year when the federal government faced shutdown.
Republicans want huge spending cuts to reduce the country's massive national debt but oppose any tax rises. Democrats have agreed to spending cuts but want to protect the poorest and to ensure that any package includes tax rises.

The US is closer to the brink than the 2 August deadline suggests. Congress would have to begin pushing through legislation by about Monday to meet that deadline.
According to the Treasury, America reached its borrowing limit of $14.3tn on 16 May but is able to keep servicing its debts until 2 August.

Mark Blyth, professor of politics at Brown University and author of the forthcoming book Austerity: The History of a Dangerous Idea, said no one knew what the impact of defaulting would be because the situation was unprecedented.
He said the US had a long-term, serious problem, given its enormous fiscal gap and dependence on China, which has been bailing the US out and which has twice expressed concern about the impact of the default crisis on its investments.

The US economy "is like Wile E Coyote who runs off the cliff and it takes him a while to realise it. What has been keeping him up is Chinese blowing air up," Blyth said.
Obama, up for re-election in November next year, has seen a sharp decline in his popularity because of the sluggishness of the US recovery from recession, with unemployment frustratingly failing to budge from just over 9%.

In spite of the negative ratings on his handling of the economy, he is doing better on the deficit issue, according to polls, with many independents, the voters who usually decide elections, blaming the Republicans and preferring a mix of spending cuts and tax increases rather than spending cuts alone.
The Democratic leader in the Senate, Harry Reid, reflecting his party's unhappiness with the tentative deal, said: "This can't be all cuts, there has to be a balance."

Credit ratings agencies such as Moody's and Standard & Poor's have put the US on notice that its triple-A rating could be downgraded, which would be a national humiliation.
A glimpse into what might happen was provided by Minnesota earlier this month when the state had to close down, with disruption reaching down even to minor elements of daily life, from beer supplies to adoption papers.
Ross Baker, professor of politics at Rutgers University, compared the US economy, with its huge debt, to a patient who needs both first aid and long-term care.

"The Democrats are the first-aid squad with their concern over the lack of money to stimulate the economy and produce jobs. The Republicans are in charge of the long-term care facility with their preoccupation with multi-generational debt levels," Baker said.
As part of this partisan battle, the House, in which the Republicans have a majority, earlier this week passed a bill to cut $5.8tn from the budget over the next 10 years. It was a symbolic move, with legislation having no chance of passing the Senate, where the Democrats have a majority.

In another symbolic move, the Senate yesterday scheduled a vote on the House bill in order to demonstrate it did not have support.
[h=2]Explainer: the debt ceiling[/h]In the past, lifting the federal debt ceiling would have passed largely unnoticed in Washington. But what makes a difference this year is that Republicans, elected with the support of the Tea Party movement, are refusing to agree unless the Obama administration makes deep cuts in spending.

The deadline for raising the $14.3tn debt limit is 2 August, according to the US Treasury. Failure to increase the limit could mean the US defaults, unable to pay its bills.

Economists are divided on what would happen next, as the situation is unprecedented, but many warn that default would have disastrous consequences not only for the US but the world economy, possibly starting a new recession.

One possibility is a short-term deal that would allow government borrowing for another eight months, in return for a more modest $1tn in cuts.
 
[h=1]Debt ceiling talks between Obama and Republicans collapse
[/h] US on brink of economic crisis after negotiations over outline of $3tn cuts package and tax rises break down






  • Ewen MacAskill in Wahsington
  • guardian.co.uk, Saturday 23 July 2011 02.24 BST Article history
    Barack-Obama-statement-on-007.jpg
    Debt ceiling talks between Barack Obama and John Boehner have broken down, throwing the US into economic uncertainty. Photograph: Manuel Balce Ceneta/AP

