USA in hurry to finalize a solution for its debt crisis before Asian Mkts open on Monday

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House Speaker John Boehner told Republican lawmakers they need to provide a positive signal on a plan to avert a U.S. default before Asian financial markets open tomorrow, Republican congressional aides said.

Boehner wants at least $3 trillion in spending cuts in a two-step plan to accompany an increase in the U.S. debt limit, one of the aides said. Treasury Secretary Tim Geithner warned President Barack Obama and congressional leaders during a White House meeting today of a possible reaction by Asian markets, said an official familiar with the meeting.

The markets could be tumultuous if a plan isn’t negotiated over the weekend, said Christian Cooper, head of U.S. dollar derivatives trading in New York at Jefferies & Co.

“The markets will be under very real pressure at the open because the assumption will be there is really no resolution to this,” Cooper said. “The breakdown in negotiations has crossed the line from the political posturing of the last few weeks to potentially a very real crisis.

“The Tea Party is effectively playing Russian roulette with the bond market and they will, with certainty, lose,” Cooper said. Jefferies is one of 20 primary dealers that trade with the U.S. Federal Reserve.

The congressional leaders met again for just under an hour at Boehner’s U.S. Capitol office late this afternoon. “We’re just continuing to go back and forth,” Senate Republican leader Mitch McConnell of Kentucky said after the meeting. “We’re still talking.”

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Republicans challenged a presidential veto threat by preparing for a short-term extension of the U.S. debt limit, hardening partisan differences in the face of warnings that a stalemate risks roiling financial markets as soon as tonight.

Senate Majority Leader Harry Reid, a Democrat, declared himself “deeply disappointed” with a Republican stance that’s “pushing us to the brink of a default.” Michael Steel, House Speaker John Boehner’s spokesman, said a short-term extension, which would mean another vote on the nation’s borrowing authority before the 2012 elections, is “inevitable.”

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Republican House Speaker John Boehner has walked away from crunch debt ceiling talks at the White House with US President Barack Obama.

Mr Obama said Mr Boehner had rejected an "extraordinarily fair deal" that would have included $650bn (£400bn) of cuts to entitlement programmes.

"A lot of Republicans are puzzled", the president said, that a deal could not be reached.

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Is it like USA having this *credit card* and spending on everything. They cannot settle the debt so what when they near the *credit card limit* what they are doing is *increasing the credit card limit* (and cutting spending on healthcare, education etc.) and spend more on credit. This is what has been happening over the years by every President. But this President has a little trouble probably because he's black. Now it's in trillions. Soon it will go to the number next to the trillion. Genius solution. Get more and more credit. Higher it goes very very harder and dangerous the collapse will be. May be the size of a trillion atomic bombs blowing around the world.

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I think President Obama is against heath benefits cuts. As i heard he wants to increase the tax income from wealthiest and give more heath reliefs. Yeap most of western countries have been swim in the credit river than there own. Lots of skyscrapers, flyovers, Disneyland have been made up on credits. Really USA is in deep crisis, cant even think about end of it. All these are short term measures. Still they havent touch the military budget i think.

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U.S. Treasury Secretary Timothy F. Geithner said he hopes lawmakers can agree on the framework of a debt-limit agreement today because the House of Representatives must start deliberations tomorrow to meet the Aug. 2 deadline.

“They need to get this process moving in the House by Monday night,” Geithner said today on ABC’s “This Week” program. “To achieve that deadline, they need to have a framework that they know with complete confidence will pass both houses of Congress that is acceptable to the president. That should happen today.” When asked if he thinks a deal will be reached today, Geithner said, “I hope so.”

Geithner said two types of plans are being discussed: One is a “comprehensive, balanced” plan including spending cuts and “tax reform that would generate revenues,” which President Barack Obama is still negotiating with House Speaker John Boehner. The other, proposed by Senate Minority Leader Mitch McConnell and Majority Leader Harry Reid, would put in place “some up-front savings, but then establish a special committee with exceptional powers that could legislate quickly.”

Republicans yesterday challenged a presidential veto threat by preparing for a short-term extension of the $14.3 trillion debt limit, hardening partisan differences in the face of warnings that a stalemate risks roiling financial markets as soon as tonight.

sajeethk

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will you all think our market depend on US....

windi5

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Nope but may be a least effect. nothing gonna effect our mkt than our own affairs. our mkt is very resilient when compared with some others. 30y long war couldn't eradicate CSE, only ups n downs. Exposure to the world is not a vast.But in the end all countries are interconnected, feel the effect as much as to the our exposure to those countries.

