U.S Debt News – Race is on to avert a U.S. default

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Just four days to go before the August 2nd for raising the $14.3 trillion debt limit to avert a default, the U.S. House of Representatives which is controlled by Republicans, had to postpone yet again the vote on the debt plan after Speaker John Boehner’s failure to round up enough support from his own Republican party members.

House Republicans rescheduled an emergency meeting today at 1400 GMT. They will try to close the rift within their party, as some hardliner conservatives are blocking efforts to reach a compromise on raising debt ceiling.

President Barack Obama warned that if both parties don’t reach a deal today the U.S. government will run out of money to pay its bills on Aug. 2 and will default.

The U.S Treasury is working hard to try and set up an emergency plan before the weekend explaining how the government would function and pay its obligations should the debt limit not be raised from the current borrowing limit of $14.3 trillion.

However, with time running out, Boehner could have a weaker position at the bargaining table, risking the Democrats rejecting his budget deficit plan.

The deadlock in talks has made investors very nervous, and the Dollar very weak. U.S. Treasuries rose, pushing 10-year yields to a one-week low.

China is especially concerned as it is the largest foreign creditor to the United States, with its Dollar holdings estimated to account for about 70 percent of its $3.2 trillion in its foreign exchange reserves.