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China official: GOP ‘playing with fire’ with debt ceiling

June 8, 2011

usatoday

There’s been an interesting warning on the debt ceiling today — from China.

Li Daokui, an adviser to the People’s Bank of China, told reporters in Beijing, “I think there is a risk that the U.S. debt default may happen.” And he puts the blame on congressional Republicans. “The result will be very serious and I really hope that they would stop playing with fire,” he said.

China is no disinterested party: It holds more than $1 trillion in Treasury debt as of March.

President Obama may well agree with the Chinese banker’s sentiment, as he urges Congress to go ahead and raise the nation’s $14.3 trillion debt ceiling.

Technically, U.S. obligations have already risen past that ceiling, but the Treasury Department says it can use accounting maneuvers to keep paying bills until Aug. 2.

Congressional Republicans, including those who control the U.S. House, say they won’t agree to a debt ceiling increase unless the White House and Democrats agree to major spending cuts.

The two sides are negotiating — as the world waits.

“I really worry about the risks of a U.S. debt default, which I think may lead to a decline in the dollar’s value,” Li said.

  1. June 9, 2011 at 3:12 pm

    A little story of why the US won’t default, at least voluntarily.

    http://goldandsilverlinings.com/?p=1165

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