Monday, August 1, 2011
Gov'ts welcome US debt deal, still worry about ratings
Japan and Germany welcomed news of an 11th-hour deal to avoid a US government default, but officials in both countries said Washington must do more to deal with its huge debt burden and the threat of a cut in its credit ratings.
Japan, second to China as America's biggest creditor, joined other countries and investors in praising the deal but said it hoped the United States would take additional steps to stabilise its finances and head off the threat of a downgrade.
"If you look at the currency market, we're not seeing a rapid decline in the yen as a result," Deputy Finance Minister Fumihiko Igarashi said of the deal, which buoyed the dollar and share markets but left many investors and economists relieved but unimpressed and also left Washington's political credibility under question.
"Part of the reason why is that there is still concern about a U.S. sovereign downgrade. It is my hope and request that US authorities continue to make efforts to stabilise their public finances," Igarashi added.
Governments and policymakers had warned Washington of the risk of financial disaster if it failed to find a compromise that raised the $14.3 trillion US debt ceiling before it ran out of cash to pay its dues. An official Chinese newspaper had called US handling of the crisis irresponsible and immoral.
A German government spokesman said on Monday the country was pleased that political agreement looked to have been reached, but he declined to comment on the details of the agreement.
The country's banking association was more cautious.
"The political conflict is just one aspect. Now it is important to tackle the deeper economic problems which are tied to debt levels," said Michael Kemmer, head of German Banking Association BdB.
"For this to happen, a long-term plausible solution is needed, with which US government income and spending can be brought back into equilibrium."
The agreement between the White House and Democrat and Republican leaders still needs to be endorsed by Congress by Tuesday to allow the debt ceiling to be lifted in time to avoid default or a seizing up of government finances.
Japan, second to China as America's biggest creditor, joined other countries and investors in praising the deal but said it hoped the United States would take additional steps to stabilise its finances and head off the threat of a downgrade.
"If you look at the currency market, we're not seeing a rapid decline in the yen as a result," Deputy Finance Minister Fumihiko Igarashi said of the deal, which buoyed the dollar and share markets but left many investors and economists relieved but unimpressed and also left Washington's political credibility under question.
"Part of the reason why is that there is still concern about a U.S. sovereign downgrade. It is my hope and request that US authorities continue to make efforts to stabilise their public finances," Igarashi added.
Governments and policymakers had warned Washington of the risk of financial disaster if it failed to find a compromise that raised the $14.3 trillion US debt ceiling before it ran out of cash to pay its dues. An official Chinese newspaper had called US handling of the crisis irresponsible and immoral.
A German government spokesman said on Monday the country was pleased that political agreement looked to have been reached, but he declined to comment on the details of the agreement.
The country's banking association was more cautious.
"The political conflict is just one aspect. Now it is important to tackle the deeper economic problems which are tied to debt levels," said Michael Kemmer, head of German Banking Association BdB.
"For this to happen, a long-term plausible solution is needed, with which US government income and spending can be brought back into equilibrium."
The agreement between the White House and Democrat and Republican leaders still needs to be endorsed by Congress by Tuesday to allow the debt ceiling to be lifted in time to avoid default or a seizing up of government finances.
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