US debt negotiations continue

US Lawmakers have less than two weeks to act in order to guarantee that the country will be able to make key interest payments on debt already incurred. The United States needs to borrow money in order to service the country’s existing debt, or else the US government will default on its obligations. The problem is the US has already borrowed as much as it is allowed by law to borrow. So, Congress needs to pass a law increasing that amount – and the Republican-led House of Representatives is insisting on spending reductions as a condition of raising the so-called “debt ceiling”, while at the same time refusing to countenance tax hikes to increase revenue. Democrats, on the other hand, have called for $400 billion in tax increases and are insisting on guarantees for certain services they see as essential social obligations. The inability of the US political leadership to reach an agreement is already affecting global market confidence. The price of gold rose to above $1,600 an ounce on Monday - a new high - while stock indices fell.

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