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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: JohnM who wrote (166061)	7/14/2011 4:05:55 PM
From: MJ	Respond to of 542125

Thank you for your response and that of Wharf Rat's also.

To: JohnM who wrote (166061)	7/14/2011 4:07:22 PM
From: epicure	Read Replies (2) \| Respond to of 542125

So why the plague of PFPers over here? Is it getting dull in winger and baggerville?

To: JohnM who wrote (166061)	7/14/2011 4:34:12 PM
From: stockman_scott	Read Replies (1) \| Respond to of 542125

China Urges U.S. to Protect Creditors by Raising Debt nytimes.com By BETTINA WASSENER HONG KONG — China, the United States’ biggest creditor, urged the United States government on Thursday to act to protect investors’ interests, highlighting rising concerns around the globe about the protracted budget talks taking place in Washington. American policy makers are locked in tense negotiations over the government debt limit, which the Obama administration says must be raised from its current level of $14.29 trillion to allow the government to pay its daily bills and service any debt coming due. Any failure to pay due debt would effectively amount to a default, which, however brief, could shake confidence in the American economy and severely unsettle global financial markets. Late Wednesday, Moody’s Investors Service sharpened attention on such an outcome by warning that it might cut its top-notch rating for the United States. Moody’s cited a “rising possibility” that no deal would be reached before the United States government’s borrowing authority hits its limit on Aug. 2. On Thursday, Ben S. Bernanke, the chairman of the Federal Reserve, repeated a warning of a “huge financial calamity” if President Obama and the Republicans could not agree on a budget deal that allowed the debt ceiling to be raised. In testimony before a Senate committee, Mr. Bernanke said that lawmakers should consider the fragile state of the economy in their negotiations. “Not passing — not increasing the debt ceiling and allowing — certainly allowing default on the debt would have very real consequences for average Americans,” Mr. Bernanke said, noting that interest and mortgage rates would jump. “That would also increase the federal deficit because we have to pay the interest on the debt as part of our spending,” he said. The authorities in Beijing added their voice of concern Thursday, though in more muted terms. “We hope that the U.S. government adopts responsible policies and measures to guarantee the interests of investors,” Hong Lei, a Foreign Ministry spokesman, said in response to questions about the Moody’s report. The comments echoed those made by officials in Beijing in April, when Standard & Poor’s lowered its outlook on the United States from stable to negative because of the country’s high budget deficit and rising government indebtedness. China holds more than $1 trillion in United States Treasury securities, making it highly sensitive to any developments that could lower the value of those holdings. During his testimony before Congress, Mr. Bernanke told lawmakers that if the United States did not raise its debt limit, the government would need to prioritize its financial obligations by paying its creditors first and stopping benefits like Social Security payments. “The assumption is that as long as possible, the Treasury would want to try to make payments on the principal and interest to the government debt, because failure to do that would certainly throw the financial system into enormous disarray and have major impacts on the global economy,” he told lawmakers. Meanwhile, Dagong Global Credit Rating, a Chinese rating agency that downgraded its assessment of the United States last November, said Thursday that it had placed that rating on a negative watch list, citing the declining solvency of the American government, slow economic growth and high fiscal deficits. Dagong is little known outside China, and its views have nowhere near the same effect as those of Moody’s or Standard & Poor’s on financial markets. An actual downgrade by either of those two major rating agencies would make it more expensive for the United States to issue new debt, and could reverberate throughout the global financial system. The mere warning by Moody’s that a downgrade might be in the cards was enough to send the dollar sharply lower on Thursday. The euro rose to $1.422 from $1.403 on Wednesday. Investors also rushed to buy assets seen as safe. Gold hit a record high on Thursday at more than $1,594 an ounce. The American economic woes could have wider repercussions in Asia. Indonesia, for example, cautioned on Thursday that a weaker dollar could prompt an inflow of capital into its economy, as investors seek higher returns. That, in turn, could fuel a stock market or property bubble in that country. “We have estimated that the U.S. economic situation will not be as good as expected,” said Hartadi A. Sarwono, the deputy governor of Indonesia’s central bank, Reuters reported. “The impact in financial markets will add inflows because of a weakening U.S. dollar. But this is still manageable for our economy.” At the same time, the warning from Moody’s about the United States underscored the increasing concern that the debt levels that many developed nations have accumulated are ultimately not sustainable. The debt woes of several European economies have weighed heavily on global financial markets since last year amid fears that a default by Greece could send other weak and heavily indebted economies into a tailspin and set off renewed financial turmoil well beyond Europe. There was a perception of a double standard among some in Europe on Thursday, where countries like Ireland and Portugal have suffered a series of ratings downgrades. A participant in the Internet forum of Der Spiegel said, “It surprises me that the U.S.A. still has a top rating to begin with.”