10 Oct 2013
US Treasury Secretery warns markets increasingly jittery over debt ceiling
FXstreet.com (Barcelona) - During his testimony before the Senate Finance Committee on Wednesday Treasury Secretary Jacob J. Lew signalized that the current US political stalemate is beginning to have an adverse effect on the country's economy.
“The biggest threat to a recovery in our economy is a manufactured political crisis,” he said, emphasizing that a “denigration of US creditworthiness would have substantial effects on the domestic financial markets and on the value of the dollar.”
Lew remarked that the financial markets are increasingly preoccupied with the situation in the US, which pushed borrowing costs up in recent days. He said that waiting to raise the debt ceiling until the last moment was “very dangerous.”
The Treasury Secretary expressed certanity that the US would hit the debt ceiling on October 17, which would endanger Social Security payments, payments to Medicare providers, as well as active-duty military pay, retirement and veterans benefits. He labeled the possibility of prioritizing the payment obligations, as complicated because "there is no way of knowing the irrevocable damage" such a move would have on the markets.
“That's a slightly different tone he's taken there to his other rhetoric that he is vehemently against a prioritisation of debt payments,” Ryan Littlestone from Forex Live comments. “I may just be reading more than I should into the headline but it's struck a chord. It sounds like they have been looking into it in depth.”
“The biggest threat to a recovery in our economy is a manufactured political crisis,” he said, emphasizing that a “denigration of US creditworthiness would have substantial effects on the domestic financial markets and on the value of the dollar.”
Lew remarked that the financial markets are increasingly preoccupied with the situation in the US, which pushed borrowing costs up in recent days. He said that waiting to raise the debt ceiling until the last moment was “very dangerous.”
The Treasury Secretary expressed certanity that the US would hit the debt ceiling on October 17, which would endanger Social Security payments, payments to Medicare providers, as well as active-duty military pay, retirement and veterans benefits. He labeled the possibility of prioritizing the payment obligations, as complicated because "there is no way of knowing the irrevocable damage" such a move would have on the markets.
“That's a slightly different tone he's taken there to his other rhetoric that he is vehemently against a prioritisation of debt payments,” Ryan Littlestone from Forex Live comments. “I may just be reading more than I should into the headline but it's struck a chord. It sounds like they have been looking into it in depth.”