US President Barack Obama and Republicans prepared for more tough talks yesterday to avert a debt default next month, after Moody’s held out the threat of downgrading the US’ credit rating.
Asian markets mostly fell and the US dollar faced heavy selling yesterday after Moody’s warned it could downgrade the US’ triple-A debt rating, raising fears of a default by Washington.
Tokyo shed 0.3 percent to end at 9,936.12, with exporters hurt by the yen’s strength against the greenback, and Sydney closed 0.5 percent lower at 4,490.7.
Hong Kong lost 0.3 percent at 21,868.52. Seoul was flat, edging up 0.43 points to close at 2,130.07, but Shanghai gained 0.18 percent.
“The review of the US government’s bond rating is prompted by the possibility that the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes,” Moody’s said in a statement after the US financial markets closed.
“As such, there is a small but rising risk of a short-lived default,” it said.
Chinese credit ratings agency Dagong International Credit Rating (大公國際信評) said it had also put US sovereign debt on negative watch for a possible downgrade, citing weak US economic growth and the likelihood that fiscal deficits would remain high.
“Various factors that affect the repayment ability of the US federal government will keep deteriorating,” it said in a statement. “Dagong will downgrade the US sovereign ratings if there is no substantive improvement in its repayment ability and willingness within the period of observation.”
China yesterday urged the US to protect the interests of investors.
China is by far the top holder of US debt, with holdings at US$1.153 trillion in April according to US data, and the foreign ministry urged the US government to “adopt responsible policy and measures to ensure the interests of investors.”
US Federal Reserve Chairman Ben Bernanke said on Wednesday that a default would plunge the economy into “major crisis,” risking a second recession and “throw shock waves through the entire global financial system.”
He told the House Financial Services Committee that the US could keep making payments on debt principal and interest absent an increase in the congressionally set debt ceiling — but at a crippling cost.
The cash-strapped US government would have to slash domestic spending by as much as 40 percent, which could bring fragile economic growth to a standstill at a time when unemployment stands at a historically high 9.2 percent.
Bernanke sounded the alarm as Obama was to welcome his political opponents and his fellow Democrats for a fifth straight day of seemingly stalled talks yesterday with an Aug. 2 deadline just three weeks away. The US president planned to take stock of the apparent stalemate today, a Democratic aide said.
“Friday is not a hard deadline,” the aide told reporters after the contentious discussions wrapped up their fourth day, but “the clock is ticking, they have to get this done.”
Obama needs the Republican-led House of Representatives and Democratic-held Senate to sign off on a deal to close the yawning US deficit while allowing cash-strapped Washington to borrow past an Aug. 2 deadline.
The US hit the ceiling on May 16 and has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating without impact on government obligations.
However, by Aug. 2, the government will have to begin withholding payments to bond holders, civil servants, retirees or government contractors.
Obama has called for cuts to social safety net programs dear to Democrats while pushing for tax hikes on the rich, a step rejected by Republicans who charge doing so will smother investment and crush already weak job growth.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained