Today's Coming Crisis Movie

Tuesday, July 26, 2011

MF head Lagarde warns 'clock ticking' on US debt deal

The new head of the International Monetary Fund (IMF), Christine Lagarde, has warned the "clock is ticking" on a deal to tackle the US deficit and raise its debt ceiling.

Unless politicians agree a package by 2 August the US may be unable to pay its bills, triggering an economic crisis.

On Tuesday the dollar fell against the euro whilst US shares opened down.

But Ms Lagarde warned against drastic cuts in spending, saying these could create a "jobless recovery".

She also called on the EU to implement its plan to tackle sovereign debt.

Ms Lagarde took over the leadership of the IMF following the arrest of former head Dominique Strauss-Kahn in New York on charges of sexual assault.

The former French finance minister said the world economy still faced significant "downside" risks as it emerged from recession. (more)