Well, it is not surprising to see that it takes until last minute to see a deal in debt problem. Both party Republican and Democrate agree on spending cut and further deficit-reduction invloving two phase. 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 Dec. 23, 2011, under the deal.
Because of the deal, Obama now can increase debt ceiling up to $400 billion in first phase while for the next $500 billions depend on Congress resolution. For the second phase, a special joint committee of Congress will recommend further deficit reduction steps totaling $1.5 trillion or more by the end of November, with Congress obligated to vote on the panel's proposals by the end of the year. If the recommendations are enacted, Obama would be authorized to increase the debt ceiling by up to $1.5 trillion -- as long as the additional deficit reduction steps exceed that amount. The president also can get the additional debt ceiling increase if both chambers of Congress pass a balanced budget amendment to the U.S. Constitution in votes to be held by the end of the year.
Eventhough this is not the greatest deal, its quite enough to relieve the market as stock price all around the world especially in Asia see a price hike. Seeing the "greatest" nation escape from default is always a good sign.
Apart from that, the possibility of US retaining its AAA Rating is still questioned. Even if they did able to retain, Moody's said that they will give negative outlook on US economy.
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