Failure to Pay Debts Americans Threatened

TEMPO Interaktif, Washington - United States critical financial condition. Superpower is getting closer to the failure to pay the debt after the Democrats and Republicans failed to agree on the proposed debt ceiling increase in the federal government. Though the deadline to get additional loans increasingly tight until Tuesday next week.
Failed in the senate and parliament, President President Barack Obama, reacted instantly. In his speech, he declared, failure to increase the borrowing limit would be very detrimental to the nation.
"First time in history, the triple-A credit rating will be lowered state," Obama said, this condition, he continued, "leaving the question for investors, whether the United States is still a promising place to do business?"
Intensive negotiations between Republican and Democratic lawmakers last week, has not agreed to increase America's debt limit from U.S. $ 14.3 trillion. As a result, the country will not be able to pay bills maturing on 2 August.
Negotiation impasse create market confusion. This week the price of gold rose to number 1,600 per troy ounce, the highest in history. The value of the dollar fell as fears the U.S. economy continued.
"Every day, passed without the deal will make investors a little more defensive," said Omer Esiner, chief market analyst at the Commonwealth Foreign Exchange in Washington.
Obama warned of default would trigger a tax increase for all citizens of the United States, higher interest rates loans, credit cards, and mortgages. But Obama remains convinced that a deal was still possible.
"I have told the leaders of both parties that they should hold talks fairly," he said. Obama added, "There are still a few days, I'm sure they could take the deal."
Credit rating agencies, Standard & Poor's downgraded the debt would remind the United States if the country fails to reduce the budget deficit amounted to U.S. $ 4 trillion.
The impact of pruning the debt will be felt by the entire world. Investors are likely going to demand a higher return on U.S. government debt. Financial markets are reeling, forcing up interest rates and weaker asset prices.
Republicans and Democrats promised not to let the United States failed to pay the debt. But they have not one vote matter of raising the debt limit.
Democrats want to protect Medicare and Medicaid. The party states, any funding cuts public health programs for poor elderly must be balanced with tax increases. But the proposal was opposed by Republicans. The party insists rejected a tax increase.
A spokesman for the parliament, John Boehner, Republicans in Congress must pass the proposal on two-step reduction of the deficit on Monday. In a first step, Boehner proposes cuts in state spending up to U.S. $ 1.2 trillion.
But it must be rejected Obama's proposal, because it is considered a solution only for a moment. Beginning 2012, this policy should be revisited and it will heat up the political atmosphere ahead of elections. "When six months is not enough to avoid the debt downgrades," Obama said.

7:59 PM | 0 komentar | Read More

US credit crisis deteriorating

Fed governor Sarah Raskin warned of the growing number of American citizens who no longer have access to affordable credit. The Christian Science Monitor website reported that members of Congress only had nine more days to reach an agreement to raise the country's debt ceiling before it is forced into default.
Sarah Raskin‘s words strongly reminded of earlier warnings from renowned banking analyst Meredith Whitney. Whitney already forecast more than a year ago that a large number of US citizens would completely drop out of the system, since many people did not meet lending or regulatory qualifications anymore. More than 14 million Americans were currently out of a job and another 8.5 million were underemployed, since their hours had been reduced or they were not able to find a full time job. This is what the latest official employment report from the US Labor Department stated. According to Raskin, the report had been gloomy and very disappointing. Furthermore she said that the official unemployment rate of 9.1% did not reflect the real extent of the US job market’s problems.
Thousands of unemployed Americans have completely given up on looking for jobs in the last couple of weeks, although most of them were willing to work. Due to their difficult individual situation they had to face the double challenge not to have access to affordable financial services on the one hand and not to be able to build up personal savings on the other, as Raskin explained during an economic conference in Washington.
Even many citizens who have a job had problems getting loans, after the US authorities tightened lending standards in the wake of the financial crisis. Over a third of potential house buyers were no longer granted mortgages by banks. Many small businesses have also been frustrated for months, since  tighter lending rules cut off their access to new loans. This development is heavily weighing on their businesses. Raskin, who formerly worked for the state of Maryland´s regulating authority, added that both unemployed and underemployed persons hardly had any access to the simplest financial services anymore. This included opening a bank account, or owning a debit or credit card. Those who only had a low or moderate income did not have enough assets to qualify for the high lending standards of the banking system. Raskin did not comment whether the Federal Reserve planned another bond purchasing programme but stated that hurdles would be very high.
The White House recently warned of potential default of outstanding US sovereign debt if a political agreement between Republicans and Democrats could not be reached by August 2nd. As The Christian Science Monitor website reported that Congress members were only given nine more days to reach an agreement to raise the country´s debt ceiling. These calculations considered holidays, recesses, and diverging sessions from the House of Representatives and Senate. Moreover, the ratings agency Standard & Poor´s (S&P) announced this week their intention to drastically downgrade the US credit rating if no political agreement was reached on the debt ceiling. Financial markets would face Armageddon if this happened, much worse than the collapse of investment bank Lehman Brothers in 2008. However, the gold price has not profited from this announcement, since the Greek parliament´s passage of extensive budget cuts provided relief for financial markets, especially stock markets. Nevertheless, gold will likely remain one of the best investment alternatives in the wake of globally deteriorating debt problems. Even if it seems that a Greek tragedy could be avoided for now, there are too many other ticking timebombs around the globe. Perceived as safe havens and growingly seen as monetary assets again, gold and silver will likely benefit from this situation in the future.

Source : Goldmoney

7:17 PM | 0 komentar | Read More