    The US is on the brink of a major economic crisis after negotiations between Barack Obama and Republican Congressional leaders over the national debt dramatically broke downon Friday.
    Obama, showing anger, passion and verbosity rare in public in his two-and-a-half years as president, called a press conference at the White House at short notice to express his frustration with the Republicans.
    He told reporters there had been "a breakdown in trust" between the White House and the Republican leadership. In a snub to the president, the Republican leader in the House, John Boehner, failed to return calls from the White House throughout the day, with his office saying he was unavailable. Boehner finally called the president on Friday evening to inform him the Republicans were walking away from weeks of negotiation aimed at resolving the country's debt crisis.
    The collapse in talks comes with 10 days left until the US, for the first time in its history, faces the prospect of defaulting. If it fails to raise its $14.3tn (£8.7tn) borrowing ceiling, there will be serious consequences for not only the US economy but other countries around the world.
    The Republican withdrawal came just a day after Obama and Boehner had seemed close to an agreement on the broad outlines of a package to cut $3tn in federal spending over the next 10 years, and to raise some taxes. But Boehner was unable to sell it to diehard Republicans in the House, many of whom were elected last year with the support of the Tea party movement, which seeks deep cuts in spending but no tax rises.
    In a letter published just minutes after Obama began to speak, Boehner said: "In the end, we couldn't connect. Not because of different personalities, but because of different visions for our country." He blamed Obama for failing to agree to deep cuts in social security and other welfare benefits and for demanding that taxes be raised. "For these reasons, I have decided to end discussions with the White House," Boehner said.
    An exasperated Obama called Democratic and Republican Congressional leaders to meet at the White House at 11 o'clock on Saturday morning to offer alternative proposals for dealing with the looming deadline on the debt ceiling.
    The president insisted that the debt ceiling had to be raised or Americans across the country would suffer. "We've got to get it done. It is not an option not to do it," he said. If there is no deal, he said, he could not guarantee that the 70 million cheques due to go out to social security recipients, veterans and others on 3 August, the day after the deadline, would be sent.
    The US chamber of commerce expressed nervousness over the prospect of America's credit rating being downgraded.
    Federal payments to state governments could also be hit. State governors are laying down emergency plans, with California, among others, looking for alternative sources of borrowing to tide it over. Banks and businesses are also working feverishly preparing for worst-case scenarios.
    The crisis is the biggest test of wills yet between Obama and hardline Republicans endorsed by the Tea party movement. It dwarfs the stand-off earlier this year when the federal government faced shutdown.
    According to the Treasury, America reached its borrowing limit of $14.3tn on 16 May but is able to keep servicing its debts until 2 August.
    Mark Blyth, professor of politics at Brown University and author of the forthcoming book Austerity: The History of a Dangerous Idea, said no one knew what the impact of defaulting would be because the situation was unprecedented.
    He said the US had a long-term, serious problem, given its enormous fiscal gap and dependence on China, which has been bailing the US out and which has twice expressed concern about the impact of the default crisis on its investments. The US economy "is like Wile E Coyote who runs off the cliff and it takes him a while to realise it. What has been keeping him up is Chinese blowing air up," Blyth said.
    Obama, up for re-election in November next year, has seen a sharp decline in his popularity because of the sluggishness of the US recovery from recession, with unemployment frustratingly failing to budge from just over 9%.
    In spite of the negative ratings on his handling of the economy, he is doing better on the deficit issue, according to polls, with many independents, the voters who usually decide elections, blaming the Republicans and preferring a mix of spending cuts and tax increases rather than spending cuts alone.
    Credit ratings agencies such as Moody's and Standard & Poor's have put the US on notice that its triple-A rating could be downgraded, which would be a national humiliation.
    A glimpse into what might happen was provided by Minnesota earlier this month, when the state had to close down, with disruption reaching even minor elements of daily life, from beer supplies to adoption papers.
    Ross Baker, professor of politics at Rutgers University, compared the US economy, with its huge debt, to a patient who needs both first aid and long-term care.
    "The Democrats are the first-aid squad with their concern over the lack of money to stimulate the economy and produce jobs. The Republicans are in charge of the long-term care facility with their preoccupation with multi-generational debt levels," Baker said.


 
[h=1]Lawmakers split as debt deadline looms, markets uneasy[/h] By Andy Sullivan | Reuters – 40 mins ago

  • President Barack Obama meets with Senate Majority Leader Harry Reid of Nev., right, and House Speaker John Boehner …more of Ohio, left, in the Cabinet Room of the White House, Saturday, July 23, 2011, in Washington, to discuss the debt. (AP Photo/Carolyn Kaster) less
    Carolyn Kaster




[h=3]Related Content[/h]


