Invest in children of knowledge revolution

It's annoying the way business people keep slipping the words ''going forward'' into almost every sentence and it was even worse when Julia Gillard kept repeating the slogan ''moving forward'' in the last election campaign. But I have to admit they've got the right idea: we do need to keep our minds focused on the future and what we need to do to secure it.

The world keeps changing and we must respond appropriately to that change. Most of us feel threatened by change, and it's only human to want to resist it. The temptation is to try to preserve things as they are, rather than adjust to the way they will be.

As we wonder what to do about the threat to our manufacturing industry, it's tempting to see that threat as temporary. We're in the middle of a resources boom which has lifted the value of our dollar to a level which could wipe out some of our industry. But the boom won't last long and, if we're not careful, we could find ourselves high and dry: no boom and a big chunk cut out of manufacturing. What do we do then?

This is a serious misreading of our situation. What we're dealing with isn't just another of the transitory commodity booms we've experienced many times before. It's a historic shift in the structure of the global economy as the Industrial Revolution finally reaches the developing countries. The two biggest countries in the world, China and India, which were also the biggest economies before that revolution, are rapidly industrialising and within the next 20 or 30 years will return to their earlier position of dominance.

Does that sound temporary to you?

As part of their urbanisation and industrialisation, those countries - and the Vietnams and Indonesias following in their wake - will require huge quantities of iron ore, coal and other raw materials. Not for several months but for several decades. Much of what they need will be coming from us. That says it's likely to be many moons before our dollar falls back to the US70¢ levels our high-cost manufacturers are comfortable with.

The other side of the re-emergence of China and India is the global shift of all but the most sophisticated manufacturing from west to east. This is a disruptive trend affecting all the developed economies, not just us. All the rich countries are having to find other things to do as their manufacturing migrates to the poor countries.

This, too, is not a process that's likely to stop, much less reverse itself. So it's not a question of hanging in until the world comes back to its senses and things return to normal. The day will never come when we're able to reopen our steel mills and canning factories.

It's a question of whether we dig in and try to prevent our economy changing, or we adapt to our changed circumstances and move into areas more suited to a rich, well-educated, highly paid economy.

In truth, we're making so much money from our sales of raw materials to the developing countries that we could afford to use a fair bit of that income to prop up our manufacturers. That wouldn't make us poorer, just less prosperous than we could be (though keeping labour and capital tied up in manufacturing would mean a lot more immigration and foreign investment to meet the needs of our rapidly expanding mining sector).

And the fact is that, throughout most of the 20th century, we diverted a fair bit of our income from agriculture and mining to subsidising our then highly protected manufacturing sector. This may help explain why so many people - particularly older people - are so ready to do whatever it takes to stop factories being closed. It's the traditional Australian way of doing things: passing the hat.

But what's the positive, future-affirming alternative? What else can we do?

Embrace the newer revolution in the developed world, the Information Revolution. While the poor countries are becoming manufacturing economies, the rich countries are becoming knowledge economies.

The knowledge economy is about highly educated and skilled workers selling the fruits of their knowledge to other Australians and people overseas. It covers all the professions and para-professions: medicine, teaching, research, law, accounting, engineering, architecture, design, computing, consulting and management.

Jobs in the knowledge economy are clean, safe, value-adding, highly paid and intellectually satisfying.

The developed economies are fast becoming ''weightless'', as an ever smaller proportion of income and employment comes from making things and an ever increasing proportion comes from providing services. Some of those services are fairly menial, but the fastest growing categories involve the highest degrees of knowledge and skill.

Employment in Australian manufacturing has been falling since the 1980s. It's sure to continue falling whatever we do to try to prop it up. By contrast, since 1984 total employment has grown by almost three-quarters to 11.4 million. Get this: all of those 4.8 million additional jobs have been in the ''weightless'' services sector.

Notwithstanding our future increase in the production of rural and mineral commodities, our economy - like all the rich economies - will continue to lose weight. The real question is whether the services sector jobs our children and grandchildren get will be at the unskilled or the sophisticated end of the spectrum.

And that depends on how much money and effort we put into their education and training. We've gone for the past two decades underspending on education and training at all levels, falling behind the other rich countries.

If we've got any sense, we'll use part of the proceeds from the resources boom to secure our future in the global knowledge economy.

