WASHINGTON (MNI) – The following is a roundup of key developments
and events Thursday on the ongoing stand-off over the U.S. debt
ceiling:

* Senate Budget Committee Chairman Kent Conrad, in a moment of
understatement which is increasingly rare in hyperpartisan Washington,
said Wednesday that he does not know the “precise roadmap” leading to
passage of legislation to increase the debt ceiling and cut budget
deficits. Lawmakers from both parties, speaking less carefully, have
said they have absolutely no idea how the current debt ceiling stalemate
will play out. By all accounts, the debt ceiling endgame will begin when
House Speaker John Boehner manages to pass a new House Republican debt
ceiling plan.

* The standoff in Washington over the U.S. debt ceiling
extension poses a long-term threat which will weaken the U.S. dollar,
exacerbate global inflationary pressure and add to the challenges faced
by emerging markets, the official China Securities Journal said in a
front-page editorial Thursday.

* Asian share prices fell sharply Thursday after Wall Street was
slammed by mounting worries over the debt standoff and disappointing
durable goods numbers.

* The U.S. dollar started the Asian morning within narrow
ranges, between Y77.87 and Y78.03 against the yen, after opening around
Y78.00 earlier. The pair traded sideways until Japanese media reported
that Japan’s monetary authorities had hinted they were unlikely to
intervene to curb the yen’s gains at least until the U.S. debt ceiling
deadline had passed on August 2.

* House Speaker John Boehner said Wednesday evening that the
Congressional Budget Office has examined his revised spending cut plan
and now estimates it would cut deficits by $917 billion. In a statement,
Boehner called this CBO estimate positive news and vowed to press ahead.
“This bill is far from perfect but it’s a positive step forward that
denies (the) president the $2.4 trillion blank check that lets him
continue his spending binge through the next election,” he said. The
House is expected to vote Thursday on Boehner’s revised bill.

* In a blog posting by U.S. Congressional Budget Office Director
Doug Elmendorf Wednesday h warned that “a government that owes as much
as ours does, and will need to borrow as much as ours will need to
borrow, cannot take the views of its creditors lightly. Even a slight
increase in the perceived risk of U.S. government securities would
probably raise interest payments by a lot for years to come.”

* German Finance Minister Schaeuble said in a newspaper
interview published Thursday that he remains confident that a
sustainable solution will be found in the U.S. debt row, even though
maybe only at the last minute. Still, the core problem of excessive
public debt in the U.s. will not be solved by this, he cautioned.

* The Asian Development Bank Thursday said a cut in U.S.
sovereign ratings will put downward pressure on the U.S. dollar, which
will hurt countries’ holdings of the U.S. Treasuries. “If the U.S.
sovereign rating is downgraded to AA, it will put pressure on the dollar
and it is likely to depreciate further and will cause financial losses
for emerging Asian nations including China for their dollar holdings in
their foreign exchange reserves,” warned Iwan J. Azis, head of the ADB’s
Office of Regional Economic Integration.

–Editor: Brai Odion-Esene; besene@marketnews.com

** Market News International Washington Bureau: 202-371-2121 **

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