Isnin, 7 Oktober 2013

The Star Online: World Updates

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The Star Online: World Updates

Fed's Fisher decries U.S. flirtation with default


DALLAS (Reuters) - A U.S. central banker known for his criticism of Washington politics warned on Monday that the standoff in the U.S. Congress that has shut down the federal government could drive the country to the edge of defaulting on its sovereign debt.

The United States will run dangerously low on cash if lawmakers do not raise the federal borrowing cap by October 17, and a default could follow within a week.

"I deeply hope and I don't think we'll default, but it will come down to the wire," Dallas Federal Reserve Bank President Richard Fisher said in a forum at Southern Methodist University in Texas. "It's an embarrassment for my country."

The federal government shut down most of its operations and idled all but its most essential workers on October 1 after congressional Republicans made defunding or delaying President Barack Obama's signature healthcare law a condition of approving a budget for this fiscal year.

Congressional Republicans have insisted on similar concessions for raising the $16.7 trillion (10.38 trillion pounds) debt limit.

A previous confrontation over the debt ceiling in August 2011 ended with an 11th-hour agreement under pressure from shaken markets and warnings of an economic catastrophe if there was a default.

A ray of hope in the latest fiscal impasse emerged on Monday, with Obama saying he would accept a short-term fix on the debt-limit to avoid a default.

Still, the change in tone was not enough to mollify Fisher, a consistent critic of U.S. fiscal policy, which he says has hobbled the future of the nation.

"We have the three stooges in Washington," he quipped, referring to a slapstick comedy show popular in the last century.

Fisher repeated his view that the Fed has done enough, even more than enough, to boost the economy and that what is holding back growth is lawmakers' failure to clarify tax and spending policies.

He declined to predict when the Fed will decide to ratchet back its massive bond-buying stimulus program.

"The committee as a whole agreed that we didn't have proof that economy was improving," he said of the Fed's surprise decision last month not to reduce its $85 billion-a-month asset-purchase program.

(Writing by Ann Saphir; editing by Christopher Wilson)

Top creditors China, Japan step up concerns over U.S. shutdown


BEIJING/TOKYO (Reuters) - China and Japan, the United States' biggest creditors, are increasingly worried the U.S. government shutdown and standoff over the debt ceiling could wreak havoc on their trillions of dollars of investments in U.S. Treasury bonds.

Beijing and Tokyo have publicly called on the White House and Congress to resolve the dispute, which could threaten a U.S. debt default as soon as next week, and Asia's two biggest economies are privately urging Washington to find a solution.

Japanese officials held several emergency telephone conferences with U.S. Treasury Department officials on Monday, Japan's Nikkei newspaper reported, citing unnamed sources.

Tokyo urged the Americans to hammer out a deal to increase the debt ceiling or risk a default that could plunge financial markets into turmoil, the newspaper said on Tuesday.

Finance Minister Taro Aso on Tuesday said it was necessary to bear in mind the threat that the fiscal standoff posed to the value of U.S. bonds.

Similarly, Chinese Vice Finance Minister Zhu Guangyao said on Monday that Beijing had been in touch with Washington over the standoff, in which House Republicans have refused to increase the debt ceiling as they seek changes in President Barack Obama's signature healthcare law.

The standoff is in its second week, with much of the U.S. federal government closed and no signs of a breakthrough, although some glimmers of hope emerged on Monday as Obama said he would accept a short-term increase in the nation's borrowing authority to avoid a default.

The world's biggest debtor and creditors are caught in a delicate balance that neither wants to disturb. As at July 31, China held $1.28 trillion in U.S. Treasury bonds and Japan held $1.14 trillion, according to Treasury Department data.

The last big confrontation over the debt ceiling, in August 2011, ended with an 11th-hour agreement under pressure from shaken markets and warnings of an economic catastrophe if a default were allowed to happen.

China is "naturally concerned about developments in the U.S. fiscal cliff," Zhu told reporters, saying it was Washington's "responsibility" to avoid a debt crisis and ensure the safety of Chinese investments.

Japan has previously expressed its concerns in diplomatic terms. Aso and Chief Cabinet Secretary Yoshihide Suga both said last week that the fiscal standoff was essentially a U.S. domestic problem.

But Aso added the shutdown could push up the yen against the dollar -- a concern for Japan's export-reliant economy, which has benefited from a yen decline since Prime Minister Shinzo Abe won election in December on a reflationist policy platform.

Should the U.S. default on its debt, which the Treasury Department says could happen as soon as October 17, "there would be a large international impact," Aso said last week. "If there is no prompt resolution, various impacts will emerge."

The yen has been rising this month as investors shed risk and seek the perceived safe haven of the Japanese currency. The dollar slipped on Tuesday to a two-month low of 96.55 yen.

(Additional reporting by Richard Cowan, Mark Felsenthal, Aaron Sheldrick and Kiyoshi Takenaka; Writing by William Mallard; Editing by John Mair)

Japan finance minister urges U.S. to resolve fiscal standoff quickly


TOKYO (Reuters) - Japanese Finance Minister Taro Aso said on Tuesday that he wants the United States to resolve its debt ceiling standoff without delay so his country's foreign reserves and the global economy could be spared from trouble.

The absolute value of U.S. bonds held by the Japanese government could decline if the situation remains unresolved, Aso told reporters after a cabinet meeting.

The finance minister added that he had received no explanation from the U.S. government regarding the fiscal standoff.

(Reporting by Tetsushi Kajimoto; Editing by Shinichi Saoshiro)


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