WASHINGTON (Reuters) - A sharply divided Congress pursued rival budget plans on Monday that appeared unlikely to win broad support, pushing the United States closer to a ratings downgrade and debt default that would send shockwaves through global markets.
With an August 2 deadline little more than a week away, lawmakers have steadfastly refused to compromise and talks once again collapsed in acrimony at the weekend. Democrats and Republicans split into two camps to work on their own proposals.
Financial markets were uneasy in Asia and Europe on Monday about the prospect of a first-ever U.S. debt default, which Fed Chairman Ben Bernanke has said would be a "calamitous outcome" for the U.S. and the global economy.
But there was no panic selling that some politicians in Washington had feared after the weekend talks broke down, although that day could be drawing closer said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.
"There's an old saying that things don't matter until the day they matter; we're getting close to the day when it will matter," Krosby said.
After weeks of rancorous talks, finger-pointing and political point-scoring, both sides appeared still far apart on a deal to reduce the budget deficit, which would clear the way for Congress to raise its $14.3 trillion borrowing limit.
President Barack Obama and congressional leaders have tried to reassure global markets that the country will be able to service its debt and meet other obligations after August 2, when the Treasury Department says the United States will run out of money to pay its bills.
Faced with the prospect of defaulting on debt and the country losing its AAA credit rating, the highest possible, lawmakers set a Monday deadline to show markets a plan.
Republicans, driven by the fiscally conservative Tea Party movement that helped them win the House last November, strongly oppose tax increases, while Democrats who lead the Senate dislike proposed cuts to popular social programs.
Secretary of State Hillary Clinton sought to reassure Asia, which holds close to $3 trillion in U.S. government debt, that the United States would reach a deal and avoid default.
"I'm confident that Congress will do the right thing and secure a deal on the debt ceiling and work with President Obama to take the steps necessary to improve our long-term fiscal outlook," she said in a speech in Hong Kong.
Indeed, Asian officials said they remained confident a deal would be worked out, although worry levels are rising.
"Those in direct charge of reserves operations must be more nervous than before," said a senior official at South Korea's central bank, who spoke on condition of anonymity because he was not authorized to speak to the news media.
"But nobody thinks Americans will choose suicide when they have known solutions."
Germany added its voice to those expecting U.S. lawmakers to reach a compromise, although elsewhere there were signs of frustration. British Business Secretary Vince Cable told BBC television on Sunday that "right-wing nutters" in Congress were holding up the talks.
China, the biggest U.S. foreign creditor with some $1.16 trillion invested in U.S. Treasuries as of May, has regularly pressed Washington to get its fiscal house in order.
RATINGS
Talks between Democrats and Republicans in Congress fell apart once again after House Speaker John Boehner acrimoniously broke off talks with Obama.
Now the Republican-controlled House and the Democratic-controlled Senate appear to be heading for a showdown as their leaders develop competing legislation to resolve the crisis.
The political brinkmanship unsettled investors on Monday. Stock markets in Europe fell 0.4 percent and in Asia they fell around 1 percent.
U.S. stock futures prices dropped 0.7 percent, suggesting a weaker start on Wall Street later but not a major selloff that some fear. Gold, the favored safe haven, rose 1 percent to a record high.
Ratings agencies have warned that even if Congress raises the debt ceiling and averts a default, they may still strip the United States of its AAA credit rating if lawmakers fail to agree on deeper long-term budget cuts.
A lower credit rating could raise borrowing costs not only for the U.S. government but also for other countries, companies and consumers because U.S. Treasuries are the benchmark by which many loans are measured.
Earlier this month, Bernanke warned against overzealous government spending cuts in the short term because it could derail an already fragile recovery from the global financial crisis and a default would be calamitous.
Democratic Senator Harry Reid aims to raise the debt ceiling by $2.7 trillion, enough to cover the country's borrowing needs through the November 2012 elections. That would be paired with an equal amount in spending cuts over 10 years -- short of the $4 trillion in deficit savings that experts say will be necessary to keep debt at a sustainable level.
Boehner's plan would raise the debt limit in stages, forcing Congress to confront the politically painful issue again before the election. His plan could potentially deliver bigger budget savings through an overhaul of the tax code and a reform of expensive health benefits that are expected to balloon over the coming decade.
NO NEW TAXES
Neither plan would raise taxes, despite Obama's insistence that tax hikes needed to be part of the solution. Democrats want to ease the pain of spending cuts by phasing them in gradually over 10 years and increasing taxes on the wealthy.
Boehner's plan could also include some form of a balanced-budget amendment to the Constitution, a bid to retain the support of conservatives in his party aligned to the Tea Party. However, the Senate voted down a similar bill last week.
"I do think there is a path, but it's going to require us to stand together as a team," Boehner told fellow House Republicans, several sources said. "It's going to require some of you to make some sacrifices."
Reid said Boehner's plan will get nowhere in the Senate.
"Speaker Boehner's plan, no matter how he tries to dress it up, is simply a short-term plan, and is therefore a non-starter in the Senate and with the president," he said in a prepared statement.
How quickly the negotiations can advance is less clear now that both chambers will be advancing rival bills. The Senate generally needs a week to pass any legislation unless opponents can be persuaded to drop procedural barriers -- an uncertain prospect on such a high-profile issue.
Ethan Harris, co-head of global economic research at Bank of America-Merrill Lynch, said he expected a temporary increase in the debt ceiling with the promise of up to $4 trillion in deficit reductions to be finalized six months later.
"The base case scenario can be summarized as 'appease and delay' -- appease the rating agencies and the market with the beginnings of a large plan, but in actuality delay the crisis further into the future," Harris said.
Robert Tipp, chief investment strategist at Prudential Fixed Income in Newark, New Jersey, said the U.S. Treasury may have a bit of wiggle room on the August 2 deadline because tax revenues had exceeded expectations. But that would buy a few days, not weeks.
He thought the most likely scenario is a small deal that averts default but bumps the U.S. credit rating down to AA.
"I think that's what the agencies have signaled, and therefore that's what the markets are expecting," he said.
(Additional reporting by Richard Cowan in Washington, Ryan Vlastelica in New York, Emily Kaiser in Singapore, Yoo Choonsik in Seoul; Editing by Kristin Roberts, Doina Chiacu and Neil Fullick)
 
