米財政危機 世界の混乱回避へ歩み寄れ

The Yomiuri Shimbun (Jul. 29, 2011)
U.S. needs to compromise on debt ceiling talks
米財政危機 世界の混乱回避へ歩み寄れ(7月28日付・読売社説)

Negotiations among U.S. President Barack Obama, members of his Democratic Party in Congress and their Republican Party counterparts over raising the federal government's borrowing limit are facing rough going.

A compromise is needed to avoid turmoil in the world economy and financial markets.

The federal debt, the amount the U.S. government is allowed to borrow, has reached the 14.3 trillion dollars (about 1.12 yen quadrillion) ceiling provided by law.

If the administration fails to win congressional approval to raise this ceiling by the Aug. 2 deadline it will be unable to issue new Treasury bonds, thus running out of fiscal funds.

Should this happen, the payment of salaries to civil-service workers and of pension benefits would almost certainly be delayed.

With the deadline approaching, a sense of caution has arisen, prompting the dollar to be sold in foreign currency markets, and sending the yen soaring to a level of 77 yen to the dollar, a new four-month high.


Exporters to suffer

The risk of a further decline of the dollar and the accompanying sharp rise of the yen will seriously affect the earnings of Japanese export-oriented businesses, putting a damper on the nation's economic recovery and post-disaster reconstruction.

This situation is extremely worrying.

The focal points of the fiscal negotiations in the United States are how much the debt ceiling should be raised and how to reduce the record-high federal deficit.

The Republican Party has proposed the debt limit be raised by 1 trillion dollars for now, and then raised further later, after methods to cut the deficit are determined by the end of the year.

The Republicans' proposal could be aimed at putting pressure on the Democrats with an eye on the presidential election in autumn next year.

The Democratic Party's proposal is to raise the ceiling by 2.5 trillion dollars.

The Democrats apparently want to resolve the issue as quickly as possible so it does not rear its head again before the election.

The situation will become extremely serious if the talks collapse.

There is a risk of a default by the United States, whereby the administration will become unable to redeem Treasury bonds and the U.S. credit rating probably will be downgraded.


Serious losses feared

The Chinese and Japanese governments, as well as financial institutions around the world, hold a sizable amount of U.S. Treasury bonds.

If the credibility of the Treasury bonds declines, the price of the bonds will plunge, causing sizable losses to bondholders and undercutting stock prices around the world.

The United States is responsible for preventing such a crisis.

We hope the U.S. president will exercise his leadership to realize a hike in the debt ceiling.

Both parties should refrain from playing political games but look squarely at the harsh reality of the world economy and the markets.

Reducing the federal deficit is an important task.

However, it may be realistic to negotiate separately on such fiscal reconstruction measures as tax hikes.

In Europe, Greece has called on the European Union and other entities to extend additional financial support so it can emerge from its fiscal crisis.

But the prospects of containing the Greek crisis are uncertain.

The turmoil in the United States and Europe should act as a warning bell for Japan, which is gripped by the worst fiscal deficit among advanced nations.

Japan needs to expedite efforts to put its own fiscal house in order.

(From The Yomiuri Shimbun, July 28, 2011)
(2011年7月28日01時14分 読売新聞)

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