Sat, Jul 30, 2011 - Page 1 News List

Debt crisis in US deepens, markets in Asia close down

AFP, Washington

Republican leaders in Congress postponed to yesterday a vote on their bill to prevent a US debt default, deepening the crisis over stalled efforts to keep the world’s biggest economy from running out of cash.

Just five days before Tuesday’s deadline when the US Treasury says it will run out of funds, red-faced Republicans late on Thursday were forced to scuttle a vote on a House of Representatives bill to avert a potentially disastrous debt default.

House Speaker John Boehner was dealt an embarrassing blow over the delay caused by insufficient support for the measure from several members of his restive Republican caucus.

Facing stiffer-than-expected resistance from unruly conservative “Tea Party” lawmakers to the measure, Republicans said late on Thursday that they would wait a day before trying to hold a vote on it.

Reports said Republicans would try to make revisions to the bill to garner more support for what was just the latest in a long list of 11th-hour efforts to keep the US government solvent.

Boehner met one-by-one during the course of the day with Republican lawmakers to shore up support for his two-step plan to raise the US$14.3 trillion debt ceiling enough to avert default for at least six months. However, several of his fellow party members dug in their heels.

Boehner is “asking for my vote,” Representative Louie Gohmert said as he emerged after an arm-twisting session with the top House Republican.

“I’m still where I was before. I’m still a bloodied-and-beaten ‘no,’” Gohmnert said.

Markets around the world remained on edge yesterday, on fears that a fragile economic recovery nurtured since the 2008 global financial crisis could be at risk if the US fails to reach a deal to avert a potentially cataclysmic debt default.

In Asia, Tokyo ended 0.69 percent, or 68.32 points, lower at 9,833.03, while Sydney lost 0.88 percent, or 39.2 points, to close at 4,424.6 and Seoul shed 1.05 percent, or 22.64 points, to close at 2,133.21.

Meanwhile, IMF chief Christine Lagarde warned on Thursday that failure to resolve the debt crisis would likely raise “doubts” about the US dollar’s status as the world’s prime reserve currency.

“It would probably entail a decline of the dollar relative to other currencies, and probably doubts in the mind of those people who reserve currencies as to whether the dollar is effectively the ultimate and prime currency of reserve,” she told PBS television in an interview.

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