Americans vent anger at Barack Obama-John Boehner debt stalemate
The flood of calls came after President Barack Obama pink pandora bracelets and John Boehner, the top Republican in Congress, used televised addresses to blame each other for the increasingly crippling impasse. The websites of several Congressmen and Senators also briefly went down as the public sought to shake their politicians into action.
Tensions are rising across America as the White House, and Republicans and Democrats in Congress, struggle to find common ground on a deficit-reduction plan they all agree is a condition of raising the debt ceiling.
The US Treasury has said that without an agreement by August 2 it will not be able to pay all its bills, which include interest payments on its debt.
Although the dollar fell against most currencies on Tuesday, losing more than one cent against the pound to $1.6389, the calm across equity and bond markets suggests that investors still believe a deal will be done by Tuesday’s deadline.
“The view is that Congress will get its act together,” said Priya Misra, head of interest-rate strategy at Bank of America Merrill Lynch.
On Wall Street, the Dow Jones was 0.5pc lower at 12,525.70 in afternoon trade, while the S&P 500 was 0.2pc weaker at 1,334.51. US government bond prices also held up as traders awaited the results of an auction of two-year Treasuries that should offer clues as to how concerned investors are.
The relative lack of nerves may also be because some on Wall Street believe that the US Treasury will have sufficient revenue to be able to keep paying its bills beyond August 2. After analysing Treasury receipts so far for July, analysts at Barclays Capital, for example, estimate the actual deadline is August 10.
The latest US housing market data offered a sharp reminder to leaders in Washington of the tightrope they must walk between cutting the deficit without choking off a recovery that slowed during the first half.
Sales of new homes unexpectedly dropped 1pc in June, according to the Commerce Department. A separate survey from S&P/Case-Shiller showed prices in America’s 20 biggest cities were 4.5pc lower in May compared with a year earlier.
“A good deal needs to stabilise the medium-term trajectory for the deficit,” said Michael Hanson, an economist at Bank of America Merrill Lynch. “But there’s a trade-off with preserving growth.” Figures due on Friday are expected to show that the US growth slowed to just 1.6pc in the second quarter from 1.9pc in the first.
With less than a week until the August 2 deadline, Christine Lagarde, the head of the International Monetary Fund, added her voice to calls for an urgent agreement. “The clock pandora bracelets sale is ticking,” she said. “An adverse shock in the US could have serious spillovers on the rest of the world.”
Following the collapse late last week of talks between Mr Obama and Mr Boehner, Republicans and Democrats are currently pursuing separate plans through the House of Representatives and the Senate.
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