BAK;

This Debt ceiling fracas waliyoianzisha GOP itakula kwao wasipoangalia. Unajua uchaguzi wa 2010 uliingiza congress the most fringe people wenye ubaguzi na lengo lao lilikuwa ni kumzuia Obama kufanikiwa katika sera zake. Maana kama Obama atafanikiwa GOP will suffer severe defeat in 2012 election. Lengo likiwa kumfanya Obama aonekana bogus mbele ya wamarekani na kumtoa WH 2012. Sasa wamemkuta Jaluo yupo smart, walidhania atakataa kubana matumizi matokeo yake amekubali na kuenda mbali zaidi kuwa wakate zaidi. GOP wanajua kuwa Debt and deficit is their 2012 talking point, if is off the table now they will have nothing to play 2012. Matokeo yake ni kwamba GOP wamejiweka kwenye position ambayo kuchomoka kwake ni kuuangusha uchumi wa dunia na marekani kwa kukataa katakata raising the debt ceiling. Kama kweli wanatetea uchumi na ku-create jobs basi tokea wachukue house tungeona bills kama mvua za kukuza uchumi ila wanazuia everything na wanaomba uchumi uporomoke ili wachukue WH 2012. Kwao hawa ni bora Marekani iangamie kuliko kuona Obama anakuwa-re-elected.

Kitendo cha Obama kumuua Osama kitakuwa kimewauzi sana GOP maana defence card is off the table. Ila believe debt ceiling itakuwa raised maana jamaa wa wall street wanawakoromea GOP partner wao ndiyo maana GOP minority leader akaja na last minute back up. Obama kawaambia kuwa hakuna short term deal atakayo sign, ni kwamba hii kitu iende beyong 2012. GOP wanataka kutumia hii kumfunga Obama LUKU asi-Kampeni maana atatakiwa kuwashawishi waongeze debt ceiling. ITAKULA KWA GOP WASIPOANGALIA
 
26 July 2011 Last updated at 10:52 ET [h=1]IMF head Lagarde warns 'clock ticking' on US debt deal[/h]
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Christine Lagarde warned US politicians need to agree a deal quickly
[h=2]Related Stories[/h]
The new head of the International Monetary Fund (IMF), Christine Lagarde, has warned the "clock is ticking" on a deal to tackle the US deficit and raise its debt ceiling.
Unless politicians agree a package by 2 August the US may be unable to pay its bills, triggering an economic crisis.
On Tuesday the dollar fell against the euro whilst US shares opened down.
But Ms Lagarde warned against drastic cuts in spending, saying these could create a "jobless recovery".
She also called on the EU to implement its plan to tackle sovereign debt.
Ms Lagarde took over the leadership of the IMF following the arrest of former head Dominique Strauss-Kahn in New York on charges of sexual assault.
The former French finance minister said the world economy still faced significant "downside" risks as it emerged from recession.

Urgent action Speaking in New York on Tuesday, she called for an urgent deal between US lawmakers and the president to allow the US to continue borrowing money.
"The issue needs to be resolved immediately," she said.
The federal government spends more than it earns in taxes and so runs a budget deficit that topped $1.5tn (£920bn) this year. It has a national debt of $14.3tn.

But the government cannot keep borrowing money to fund its deficit without further permission from Congress.
The Republican party, which has a majority in the lower House of Representatives, is demanding steep spending cuts before they agree to a deal.

Democrat President Barak Obama and Republican House Majority Leader John Boehner have so far been unable to agree. If no deal is reached the US treasury could abruptly run out of money.
On Tuesday the dollar fell against most major currencies. US stocks also opened down due to the uncertainty.
The US dollar was at $1.6386 against the UK pound, from $1.6280 late on Monday. One euro was worth $1.447 from $1.4378.