Source : http://www.smh.com.au/

Read More

Careful, now everyone's going Dutch

As finance minister in her native Indonesia for five years, Sri Mulyani Indrawati put the cleaners through her sprawling bureaucracy of 64,000 economists, bureaucrats, tax collectors and customs officials.

She fired hundreds of corrupt tax and customs officials, and gave pay rises to the clean ones. The number of income tax payers multiplied, revenues grew sharply, and foreign investment expanded, propelling Indonesia into its present high-growth trajectory just below China and India.

Then her campaign came up against one of Indonesia's most powerful figures, business tycoon Aburizal Bakrie, who also happened to head the Golkar party, a key player in Jakarta politics. After refusing to call off a tax demand on his business group, or socialise its problems by calling the disastrous mud-volcano from one of its gas wells a natural event, she found herself under relentless attack.

Advertisement: Story continues below

With President Susilo Bambang Yudhoyono wavering in support, she was lifted out in May last year to become one of three managing directors at the World Bank in Washington.

In Australia this week, the 48-year-old Mulyani who has a PhD in economics noted the angst about the strong dollar, after the downsizing at BlueScope Steel and Qantas. It's the classic ''Dutch disease'' - named for the currency appreciation that hit the Netherlands after it tapped North Sea gas, the death knell for enterprises such as aircraft maker Fokker.

''It's happening here, in Latin America, in Indonesia, in Africa,'' Mulyani says. ''The challenge for the policymaker is how you are going to manage this booming sector and sterilise this impact that will disadvantage the other sectors, but at the same time without creating new distortions to the economy.

''The answer is more on the structural reforms that need to be adopted for the non-booming sectors, meaning that you have to invest in order to improve productivity and competitiveness of those sectors.''

She would no doubt regard a ''buy local'' rule to support the steel industry, as suggested by the Australian Workers Union chief, Paul Howes, as one such distortion, and probably frown at the growing attack on the Reserve Bank governor, Glenn Stevens, over the priority given to keeping inflation under control.

The fact is Australia ceased to be a significant manufacturing nation in the 1980s, when most civil and defence factories closed except for a few sectors sustained by lingering protection, notably car-making. It simply does not have the internal market or proximity to bigger ones to compete, except in specialised items, and there's no point preparing for World War II.

Compared with Brazil, which also sells iron ore to China, Australia is doing pretty well. It has inflation above 6 per cent, and its central bank has ramped up the key interest rate five times this year to 12.5 per cent, while taxes have been slapped on short-term investment flows. Its huge manufacturing sector, making everything from shoes to aircraft, is hit by Chinese competition.

According to The Economist's Big Mac Index (based on comparative prices of that identical hamburger around the world), the Brazilian real is 46 per cent overvalued, while the dollar is a modest 17 per cent too strong.

The Chinese yuan is 44 per cent undervalued by this index, while most of the other big non-Japan industrial countries in Asia have currencies undervalued too, ranging from 15 per cent for South Korea to 54 per cent for India.

But things are not quite that unfair. The Economist puts its fun index through a further filter, adjusting the ''raw'' Big Mac prices to gross domestic product per person to reflect local costs. The result is that China's yuan comes out 3 per cent above its ''correct'' value, and most other Asian countries move close to it or to over-strength. Brazil's real, however, becomes 149 per cent overvalued.

Our dollar's over-valuation drops to 12 per cent, with the proviso that the calculations were made on a dollar being worth less than US96¢ on July 25, when it was actually about $US1.01 - perhaps too much cholesterol from too many burgers clouding the calculations.

But would Australia rather not have this problem? As Mulyani pointed out, Asian markets are still quite vibrant thanks to strong domestic economies and intra-regional trade, though a prolonged crisis in Europe and the US will eventually impact growth. ''It's not totally decoupling, but they have the ability to withstand or at least to cushion themselves from the crisis,'' she said.

Governments are finding it hard to stand back and let market forces do their work, especially when it's not only manufacturing being hollowed out, but agricultural land is being devastated by mining and coal gas extraction. In mineral-rich eastern India, it is helping fuel the Maoist insurgency, in Australia's eastern states a more peaceful political backlash.

The rising power of big business vis-a-vis government is becoming a critical issue in diverse countries. In India, powerful companies have long made and broken ruling coalitions with suitcases of cash. Thailand has been racked for years by the power of the entrepreneur-politician Thaksin Shinawatra.

