US debt crisis: Capitol Hill ready to strike deal - but at what cost?

Compromise should stave off default but America could still lose its triple A credit rating

Jill Treanor,

Guardian, 31 July

America could soon lose its much-coveted triple A credit rating – possibly by the end of this week – as politicians in Washington race to clinch a deal to solve the debt crisis in what is likely to be a volatile week for global financial markets.

Just hours before the dollar started trading in New Zealand, the Senate was voting on a deal to raise the $14.3tn ceiling on borrowing to enable public workers to be paid, and the country to keep functioning. But while there was relief that an outright default on debt payments by the US might now be avoided, there was lingering concern that congressmen might not fall behind the $3tn of cuts needed in return for a $3tn rise in the debt ceiling before Tuesday's deadline – when the White House has warned the money will run out.

Anxiety was apparent on both sides of the Atlantic about the implications of the crisis in the US, where data on Friday showing the US economy has stagnated further heightened tensions in the market.

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