politics

Japan welcomes last-minute U.S. debt deal

12 Comments

Japan's top government spokesman on Monday said he welcomed the tentative deal over raising the U.S. debt ceiling to avoid a default, and said he expected it to help bring stability to roiled markets.

"Japan welcomes the announcement that an agreement was made to avoid default. We expect the deal will lead to the stabilization of markets," Chief Cabinet Secretary Yukio Edano said at a news conference.

Finance Minister Yoshihiko Noda said he was "glad to see the last-minute development."

Japan is the second-largest holder of U.S. Treasury bonds after China.

Tokyo stocks were 1.84% higher by noon Monday, after the dollar strengthened against the yen on news of the agreement.

Concerns over the protracted debt negotiations had sent the greenback close to post-War lows against the safe haven yen, with risk-averse investors embracing the Japanese unit to the detriment of exporters whose repatriated earnings are eroded by a strong domestic currency.

The likes of Panasonic, Sharp, Toshiba and Hitachi saw profits tumble in the fiscal first quarter due in part to the strength of the yen.

U.S. President Barack Obama announced that he and top lawmakers had reached a deal to raise the nation's debt limit and avoid default, pending Congress approval.

In Washington, leaders of the Democratic-held Senate and the Republican-led House of Representatives said they would present the framework to their rank-and-file on Monday ahead of final votes to approve the deal.

If approved, the deal will raise the debt ceiling by at least $2.1 trillion -- enough to reach 2013 -- and entail cuts of $2.5 trillion in two rounds, an official said Sunday. The parties have until Tuesday to raise the $14.3 trillion debt limit.

The U.S. government hit the debt limit in May and has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating normally -- but can only do so until Tuesday.

Japanese business and finance leaders have warned that default would send crippling aftershocks through the fragile U.S. economy, still wrestling with stubbornly high unemployment of 9.2% in the wake of the 2008 global meltdown.

© 2011 AFP

©2021 GPlusMedia Inc.

12 Comments
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More money=inflation But the Fed can print money as can the BOJ so no worries then

-1 ( +0 / -1 )

So the debt problem is solved by getting further into debt?

Me no understando!

0 ( +0 / -0 )

and entail cuts of $2.5 trillion in two rounds

these aren't cuts in actual spending, they are cuts in the amount of projected increased spending, so even with these "cuts" it's higher than current spending.

0 ( +0 / -0 )

It's finally over but it never should have gotten this far out of hand. I would have loved to see a lot more cuts. Unfortunately President Obama's concessions to Congressional Republicans went too far. But they did it and now the printing presses will run turning out even more unbacked bogus currency. Congressional counterfeiting will continue unabated. In the game of "chicken" one party always swerves at the last minute. The bottom line is that about $40 billion in actual real spending cuts will occur until the next $16.7 trillion debt ceiling limit is hit some time in the 1st Quarter, 2013 at which point it will have to to be raised to $20 plus trillion. I haven't read the bill (s) yet but maybe Congress didn't either. Hence what is their to be excited about? I'd prefer to default now then 2014, but looking on the bright side it gives you two more years to get ready therefore tighten up your seat belts cause some turbulent times will come in the future.

-1 ( +0 / -1 )

Some people are going to have hangovers tomorrow.

JPY under 76.50

Algos running wild.

0 ( +0 / -0 )

The cuts will ultimately be made on the backs of the fast disappearing middle class in the US. The message: if you live within your means and pay your taxes and live by the rules you are screwed! and left without any social safety nets or retirement benefits.

1 ( +1 / -0 )

Not so fast. It is not the BILL yet.

1 ( +1 / -0 )

This is so stupid it almost makes me want to laugh. Most people know these politicians dont give a $hi* about the economy or the debt. They are already set for life and rich. So all the screwing around they do is just fun and games to them. Yea, raise the limit some more. All Americans better start taking Chinese language classes.

-2 ( +0 / -2 )

"Obama could simply declare the debt ceiling raised by invoking the 14th Amendment, which says in part that “the validity of the public debt of the United States, authorized by law … shall not be questioned.”

I found this on some news page. Not sure why he wanted congress to work together when he could have said, Fine! Yes I can!"

0 ( +0 / -0 )

The investors know it's counter productive. The banks has been fragile, and with the continued problem in the economy, I doubt there will be any change in a short term interest rate. Good indicator is the banks like B of A, which was in high 9's last week, telling investors that next 6-12 month is going to be flat. If you increase the interest rate, no matter how little, the banks will be under more stress and vulnerable, and this will be a disaster waiting to happen.

0 ( +0 / -0 )

Time to buy gold.

REAL INFLATION is just around the corner.

0 ( +0 / -0 )

Good indicator is the banks like B of A, which was in high 9's last week, telling investors that next 6-12 month is going to be flat. If you increase the interest rate, no matter how little, the banks will be under more stress and vulnerable, and this will be a disaster waiting to happen.

I agree. The bottom line is a JOB, JOB, JOB GROWTH.

0 ( +0 / -0 )

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