In Australia, the big mining houses easily stared down the Rudd government's clumsy effort at a super-profits tax, when the Henry report's original proposal for the proceeds to finance a five percentage point cut in company tax rates might have had small business, manufacturers and service companies cheering the government on.

In Indonesia at least, things are shaping up for a return bout. Earlier this month, a new political party registered itself in Jakarta. Its name, the Union of Independent People, in Indonesian yields the acronym SRI. Its founders hope to enlist Mulyani as presidential candidate in 2014 - in which case she might be running against Bakrie.

She feels honoured by the trust placed in her, but for the moment will concentrate on her role as an ''international public servant'', she says. ''Many Indonesians are proud about that, so I have to make sure they will not be disappointed.''

Source : http://www.smh.com.au/

Read More

Lawmakers to vote on last-minute debt deal

WASHINGTON - After months of vitriolic discord, Republican and Democratic lawmakers were expected to vote on Monday on a White House-backed deal to raise the U.S. borrowing limit and avert an unprecedented default.

The Democratic-led Senate is expected to pass the deal which raises the debt ceiling and cuts about $2.4 trillion from the deficit over the next decade.

But it may face tougher opposition in the House of Representatives where both conservative Tea Party supporters and liberal lawmakers have expressed dissatisfaction with the agreement.

While the deal comes just in time to avoid a catastrophic default, Washington and investors will be closely watching to see if it goes far enough to convince credit rating agencies to let the United States keep its coveted triple-A credit rating.

Standard & Poor's has been the toughest of the rating agencies with its warnings of possible downgrades if the United States failed to agree on a viable long-term deficit reduction program. All eyes will be on the rating agency this week as it reviews the agreement and decides what to do.

The world's largest economy has already been tainted by the political squabbling that delayed action on the debt ceiling until the last minute.

The dysfunction in Washington could contribute to S&P's assessment. A credit downgrade would undermine confidence in U.S. solvency, stunting economic recovery prospects and sending negative ripples through the international financial system where U.S. bonds are bellwethers.

Financial markets in Asia showed signs of relief after the debt deal was announced, with stocks and the dollar rising and safe haven gold dropping.

But investors were still wary since the deal must be voted on and because of the possibility of a downgrade.

"A downgrade is still a significant risk over coming months and the remainder of 2011," said Anthony Valeri, fixed income strategist at LPL Financial. "The ratings agencies may not view this plan as going far enough to reduce the deficit and there remains some risk to implementing the various phases of this preliminary deal."

'DO THE RIGHT THING'

The plan involves a two-step process for reducing the U.S. deficit. The first phase calls for about $900 billion in spending cuts over the next decade and the next $1.5 trillion in savings must be found by a special congressional committee. Congress must act by December 23, 2011, under the deal.

Republicans had insisted on deep spending cuts before they would consider raising the $14.3 trillion limit on U.S. borrowing, turning a normally routine legislative matter into a dangerous game of brinkmanship.

After weeks of acrimonious impasse and with the final outcome hinging on support from recalcitrant lawmakers, Obama pressured Congress to pass the deal.

"I want to urge members of both parties to do the right thing and support this deal with your votes over the next few days," Obama said in a televised address at the White House on Sunday night.

But Obama, like congressional leaders, noted that it was not the deal that he would have preferred but it was a compromise.

Many in the anti-Washington conservative Tea Party movement, who helped Republicans win power in the House in last year's election and who oppose any hike in the debt limit, criticized the deal.

Tea Party Nation founder Judson Phillips called it "a complete victory for liberals" and said the spending cuts were "a joke".

But despite that opposition and a muted response from House Democratic leader Nancy Pelosi, who is crucial to delivering enough votes to offset Republican defections, congressional insiders expect the deal to pass in both the House and Senate.

(Additional reporting by Jeff Mason and Thomas Ferraro; Writing by Deborah Charles, Editing by Sandra Maler)

Source : http://www.reuters.com

Read More

Debt crisis moves to Senate, deadlock persists

WASHINGTON - Democrats sought to forge a last-ditch compromise with Republicans on Friday by offering a concession to avoid a crippling default, but a bitter divide remained before Tuesday's deadline to raise the country's debt ceiling.

The Republican-controlled House of Representatives approved a deficit-cutting plan and the Democratic-led Senate quickly rejected it, moves that underscored the ideological differences but also opened the way to start negotiating a deal.

