26/07/2011
As the debt ceiling debate continues to be stuck at stalemate in the US, Vince Cable, the UK Business Secretary, has described how the world could be triggered back into a recession because a few 'right-wing nutters' were preventing a pact being made.
President Barack Obama has offered a deal which involves significant spending cuts but also includes tax rises, particularly on wealthier assets, a measure which the Republicans are refusing to consider.
The US is wobbling towards a very real possibility of a debt default because, if it does not raise its debt ceiling by the beginning of August, it will have no money to pay what is due. Whilst this would undoubtedly be bad news for America, the notion that the super-power cannot pay its bills would have an impact on economies around the globe and would send shockwaves through markets everywhere.
Even if the US does manage to scrape together the cash to pay its debts on time, it is still facing a tough time, as some of the credit agencies have said that they may lower their status regardless of whether the payments are late.
Timothy Geithner, the US Treasury Secretary, has said that there is no way the US will allow the situation to continue as far as risking not having enough cash to pay its debts and an agreement would be made one way or another before then.
Former US President, Bill Clinton, said a few days ago that he would not be prepared to go to the lengths that Barack Obama currently is and would instead have simply upped the limit. According to CBS News, Bill Clinton said that rather than risk the country defaulting, he would have authorised a rise in the debt ceiling and 'forced the courts to stop me.'
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