debt ceiling

Hillary Clinton, US Secretary of State, tried to assure global financial markets that the US economy has a viable efficient model that has helped it withstand all crises.

Addressing the US Chamber of Commerce in Hong Kong, the State Secretary assured that the US Congress would come to a deal on the debt before August 2 deadline to avert default.

China urged the US to enter “responsible” measures to increase market confidence in the dollar and US government debt.

A Chinese currency regulator called upon US leaders amid their efforts to develop an 11th-hour deal to raise a $14.3 trillion debt ceiling for the United States before it runs out of money to cover all its bills on August 2.

After 11 days of consecutive gains gold remained steady below its record high on Tuesday.

Experts believe gold appeal as a safe haven will remain as there is no short-term prospects for euro zone crisis solution while the White House was pursuing a fallback plan with Congress to raise the U.S. debt ceiling and avert a default that could plunge global financial markets into chaos.

Spot gold was little changed at $1,602.41 an ounce by 0325 GMT, off the record high of $1,607.01 reached on Monday.

U.S. gold GCcv1 was almost steady at $1,603.20.

China believes the United States will be able to come out of its debt crisis and resolve an impasse related to raising debt ceiling with no need to be declared a default. China is interested in having US on a high level as it is the biggest foreign creditor and the dollar decline would have a negative impact on its economy.

Chinese advisers think that the deadlock in budget negotiations would not prevent the US authorities to come to a decision to raise the debt ceiling.

The United States will inevitably default when the debt ceiling deadline on August 2 comes, noted David Murrin, chief investment officer at Emergent Asset Management.

"It's inevitable that the US will default - it's essentially an empire which is overextended and in decline - and that its financial system will go with it.

“The question is: does it default when it is forced to by the outside world, probably the Chinese, or does it take the option to default on its own terms in such a way that it may have a strategic advantage," he said.

Timothy Geithner is considering to step down from his Treasury Secretary post later this year, however he won’t make any final decision until contentious negotiations over the U.S. debt ceiling are completed, report the sources with the knowledge of the matter.

After some speculations in the media Geithner answered the direct question about his resignation and made and evasive comment.

Moody’s warned it would downgrade Aaa-rated US states and municipalities if the country on the whole loses its top rating or if federal funding falls significantly as part of a plan to reduce the nation's deficit.

Inasmuch as most states and some municipalities rely heavily on federal funding for the operational purposes, they may appear vulnerable as the government plans to cut budget in the volatile economic environment, Moody's senior analyst Anne Van Praagh noted.

A new NBC News/Wall Street Journal survey revealed that about half of Americans with 2/3 of Republicans are sure the country is going into another recession. 54% of the polled said they disapprove of Obama’s handling of the economy.

“The public is incredibly pessimistic about the future,” said Peter Hart, the Democratic pollster who conducts the NBC/WSJ poll with his Republican counterpart Bill McInturff.

McInturff adds: “The president has substantial advantages, but is still in for a difficult race.”