The back-to-back votes broke weeks of political inertia in efforts to lift the $14.3 trillion debt limit by Tuesday after which the world's largest economy will be unable to pay all of its bills, the government says.

But hopes for a quick resolution faded as the Senate adjourned for the evening after a round of parliamentary maneuvering and finger-pointing, setting the stage for a tense weekend in Washington.

Senate Democratic Leader Harry Reid ceded some ground late on Friday when he revised his own deficit-reduction proposal to incorporate parts of a "backup plan" first proposed by the Senate's top Republican, Mitch McConnell.

The new version would essentially give President Barack Obama the authority -- and the blame -- to raise the debt ceiling in three stages to cover borrowing needs through the 2012 elections when he is running for a second term.

Obama and his Democrats had hoped to avoid multiple votes before the election.

Despite the pressing deadline, progress toward an agreement did not appear imminent.

"They are refusing to negotiate with us and all they do is talk," Reid told reporters after the Senate vote, which like the House tally hewed to party lines.

Delays and procedural hurdles will still make it all but impossible for Congress to strike a deal and send it to Obama's desk before Monday night at the earliest, injecting further uncertainty into already rattled global financial markets.

Even if a late deal can be struck, the United States risks losing its top-notch AAA credit rating, a once-unthinkable event for world financial markets that would push up the U.S. cost of borrowing while the economy is still struggling.

World leaders have been stunned by the dysfunction in Washington. World Bank President Robert Zoellick on Friday said the United States was playing with fire.

America's largest foreign creditor, China, has repeatedly urged Washington to protect its dollar investments and its state-run news agency on Friday said the United States had been "kidnapped" by "dangerously irresponsible" politics.

Wall street ended its worst week in a year on Friday. The dollar plunged to a record low against the Swiss franc, which is viewed by investors as a safe haven currency.

In short-term lending markets, investors dumped holdings over fears about the talks, driving rates on Treasury debt that matures in August to six-month highs.

The Treasury warned Wall Street firms it might delay or cancel a major round of bond sales if Congress does not raise the debt limit in time.

Both sides in Congress have been at impasse for weeks with lawmakers locked in a blame game that has raised the risk of a potentially devastating default, which could plunge America back into recession and trigger economic turmoil globally.

Developments gathered pace on Friday when Republicans pushed a deficit-cutting plan through the House by a vote of 218-to-210 after the party's leaders reworked the bill to appease anti-tax conservatives in their ranks.

The legislation, denounced earlier by Obama who had admonished lawmakers to stop wasting time and find a way "out of this mess," was always doomed to defeat in the Senate where all of Obama's Democrats had vowed to vote against it.

The Senate defeated the measure, 59-to-41.

"We are moving a bit closer," said Axel Merk, president of Merk Investments in Palo Alto, California. "We'll get an agreement, ultimately, but the drama is going to continue to play out."

POLITICAL MANEUVERING

Senate Democrats had hoped to work out a compromise with Republicans on Friday but said McConnell refused to negotiate.

Immediately after defeating the House bill pushed by Republican Speaker John Boehner, Reid sought to sway some Senate Republicans by offering a revised version of his plan that included elements from one McConnell proposed weeks ago.

Through a complex legislative procedure, Obama would be able to increase the debt ceiling by $2.4 trillion in three stages but Republicans would have political cover by not having to explicitly approve each case. The White House has not ruled out accepting such a provision.

Republican aides said McConnell wants to negotiate directly with the White House to ensure that Democrats will be on board with any final deal.

Reid will find out how many Republicans back his plan in a procedural vote scheduled for 1 a.m. EDT (0500 GMT) on Sunday. If all 53 Democrats back the plan they will need at least seven Republicans to clear the 60-vote threshold.

A vote on its final passage, which requires a simple majority, could come on Monday morning.

Boehner's failure on Thursday to quell a rebellion among Tea Party-affiliated conservatives in his party exposed a rift among Republicans that has hindered efforts to reach a deal.

But Boehner brought enough of his recalcitrant Republicans onboard on Friday with a retooled plan that included a requirement for Congress to pass a balanced budget amendment to the Constitution and send it to the states for ratification, a long-time core demand of fiscal conservatives.

Boehner's two-step plan would have cut spending initially by about $900 billion and lift the debt ceiling only enough to last a few months. That would mean a re-run of the acrimonious debate which Obama is determined to avoid at a time when he will be deeper into 2012 re-election campaign.

