politics

Aso worried U.S. gov't shutdown damage will spread

20 Comments

Finance Minister Taro Aso on Friday urged the United States to resolve a budget gridlock in Washington that triggered a government shutdown, warning of grim "consequences" for the global economy.

The present impasse, where the refusal of a right-wing rump of the Republican Party in Congress to pass a budget bill has resulted in the first shutdown in 17 years, is already affecting the currency markets, Aso said, warning it could worsen.

"I think this could likely result in a situation where the dollar will be sold and the yen will be bought," he told reporters.

The yen has already soared to multi-month highs against the dollar, as traders move out of the greenback and into the safe haven of the Japanese currency.

The falling dollar is bad news for Japan's exporters, a key driver of growth in the world's third-largest economy, because it erodes their repatriated profits.

But, "my feeling is... the debt limit will have an internationally significant impact," Aso said, referring to a looming October 17 deadline by which the US government needs lawmakers to raise the ceiling on the amount of money it can borrow.

"Unless it is resolved swiftly, we will see various consequences."

Aso's comments came as U.S. President Barack Obama cancelled his tour to key summits in Asia to stay at home and deal with the crisis.

Obama is locked in a bitter fight with the Republican-controlled Congress, where lawmakers have linked passage of the budget bill to a delay in the implementation of "Obamacare", a law that requires all Americans to have health insurance.

The impasse has led to the shuttering of government offices across the country, with so-called "non-essential" staff told to stay at home, with observers warning of a knock-on effect to the economy.

The U.S. Treasury has warned of a disastrous outcome if Congress's refusal to move on the budget becomes a refusal to raise the country's borrowing ceiling.

That could lead it to default on its bonds, which are held by governments around the world and, as traditionally the most liquid asset, are the backbone of the global financial system.

It said if the country's borrowing power is not increased by Oct 17 it will run out of cash to pay the nation's bills and could return the US to a recession as deep as that of 2008-2009 in the wake of the Lehman shock.

© (C) 2013 AFP

©2019 GPlusMedia Inc.

20 Comments
Login to comment

Irresponsible people running governments, making bad decisions, concerned with scoring points for their egos and interested only in their own agendas and not one of them gives a flying rats fury bum about the damage they do or the people they do it too.

Politicians and bankers are almost the same breed.

Some of us would actually like to see the world's economy pick up so the industrious people amongst us can get back to making our way through this mine field these idiots keep laying.

2 ( +4 / -2 )

Finance Minister Aso should be more concerned with what his derelict boss Shinzo Abe is doing and the potential for economic disaster from Abenomics: what the finance wonks are calling "Abegeddon."

14 ( +14 / -0 )

Then Aso will have a perfect scapegoat to blame once Abenomics starts failing ...its the U.S fault, look everyone.

11 ( +11 / -0 )

aw... the poodle is worried about its master

0 ( +4 / -4 )

Better to shut the government down than to have it actively driving its people off the cliff.

-1 ( +3 / -4 )

I feel as a Japanesel very lucky I can go to any hospital without worrying about expenses. Americans do not like welfares basically. Rebublicans particularly do not like to spend tax money for the weak who they consider just lazy. To some extent I agree. Welfare increases lazy people. They take it for granted and some steal government money. Many Japanese receive and spend more money than they have paid for. We have to fix it but the politicians cannot do it in fear of losing elections.

0 ( +5 / -5 )

I can go to any hospital without worrying about expenses

You have to pay 30 percent unless you have extra insurance.

6 ( +7 / -1 )

Or is Aso worried because the skirt he has been hiding under has just been lifted?

-2 ( +1 / -3 )

Perhaps he read a Munga about this situation and now has a better understanding of economics, it's a good thing?

1 ( +2 / -1 )

pochan-san Three years ago, I had one of my heart vascule blocked 90% and I received a treatment of insertion of a stent in my heart which costs about one million yen. Certainly in principle, I have to pay 30% of it but by the mercy of our government when the medical expenses exceeds 80,000 yen a month, a patient does not have to pay the rest of the money. So, the surgery at one of the best hospital in Japan Tokyo University Hospital, It costed me only 80,000 yen. Isn't it wonderful! But I feel guilty I am helping the government go broke.

7 ( +9 / -2 )

No, if youA're life was saved with tax payer money, just be the best Japanese you can be. That surgery is worth it if your "I'm so glad to be born Japanese, and so proud of our family like health system" spreads to other japanese. If confidence spreads, we can get the economy going again. Then that would be money very well spent :)

1 ( +3 / -2 )

Media Hype does surround this,but is still a concerning insight into how Govt's ,who are deemed as pillars,behave more and more like sporting teams or financial institutions,run my egotistical psychopathic maniacs obsessed by profit and self worth.

0 ( +0 / -0 )

I'm just amazed at how these people came into power. Either people understood what they stand for and voted them in hoping that they would shut down the government or they fooled the few people that turned out to vote into believing they would work to make the US a better country.

0 ( +0 / -0 )

Suppose a rich family stop to pay their servants and even delay their children's tuition, I think their banker would be definitely worried! So Aso's actually worried about those 1.1 trillion debt Japan bought from the US.

0 ( +0 / -0 )

What Aso said would come true whatever people say. Global economy would be worst when the US had default. In other words, America is down and then the rest of the world is down for sure.

1 ( +1 / -0 )

Politicians and bankers are almost the same breed.

Throw in lawyers and I agree with you....

I would predict that the congressional leadership might grow a spine and tell the right wingers to sit down and shut up before the US can't borrow any more money (mid October is that deadline, I think).

Of course if the government stopped spending money it didn't have then the wouldn't have to borrow. What a concept. Of course the last president to get that right was Clinton. Shrub and Obuma have squandered everything.

-1 ( +1 / -2 )

The Americans are saving money! Shut down more of the bloated GOVERNment - the dollar should be getting stronger not weaker. Control of people takes money, less control = less money

We are all seeing that the US is doing just fine

If only Japan would shutdown more of its government?

0 ( +0 / -0 )

I look at this headline and all I see is: "Stocks are falling, confidence in Abenomics is failing... we need something to pin this on!"

0 ( +1 / -1 )

Schopenhauer,

" We have to fix it but the politicians cannot do it in fear of losing elections."

I agree. That's the trap of socialist policies enacted by populists.

Likewise, the monetary easing(fiat currency "printing") creates an a drug-addiction-like dependency on the markets. Notice how if the FED so much as whispers actual tapering, the market drops until the media spinmasters soothe the investors' fears. But it's just more candy-coating. Eventually it'll have to stop,

-1 ( +2 / -3 )

Aso should communicate with powerful Harry Reid who had bitter election fight against Tea Party candidate when he became Senator candidate

Creating Debt Ceiling, Obama has right to do sp but he will not. Aso has to be tutored USA Govt and Economic system to know why American economists and analysts tell us it will be disastrous to raise debt ceiling. USA will no longer be able to borrow needed money that is not within debt ceiling, and many more reasons they have been discussing all day long.

We Nevadan joke Obama must be thinking Harry is in his pocket, but he is in Harry;s pocket since harry was elected
-1 ( +0 / -1 )

Login to leave a comment

Facebook users

Use your Facebook account to login or register with JapanToday. By doing so, you will also receive an email inviting you to receive our news alerts.

Facebook Connect

Login with your JapanToday account

User registration

Articles, Offers & Useful Resources

A mix of what's trending on our other sites