For the first time in its history America faces prospect of bankruptcy and a potential crash of the global economy as US law makers continue to bicker over the raising the cap on the borrowing limits of the US Treasury.
With the Tuesday deadline of a possible default looming, Americans yesterday reacted angrily with phone calls to their representatives in Washington in response to President Barack Obama’s nudge to Americans to call their representatives to order.
The credit- rating companies have concluded plans to downgrade America’s top-tier AAA credit rating, owing to the potential default on its debt, which could result in forced asset sales that are so widespread that global stock-and-bond markets would plunge – and economies around the world would crash.
The default scenario means that US currency will weaken while U.S. Treasury securities, widely used as loan collateral, could weaken and trigger global margin calls and widespread asset sales. America’s banks, major securities broker-dealers and giant hedge funds – and most of the world’s biggest financial institutions who hold hundreds of billions of dollars of U.S. Treasuries that they use as collateral to borrow are facing dangers of decline in the value and the world economies are likely to be affected by a bankrupt America, the world’s leading economy. Traders who use their U.S. Treasury securities to borrow more money or to buy still more Treasuries, are deeply worried with the politics that is playing out in Capitol Hills.
Records last week shows that the national debt has already hit the $14.3 trillion legal limit and unless the Congress acts by Tuesday, the Treasury will go broke meaning that US could begin running short of cash for federal health-care and retirement benefits, military salaries and payments due investors, thereby throwing the U.S. government into default for the first time in its history.
Apart from the default saga America’s credit -rating companies is in danger as the country risk begin downgrade its AAA rating, which could drive up interest rates for governments at all levels, as well as for ordinary Americans.
Speaker Mr. John A. Boehner who represents Republican Party, Ohio, laboured through the week end to rally a vote for his plan which will raise the debt ceiling for six months but President Obama has signaled that he would veto the measure because it would force another battle over the debt limit early next year.
Majority leaders Mr. Harry Reid of Democratic Party, Nevada pronounced the Republican Party proposal “dead on arrival” in the Senate, where Democrats were struggling to rally votes for their own plan to raise the debt limit by $2.7 trillion — enough additional borrowing authority to cover the nation’s bills into 2013.
The legislative maneuvering played out against a backdrop of public outrage, as the Capitol switchboard became jammed and visitors swamped congressional Web sites, apparently heeding a call Obama made Monday in a prime-time national address for Americans to contact their representatives in Congress.
The Congressional Budget Office said that the measure drafted by Senate Majority Leader Harry M. Reid would cut about $840 billion from agency budgets through 2021, while about $850 billion could be saved from Boehner’s proposal over the same period But Reid also claims significant savings from winding down the wars in Iraq and Afghanistan. The CBO found that those savings account for more than $1.1 trillion, making up about half of Reid’s debt-reduction package.
America has over the past ten years overstretched itself in military campaigns which are non productive and has not added to the growth of the economy. President Obama has told Americans the nation faced a ‘deep economic crisis’ if Democrats and Republicans could not reach a deal on spending, urging both sides to compromise.
Source: www.vanguardngr.com
With the Tuesday deadline of a possible default looming, Americans yesterday reacted angrily with phone calls to their representatives in Washington in response to President Barack Obama’s nudge to Americans to call their representatives to order.
The credit- rating companies have concluded plans to downgrade America’s top-tier AAA credit rating, owing to the potential default on its debt, which could result in forced asset sales that are so widespread that global stock-and-bond markets would plunge – and economies around the world would crash.
The default scenario means that US currency will weaken while U.S. Treasury securities, widely used as loan collateral, could weaken and trigger global margin calls and widespread asset sales. America’s banks, major securities broker-dealers and giant hedge funds – and most of the world’s biggest financial institutions who hold hundreds of billions of dollars of U.S. Treasuries that they use as collateral to borrow are facing dangers of decline in the value and the world economies are likely to be affected by a bankrupt America, the world’s leading economy. Traders who use their U.S. Treasury securities to borrow more money or to buy still more Treasuries, are deeply worried with the politics that is playing out in Capitol Hills.
Records last week shows that the national debt has already hit the $14.3 trillion legal limit and unless the Congress acts by Tuesday, the Treasury will go broke meaning that US could begin running short of cash for federal health-care and retirement benefits, military salaries and payments due investors, thereby throwing the U.S. government into default for the first time in its history.
Apart from the default saga America’s credit -rating companies is in danger as the country risk begin downgrade its AAA rating, which could drive up interest rates for governments at all levels, as well as for ordinary Americans.
Speaker Mr. John A. Boehner who represents Republican Party, Ohio, laboured through the week end to rally a vote for his plan which will raise the debt ceiling for six months but President Obama has signaled that he would veto the measure because it would force another battle over the debt limit early next year.
Majority leaders Mr. Harry Reid of Democratic Party, Nevada pronounced the Republican Party proposal “dead on arrival” in the Senate, where Democrats were struggling to rally votes for their own plan to raise the debt limit by $2.7 trillion — enough additional borrowing authority to cover the nation’s bills into 2013.
The legislative maneuvering played out against a backdrop of public outrage, as the Capitol switchboard became jammed and visitors swamped congressional Web sites, apparently heeding a call Obama made Monday in a prime-time national address for Americans to contact their representatives in Congress.
The Congressional Budget Office said that the measure drafted by Senate Majority Leader Harry M. Reid would cut about $840 billion from agency budgets through 2021, while about $850 billion could be saved from Boehner’s proposal over the same period But Reid also claims significant savings from winding down the wars in Iraq and Afghanistan. The CBO found that those savings account for more than $1.1 trillion, making up about half of Reid’s debt-reduction package.
America has over the past ten years overstretched itself in military campaigns which are non productive and has not added to the growth of the economy. President Obama has told Americans the nation faced a ‘deep economic crisis’ if Democrats and Republicans could not reach a deal on spending, urging both sides to compromise.
Source: www.vanguardngr.com
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