ID :
195026
Thu, 07/14/2011 - 12:38
Auther :
Shortlink :
https://oananews.org//node/195026
The shortlink copeid
S. Korea should prepare for a possible U.S. default
(Yonhap Editorial)SEOUL, July 14 (Yonhap) -- The world's financial markets are waiting with acute attention for Aug. 2, the deadline for the United States to raise the legal limit of its debt ceiling to avert the first-ever U.S. debt default.
The aggregate debts of the United States have exceeded the legal limit of US$14.3 trillion, and the Obama administration has requested that Congress raise the limit. In order to avert a default, Congress must reach an agreement with the White House by July 22. Failure to do so -- and a subsequent default -- could touch off another global financial crisis.
Many experts do not expect such an incident will actually happen considering the enormous impact a U.S. default would have on the global economy and financial markets.
A rare meeting between President Barack Obama and congressional leaders on Sunday ended with little progress on averting a U.S. debt default. Participants said they're not giving up on ironing out an agreement before the Aug. 2 deadline.
In addition to negotiating a higher debt limit, the Obama administration and Congress are discussing a reduction of fiscal deficits. President Obama is pushing to raise taxes and slash government spending, both of which many politicians oppose. The opposition Republicans insist that tax hikes have no place in any kind of deal. The Democrats, Obama's party, oppose the president's plans to cut government aid to seniors and poor Americans.
As the deadline nears, there are warning signs of a temporary default.
Moody's Investors Service raised the pressure on U.S. lawmakers to increase their government's $14.3 trillion debt limit by placing the nation's credit rating under review for a downgrade.
The U.S., rated Aaa since 1917, was put on review for the first time since 1995 out of concern the debt threshold will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes even though the risk remains low.
The prevailing prediction at this time is that U.S. politicians, well aware of how huge an impact a U.S. default would have on the global economy, will reach an agreement to avert the breakup before the deadline.
But who knows? If the negotiations hit a snag, we cannot exclude the possibility of a temporary default.
A default, though temporary, would bring in a tsunami of backlash to the global economy, and South Korea will not be safe from the impact. The Seoul government should be prepared thoroughly for all possible contingencies.
The aggregate debts of the United States have exceeded the legal limit of US$14.3 trillion, and the Obama administration has requested that Congress raise the limit. In order to avert a default, Congress must reach an agreement with the White House by July 22. Failure to do so -- and a subsequent default -- could touch off another global financial crisis.
Many experts do not expect such an incident will actually happen considering the enormous impact a U.S. default would have on the global economy and financial markets.
A rare meeting between President Barack Obama and congressional leaders on Sunday ended with little progress on averting a U.S. debt default. Participants said they're not giving up on ironing out an agreement before the Aug. 2 deadline.
In addition to negotiating a higher debt limit, the Obama administration and Congress are discussing a reduction of fiscal deficits. President Obama is pushing to raise taxes and slash government spending, both of which many politicians oppose. The opposition Republicans insist that tax hikes have no place in any kind of deal. The Democrats, Obama's party, oppose the president's plans to cut government aid to seniors and poor Americans.
As the deadline nears, there are warning signs of a temporary default.
Moody's Investors Service raised the pressure on U.S. lawmakers to increase their government's $14.3 trillion debt limit by placing the nation's credit rating under review for a downgrade.
The U.S., rated Aaa since 1917, was put on review for the first time since 1995 out of concern the debt threshold will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes even though the risk remains low.
The prevailing prediction at this time is that U.S. politicians, well aware of how huge an impact a U.S. default would have on the global economy, will reach an agreement to avert the breakup before the deadline.
But who knows? If the negotiations hit a snag, we cannot exclude the possibility of a temporary default.
A default, though temporary, would bring in a tsunami of backlash to the global economy, and South Korea will not be safe from the impact. The Seoul government should be prepared thoroughly for all possible contingencies.
