U.S. debt ceiling and its impact

1, the market has long expected the U.S. debt ceiling is also raised, will be the other major issues of the U.S. government following the financial cliff.

2 need to go through the intense debate to the final agreement. Republicans should fierce opposition, because their basic idea is to limit government spending rather than by raising taxes to reduce the budget deficit.

3, the Obama administration will strive for maximum upregulation (small may cancel the debt ceiling), so as not to affect the normal operation of the government - take stock of what the progress and impact of the Obama reform initiatives as well as rigid spending problem.

4 a practical point of view, the U.S. deficit reduction the parties agree with the goal, but the process is long-term oriented. According to the current U.S. fiscal revenue and expenditure, the debt ceiling needs to improve, or even the need to continue to improve.

The Obama administration has developed some reduction program, such as can be implemented, the need to increase the amount should be less than the magnitude of increase last year.

6, the debt ceiling itself is little suspense, the market was inevitable due to the dispute and give his own views. If the Republicans enough to adhere Obama administration showed enough support reduction sincerity, will support a short-term upward against the U.S. dollar, the dollar higher, and the U.S. economy may slow down because of the large reduction efforts, industrial raw materials will market even gold constitutes bad; Conversely, if the debt ceiling (possibly) improve by a big margin, constitute bearish on the dollar, the market will think that the loose monetary policy will therefore maintain longer, then commodities, especially raw materials market will be relatively strong number .

7, in short, the impact on the market the largest herein reflect the U.S. government's determination and ability to solve the debt problem, and the resulting impact on monetary liquidity and economic growth - to recommend a variety of possible solutions to be demonstrated.

8, on the long term, with the recovery of the U.S. economy and some tax increases to less support efforts to produce the desired results, the size of the U.S. government deficit will gradually decline, the debt ceiling can not be raised infinitely. Financial and balance of payments situation improved loose monetary policy exit, both need to combine considerations. From the signal of the the recent Fed issued hope ahead of the end of the easing policy point of view, in fact, hinted that the U.S. government pay more attention to improve the fiscal revenue and expenditure, in order to create conditions for exit currency.