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http://english.aljazeera.net/news/americas/2011/07/201172522325342583.html.
US lawmakers have failed to achieve a budget breakthrough and instead worked on rival plans in an impasse that has heightened prospects for a catastrophic US debt fault....Although some had predicted global markets would fall apart without a deal before the Asian markets opened on Monday, the reaction was relatively modest as investors pulled out of riskier investments like stocks and headed for safe haven assets like gold, pushing the metal to a new record.

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At the end USA will increase the credit limit. That's what eventually happens at the end.

Anyway when USA, European economy goes down Asian markets will affect badly. Even Chinese economy is in danger. Where would China sell their products? electronics? computers? Where would Japan sell cars and SUVs?

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http://forum.srilankaequity.com/t7174-rating-agencies-down-grade-us-economy

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European stocks dropped after President Barack Obama and Congress failed to reach a deal on raising the U.S. debt limit, increasing concern that the world’s largest economy may default. U.S. futures and Asian equities also retreated.

Banks declined after Moody’s Investors Service downgraded Greece’s sovereign-credit rating. Ryanair Holdings Plc slipped 2.4 percent after Europe’s biggest discount airline reported first-quarter earnings that missed estimates. Bank of Ireland Plc surged 5.9 percent after the Irish government agreed to sell a 1.12 billion-euro ($1.6 billion) stake in the nation’s biggest lender.

The benchmark Stoxx Europe 600 Index lost 0.6 percent to 270.46 at 8:03 a.m. in London, snapping a four-day rally. The gauge climbed last week after euro-area leaders agreed to a second bailout for Greece. The Stoxx 600 has still lost 7.1 percent from this year’s high in February amid concern that Europe’s fiscal crisis will derail the economic recovery.

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Secretary of State Hillary Clinton reassured China, the top holder of American Treasuries, that the U.S. will resolve its impasse over the debt ceiling and improve the country’s long-term fiscal outlook.

“Many have questions about how the United States is going to resolve our debt-ceiling challenge,” Clinton said today in Hong Kong. The “political wrangling” is part of democratic problem-solving, she said. “I am confident that Congress will secure a deal on the debt ceiling and work with President Obama to take steps to improve our long-term fiscal outlook.”

The top U.S. diplomat made the remarks as talks over the debt ceiling stalled again in Washington, sending the value of the U.S. dollar down and gold to record highs. Failure to reach an agreement before Aug. 2 risks a default and a cut in the nation’s AAA credit rating. Chinese officials have expressed confidence that it won’t get to that point.

“They will definitely reach an agreement,” Xia Bin, one of three advisers to the People’s Bank of China, said in a telephone interview with Bloomberg News today.

Characterizing the debt debate as a short-term bump in the road, Clinton held the U.S. “opportunity society” up as a model for the Asia-Pacific. Speaking before the American Chamber of Commerce in Hong Kong, she said that requires attributes that “characterize healthy economic competition, not just in Asia, but across the world: open, free, transparent and fair.”

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Republicans and Democrats prepared dueling plans for raising the U.S. debt ceiling, unable to break a partisan stalemate over how to tackle the nation’s $14.3 trillion debt and quell market concerns about a potential default Aug. 2.

House Speaker John Boehner of Ohio told fellow Republicans he was determined to force action on a two-step debt-limit extension that would provide a roughly $1 trillion, shorter-term increase than President Barack Obama has requested, defying a veto threat and the administration’s warnings of dire economic consequences. He aimed to unveil his plan as early as today, when he was to update Republicans in a closed-door meeting in the Capitol.

The Senate’s top Democrat Harry Reid, meanwhile, readied his own proposal, which would hand Obama the full $2.4 trillion in additional borrowing authority he has requested -- enough to last through the 2012 elections --tied to a $2.7 trillion package of spending cuts that would leave Medicare and Medicaid untouched, according to a Senate Democratic aide.

U.S. stock futures and Treasuries slid in London as the lack of an agreement on raising the federal debt limit intensified concern of a default. The dollar weakened against yen and Swiss franc.