The main Dow Jones index was 0.6% or 77 points lower at 12,516.
Ms Lagarde warned that whilst a package to cut the US deficit was essential, quick cuts in spending could damage the economy.
"That's why we've advised against fiscal consolidation that is unduly hasty - even as we stress the importance of getting a fiscal consolidation plan agreed soon," she said.
However the US was not the only concern raised by the new IMF head.

Eurozone danger She warned that the EU sovereign debt crisis - which has so far included Greece, Ireland and Portugal - highlighted the difficulties of sharing a single currency without close economic co-ordination.
She called on EU leaders to move quickly to implement their plan on tackling the crisis.
Otherwise, she warned, "turbulence could easily re-surface on the financial markets" which had been highly volatile in the build up to the deal.

Last week, eurozone leaders agreed a new 109bn euros ($155bn, £96.3bn) bail-out for Greece and expanded the role of the European rescue fund to alleviate pressure on other indebted countries like Spain and Italy.
But despite the deal, both Spain and Italy, who have high public debts, have been forced to borrow at higher interest rates than previously.
Spain borrowed 2.9bn euros in short-term debt, paying an interest rate of 2.519% to borrow for six months, up sharply from 1.776% previously.
Italy had to pay 2.269% to borrow for the same amount of time - up from 1.988%.

Emerging markets Emerging fast-growing economies such as Brazil, China and India also face risks due to their rapid growth.
She called for action - such as interest rate rises - to ensure economies do not over-heat.
"Staying ahead of the curve will be essential to avoid the possible hard landing if policy action comes too late," Ms Lagarde said.
On Tuesday the Reserve Bank of India raised its main interest rate to 8% from 7.5%, the eleventh increase since March 2010.
 
Rais wa Marekani, Barack Obama, ameitumia hotuba yake kupitia televesheni kulibinya bunge litanzuwe mzozo wa madeni ya nchi hiyo.
Marekani iko katika hatari ya kufilisika mnamo wiki moja kutoka sasa, ila ikiwa tu kiwango cha kukopa nchi hiyo kitazidishwa. Katika hotuba aliyoitoa kutokea Ikulu, rais huyu aliwalaumu wabunge wa chama cha Republican kwa kukosekana kufikiwa mwafaka, na akawahimiza Wamarekani washilikiane kuweko suluhu.

Source: DW
 
chatu dume said:
Rais wa Marekani, Barack Obama, ameitumia hotuba yake kupitia televesheni kulibinya bunge litanzuwe mzozo wa madeni ya nchi hiyo.
Marekani iko katika hatari ya kufilisika mnamo wiki moja kutoka sasa, ila ikiwa tu kiwango cha kukopa nchi hiyo kitazidishwa. Katika hotuba aliyoitoa kutokea Ikulu, rais huyu aliwalaumu wabunge wa chama cha Republican kwa kukosekana kufikiwa mwafaka, na akawahimiza Wamarekani washilikiane kuweko suluhu.

Source: DW
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hapo kwenye red ...sijasikia...hebu rudia kwa sauti plz!!
 
ritz said:
Mkuu, hayo mambo ya uchumi zama ufatilie habari za Marekani walivyokwama kiuchumi
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Hawajakwama. They are doing something about it. Unlike Kikwete ambaye anasema yeye si Mungu kwa hiyo hawezi kuleta mvua.
 
Hawajakwama na wala hawajafilisika. Hayo madeni yao wanaweza kulipa watu wachache tu hapo USA.

Kinachoendelea kwa wenzetu ni ile kuweka tahadhali na kuzuia mabaya yasitokee na siyo baadaye kuja kuponya.

Ukilea matatizo basi unakuja kuishia kuwa kama Greee.
 
Yani marekan ifilisike,imekua tanzania inayokosa hadi mishahara ya kulipa wafanyakaz wake!
 
ritz said:
Mkuu, hayo mambo ya uchumi zama ufatilie habari za Marekani walivyokwama kiuchumi
Click to expand...
Anayetarajia Marekani itafilisika hivi karibuni ni sawa na Fisi anayemsindikiza mtu akidhani mkono utaanguka.Hatujafilisika hata sie ambao tumejaa takwimu za kupikwa kwamba uchumi wetu unakua kwa kasi lakini kila mwaka tunakuwa kwenye kundi la maskini wa kutupwa. Ije ifilisike Marekani ambayo inajua miaka 30 ijayo itakuwa inafanya nini!!!!
 
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