Hong Kong’s benchmark stock index soared in the exchange’s first session of the new year on Wednesday, hitting a 19-month high as investors welcomed news that U.S. lawmakers had passed a deal to avert the so-called “fiscal cliff.” But after demanding on Tuesday that the U.S. “live up to its global economic responsibilities,” and claiming that the deadlocked talks had “exposed the deficiencies of the U.S. political system,” Xinhua News chided the world’s largest economy for only “kicking the can down the road:”
“At the moment there is a relief rally going on,” said Bernard Baumohl, chief global economist at the Economic Outlook Group and frequent guest on PBS’ Nightly Business Report.
“But I think now we’re going to have to deal with phase two of that poison pill,” he said, referring to cutting federal spending and the upcoming debt ceiling talks.
U.S. Congress has tied the economy to a bungee cord, he said. ” We jumped off the cliff temporarily on January 1st, then came the deal on taxes, so we came back up safely back on the cliff. But now we may go back off the cliff if there is no agreement on the spending side.”
Spending cuts are a highly incendiary topic for Democrats and Republicans. “They go right to the very core of the philosophical difference between the two parties,” he said, adding that he foresees a heated debate over the next two months on the issue.
On the Chinese blogosphere, meanwhile, Tea Leaf Nation’s David Wertime writes that netizens “approached the problem with a familiar mixture of humor and cynicism:”
[...]Across comment threads, many reacted as a majority of Americans have–decrying the faux crisis as a manufactured political “show,” a “performance by the two parties.” Perhaps most vividly, @羽林踏雪 declared it a “rotten Hollywood drama.”
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