US Debt ceiling crisis
Discussion
25 July 2011 Last updated at 18:24
IMF calls for US to raise debt ceiling and cut spending
The International Monetary Fund (IMF) has called on US politicians to act urgently to raise the country's debt ceiling.
The IMF also called for a "comprehensive solution" to reduce the US deficit over the medium term.
Without this, IMF directors warned, the markets could lose confidence in Washington's ability to pay its debts.
The US risks default on its $14.3tn (£8.7tn) debt without a deal to raise the borrowing limit by 2 August.
"These risks would also have significant global repercussions, given the central role of US Treasury bonds in world financial markets," the IMF said.
IMF calls for US to raise debt ceiling and cut spending
The International Monetary Fund (IMF) has called on US politicians to act urgently to raise the country's debt ceiling.
The IMF also called for a "comprehensive solution" to reduce the US deficit over the medium term.
Without this, IMF directors warned, the markets could lose confidence in Washington's ability to pay its debts.
The US risks default on its $14.3tn (£8.7tn) debt without a deal to raise the borrowing limit by 2 August.
"These risks would also have significant global repercussions, given the central role of US Treasury bonds in world financial markets," the IMF said.
There was one, a couple of weeks ago:
http://www.pistonheads.com/gassing/topic.asp?h=0&a... Put US Debt on Downgrade Review
http://www.pistonheads.com/gassing/topic.asp?h=0&a... Put US Debt on Downgrade Review
Mermaid said:
It seems not much interest in either for everyone expects a deal to be cobbled together. It will be wake-up if they don't.
Democrats want to cut the $700bn expenditure on defence - Republicans say No No No.
Political posturing on both sides. You are correct, a deal will be struck.Democrats want to cut the $700bn expenditure on defence - Republicans say No No No.
Jimbeaux said:
Mermaid said:
It seems not much interest in either for everyone expects a deal to be cobbled together. It will be wake-up if they don't.
Democrats want to cut the $700bn expenditure on defence - Republicans say No No No.
Political posturing on both sides. You are correct, a deal will be struck.Democrats want to cut the $700bn expenditure on defence - Republicans say No No No.
EDLT said:
Can someone explain how increasing the amount of debt they can get into helps to reduce their deficit?
I don't understand economics very well, but I THINK it's as follows.You're earning £1000 per month but have to spend £1200 to make ends meet.
You have a plan to reduce the gap, by earning more money and cutting your spending, but it'll take time for it all to come together.
You're credit card is about to max out.
By increasing the credit limit you can buy yourself time to get into a position where you aren't spending more than you earn.
ETA- if you don't increase your credit limit then you run out of cash before your plan comes together and you go bankrupt.
The problem as I see it is that all most of the governments seem to have plans to do is get it to a level where instead of paying out £200 per month more than they earn, they'll only be paying out £100 per month more than they earn. i.e. eventually it'll go tits up.
However, I never studied economics and have only a fragile grasp of this situation so I'm sure someone will correct me!
EDLT said:
Can someone explain how increasing the amount of debt they can get into helps to reduce their deficit?
It doesn't. But, strangely, it could stop it increasing further (assuming the budget is balanced moving forward).A default would trigger an automatic downgrading of US debt by credit rating agencies. That would in all likelihood lead to an increase in the cost of US borrowing moving forward, meaning higher interest rates to pay for out of an already-stretched budget. Furthermore, the way of credit ratings is that, by and large, no company or municipality can have a better credit rating than its country. In consequence, the cost of borrowing for many companies, individuals, states and cities would also increase, with a resultant increase in expenditure. This would reduce profits, reduce federal and state tax receipts, and so on.
So, even were the US to be able to produce a balanced budget moving forward, a default would mean it would have to pay more in interest, and receive less in taxes, than hitherto.
Rickeh said:
Obama's making an address 9pm EDT (1am here) about the issue
He has no solution yet. This is him using his position to better his position, as any President would. This is all about the 2012 election. The Senate and the House will come to a deal soon and the President wants to be seen as being involved. That is one reason he insists that any debt extension be good through at least 2013. Bandit said:
I think i saw that "just" $1 trillion was borrowed from China.
Around 4.5 it total outside of the US (May 2011).UK hold around 390 B$
http://www.treasury.gov/resource-center/data-chart...
Obama blames the Republicians or impasse.
http://www.bbc.co.uk/news/world-us-canada-14286606
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