“From the markets’ point of view, a two-stage plan is a non-starter because we now know it is amateur hour on Capitol Hill and we don’t want to be painted in this corner again,” said Christian Cooper, head of U.S. dollar derivatives trading in New York at Jefferies & Co.

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The Obama administration and House Speaker John Boehner’s office exchanged charges of intransigence in talks aimed at averting a U.S. default Aug. 2 and tackling the nation’s $14.3 trillion debt.

Boehner’s office said he will unveil a plan today to prevent a default, cut spending and deny President Barack Obama a “blank check” to borrow more money without further reductions. Boehner told fellow Republicans he was determined to force action on a two-step debt-limit extension that would provide a $1 trillion, shorter-term increase than Obama seeks, defying a veto threat and the administration’s warnings of dire economic consequences.

The Senate’s top Democrat Harry Reid readied his own proposal, which would hand Obama the full $2.4 trillion in additional borrowing authority he has requested -- enough to last through the 2012 elections -- tied to a $2.7 trillion package of spending cuts that would leave Medicare and Medicaid untouched, according to a Senate Democratic aide.

White House Communications Director Dan Pfeiffer, in a White House blog posting, today accused Republican congressional leaders of taking a “my way or the highway” approach that “could put our credit rating at risk and leave the cloud of uncertainty over the American people.”

Boehner’s office called Obama’s request for a longer-term extension “purely political and indefensible” in a blog posting. House Republicans plan a closed-door meeting in the Capitol today.

Representative Ed Markey, a Massachusetts Democrat, called Boehner’s approach unacceptable. “It’s a very cynical, regain- the-majority strategy that puts the entire economy at risk” and ensures another debate next year, he said.

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House Speaker John Boehner’s two- step debt-limit plan would raise the U.S. borrowing limit by up to $1 trillion and later by about $1.6 trillion while requiring larger spending cuts, according to Republican aides.

The plan would require $1.2 trillion in spending cuts in the first phase and up to $1.8 trillion in the second step, the aides said. A committee would be created to identify cuts, and Congress would be required to vote by the end of this year on a constitutional amendment for a balanced budget, one aide said.

Senate Majority Leader Harry Reid readied his own proposal, which would hand President Barack Obama the full $2.4 trillion in additional borrowing authority he seeks -- enough to last through the 2012 elections -- tied to $2.7 trillion in spending cuts that would leave Medicare and Medicaid untouched, said a Senate Democratic aide.

Boehner is meeting with House Republicans at 2 p.m. on his plan. Reid is to announce his plan at 2:30 p.m., he will meet with Senate Democrats at 6 p.m., an aide said said.

The Obama administration and Boehner’s office have exchanged charges of intransigence in talks aimed at averting a U.S. default Aug. 2 and tackling the nation’s $14.3 trillion debt.[bn:PRSN=3296948]

Obama [] told a Hispanic group today he won’t back deficit- cutting that hits government entitlement programs without making sure the wealthy “pay their fair share.”

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President Barack Obama warned that the nation’s burgeoning deficit threatens to do “serious” damage to the economy and pressured Congress to reach a compromise on a deal to raise the debt ceiling and address future shortfalls.

With a week left before the Treasury Department says the U.S. won’t be able to pay all its obligations unless the $14.3 trillion debt limit is increased, Obama urged lawmakers to put aside politics and implored Americans “to make your voice heard.”

‘It’s a dangerous game we’ve never played before, and we can’t afford to play it now,” Obama said in a prime-time address from the White House. “We can’t allow the American people to become collateral damage to Washington’s political warfare.”

House Speaker John Boehner said Republicans have no intention of handing Obama a “blank check.”

“The president has often said we need a ‘balanced’ approach -- which in Washington means: We spend more, and you pay more,” Boehner said in his televised response. “The sad truth is that the president wanted a blank check six months ago, and he wants a blank check today. This is just not going to happen.”

As the stalemate in Washington continued, U.S. stocks and Treasuries declined. The Standard & Poor’s 500 Index slipped 0.6 percent to 1,337.43 in New York after losing as much as 1 percent. The 30-year Treasury yield rose six basis points to 4.32 percent. In Tokyo, S&P futures lost 0.3 percent.

The cost of insuring U.S. debt rose, sending credit-default swaps on Treasuries up three basis points to 56.15, approaching the highest in 17 months, according to CMA Analytics.

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USA in hurry to finalize a solution for its debt crisis before Asian Mkts open on Monday

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