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Fisher Capital Management Corporate News:Ben Bernanke Warning Over US Debt Crisis
Posted by fcmcorp on June 18, 2011 in company news, corporate news, finance, investment, latest headlines, world news with 4 Comments

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http://www.rte.ie/news/2011/0615/us.html



Updated: 17:18, Wednesday, 15 June 2011

The head of the US central bank has said America’s creditworthiness is at risk if the country’s borrowing limit is not raised.



Federal Reserve Chairman Ben Bernanke has urged Republican members of Congress to vote in favour of lifting the borrowing level from its current $14.3 trillion threshold.

‘I fully understand the desire to use the debt limit deadline to force some necessary and difficult fiscal policy adjustments, but the debt limit is the wrong tool for that important job,’ Mr Bernanke said in a speech in Washington.

The Fed Chair said in the absence of a quick resolution to the battle over the debt limit, the US could lose its prized AAA credit rating, while the dollar’s special status as a reserve currency might be damaged.

Mr Bernanke said that putting in place sustainable fiscal policies was a ‘daunting’ challenge ‘crucial for our nation.’

‘History makes clear that failure to put our fiscal house in order will erode the vitality of our economy, reduce the standard of living in the United States, and increase the risk of economic and financial instability.’

However, he said, ‘In debating critical fiscal issues, we should avoid unnecessary actions or threats that risk shaking the confidence of investors in the ability and willingness of the US government to pay its bills.’

US President Barack Obama yesterday warned of a new economic meltdown if the ceiling is not lifted in time.

‘We could actually have a reprise of a financial crisis, if we play this too close to the line,’ Mr Obama told NBC television.

‘We’re going (to) be working hard over the next month. My expectation is we’re going (to) get it done in a sensible way. That’s what the American people expect.’

If agreement is not reached by a deadline in early August, the US could start defaulting on its obligations.

Treasury Secretary Timothy Geithner has warned that failure to raise the borrowing cap by 2 August will trigger turmoil in the bond markets and economic ‘catastrophe’.

He met with Republican and Democratic politicians to try to find an exit to the impasse.