Reid has said a short-term solution is unacceptable and is pushing for $2.2 trillion in cuts over 10 years.

Ratings agency Moody's signaled it probably will not downgrade the United States' triple-A credit rating immediately, even if there is no deal to raise the debt ceiling, but a cut could come in the medium term. It said the United States would still have enough money to pay its debts to bondholders after Tuesday.

Rival ratings agency Standard & Poor's has warned it could cut the rating soon if there is no deal to address the underlying budget problems.

(Additional reporting by Rachelle Younglai, Donna Smith, Lily Kuo, Margaret Chadbourn, Laura MacInnis, Tabassum Zakaria in Washington and Karen Brettell, Steven C. Johnson and Jennifer Ablan in New York; Writing by Stuart Grudgings and Matt Spetalnick)


Source : http://www.reuters.com

Read More

Republicans race to revive debt plan

WASHINGTON - Republican leaders will scramble to rescue their budget deficit-cutting plan on Friday after conservatives mounted a rebellion that heaped uncertainty on efforts to avert a catastrophic debt default.

House of Representatives Speaker John Boehner's failure to round up enough support for his plan on Thursday exposed a rift in the Republican Party that is hampering efforts to reach a compromise to raise the U.S. debt ceiling before a Tuesday deadline.

President Barack Obama says that unless Democrats and Republicans strike a deal, the government will start being unable to pay all its bills on August 2, a once unthinkable prospect that is increasingly unnerving investors.

With only four full days left, the Treasury could unveil as early as Friday an emergency plan explaining how the government would function and pay its obligations if Congress does not agree to raise its borrowing limit from $14.3 trillion.

Despite warnings of dire economic consequences, lawmakers appear as far apart as ever as conservative Republicans demand an end to what they say is out-of-control government spending and Democrats seek to protect spending on social programs.

In a sign of growing international alarm over the U.S. impasse, China's state-run news agency sharply criticized U.S. politicians, saying the world's largest economy has been "kidnapped" by "dangerously irresponsible" politics.

As the largest foreign creditor to the United States, Beijing has repeatedly urged Washington to protect its dollar investments, which are estimated to account for about 70 percent of its $3.2 trillion in foreign exchange reserves.

Boehner's plan, which would cut spending by about $900 billion and raise the debt ceiling for a few months, is sure to be rejected by the Democratic-controlled Senate but could factor into an eventual compromise.

His inability to win quick passage in the Republican-run House could weaken his position at the bargaining table.

Top Senate Democrat Harry Reid wants to raise the debt ceiling by enough to kick the crisis beyond the November 2012 presidential election.

Reid indicated late on Thursday that he may advance his own bill, which cuts spending by $2.2 trillion over 10 years, in the Senate rather than use Boehner's proposal as the basis for a compromise.

REPUBLICAN MEETING

House Republicans were due to meet at 10 a.m. (1400 GMT) on Friday to discuss a way forward after last-minute arm-twisting by Boehner failed to overcome opposition within his party and forced him to abandon a planned vote on Thursday night.

The setback raised doubt over his ability to deliver enough votes in any compromise deal with the Senate.

Lawmakers continued to throw blame at each other, with Democrats accusing Republicans aligned with the fiscally conservative Tea Party movement of holding Americans hostage to their vision of small government.

"Republicans have taken us to the brink of economic chaos. The delay must end now so we can focus on the American people's top priority: creating jobs and growing the economy," House Democratic Leader Nancy Pelosi said in a statement.

Tea Party lawmakers say they are justified in taking a strong stand after being elected last year on a promise to slash spending.

Fears of an unprecedented default by the world's biggest economy and the more likely scenario of America losing its top-notch credit rating are gnawing at markets, hitting stocks, undermining the dollar and fueling a move to safe havens.

Further market turbulence appeared likely on Friday. After the announcement that the House would not vote on Thursday, the dollar fell to a four-month low of 77.50 against the Japanese yen. U.S. stock futures were off 0.6 percent, pointing to a weaker start on Wall Street.

Veterans of U.S. legislative battles voiced confidence that a deal will be reached as Congress works through the weekend and feels the heat from jittery financial markets and ordinary Americans frustrated by the Washington gridlock.

The main sticking point between Republican and Democratic leaders is that Boehner's two-step plan would only extend the government's borrowing for a few months. Obama wants the debt ceiling raised beyond the November 2012 elections.

