Concerns over US shutdown, possible default spread

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DEBT DEFAULT LOOMING. The US is facing a debt default as politicians bicker over the federal budget. The dome of the US Capitol in Washington, DC, USA, 03 October 2013. EPA/Shawn Thew

Concerns over the United States’ building financial crisis is gathering steam. The weeklong shutdown is also getting nearer the October 17 deadline on the government’s borrowing limit, creating jitters in the stock market and in China, with Beijing warning that the United States must act quickly to establish the credibility of the dollar, the world’s major reserve currency. The Dow Jones Industrial Average fell 0.90% to 14,936.24 on worries about the debt ceiling showdown that could trigger a disastrous default and shred Washington’s prized credit rating. The US government will be barred from borrowing after October 17 unless the current $16.7 trillion debt ceiling is lifted. In the resultant chaos, Washington would begin defaulting on its debts, global stock markets could plummet and the fragile world economy could take a hit it can ill afford. President Barack Obama is refusing to negotiate and enter into a compromise over his trademark health care law with Republican House Speaker John Boehner.

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