Without a deal, Obama could be forced to consider taking emergency steps to ward off a default even though the White House has said Congress must come up with a solution.

Among his options are invoking an obscure constitutional amendment to raise unilaterally the debt ceiling or for the Treasury to prioritize payments, choosing between paying bond holders or Social Security pension recipients, for example.

"I think they should be exploring all their legal options," Democratic Representative Chris Van Hollen said on Thursday night.

Even if the administration were to implement some of the options, the debt crisis could still trigger turmoil in financial markets.

(Writing by Stuart Grudgings; editing by Eric Beech)


Source : http://www.reuters.com

Read More

Obama seeks "Plan B" as debt plans stall

WASHINGTON - A Republican plan to cut the U.S. deficit faced delay and stiff opposition on Wednesday, piling anxiety onto investors and ordinary Americans hoping for a late compromise to avoid a crippling debt default.

Deeply divided Republican and Democratic leaders are scrambling to find common ground with less than a week before the government hits its borrowing limit approved by Congress, triggering a possible default that would roil global markets.

Even if that fate is avoided, a plan that flinches from hefty deficit cuts could result in a downgrade of America's top-notch credit rating that would raise its borrowing costs and deal a severe blow to its anemic economic recovery.

After weeks of acrimonious debate, the contours of a possible deal have emerged but Republicans and Democrats are digging their heels in on some key demands and blaming each other for putting politics ahead of the national interest.

The chances of a quick resolution narrowed after a vote on a deficit plan by the top Republican in Congress was pushed back to Thursday from Wednesday.

Republican Speaker John Boehner rushed to rework his bill after an analysis found it would cut spending by $350 billion less than the $1.2 trillion over 10 years he had claimed.

President Barack Obama has threatened to veto the Boehner plan and top Senate Democrat Harry Reid described it as "dead on arrival."

The plan has also failed to win the backing of conservative Tea Party Republicans, who have steadfastly refused to back tax rises and want much heavier cuts to social programs that are traditionally protected by Obama's Democrats.

The White House said on Tuesday it was working with Congress to craft an unspecified "Plan B," providing a glimmer of hope that an 11th-hour deal could be reached as lawmakers feel the pressure from increasingly anxious financial markets.

The gridlock dragged down U.S. stocks for a second day on Tuesday and the dollar continued to slide in early Asian trade on Wednesday, falling to a fresh four-month low against the Japanese yen.

There have been no signs yet of the panic that could be sparked by a default, with most investors confident that a deal will somehow be struck.

A Reuters/Ipsos poll showed Americans are overwhelmingly concerned about the crisis and a majority -- 56 percent -- support a mixture of tax increases and spending cuts that Obama has advocated and Republicans have dismissed.

"WRAPPED UP IN A BOW"

Despite their differences -- sharpened by the looming presidential and congressional elections in November 2012 -- there is common ground between Boehner's bill and a rival plan by Reid that calls for a $2.7 trillion deficit reduction over the next decade.

Reid said he could not understand why Republicans did not support the plan he presented since it does not raise taxes and the spending cuts in the proposal have been endorsed by them.

"It's everything Republicans have demanded wrapped up in a bow and delivered to their door," he said.

Obama has said he cannot accept Boehner's two-step deficit plan because it extends the Treasury's borrowing authority only until early next year, risking a rerun of the debt impasse during the election campaign.

Obama, who will run for a second term, has backed Reid's one-step plan, which has a hike to the $14.3 trillion debt limit that would carry through the elections.

Neither plan goes far enough with deficit cuts to guarantee the U.S. sovereign credit rating will not be downgraded, an action that would dent the global safe-haven status of the dollar and Treasury bonds.

All three big credit-rating agencies have warned the United States needs to come up with a credible deficit plan to keep its top rating in the long term.

Executives from Standard and Poor's and Moody's Investors Service are due to appear before a congressional panel on Wednesday, where they will face scrutiny over their views on the debt ceiling debate.

Obama and Treasury Secretary Timothy Geithner have stressed the government will run out of room to borrow funds on August 2, next Tuesday.

But Treasury officials have never said when the government will exhaust its funds to pay the nation's bills and the consensus among Wall Street analysts is that the cash will not run out until about two weeks later than that.

(Writing by Stuart Grudgings; Editing by John O'Callaghan)

Source : http://www.reuters.com

Read More