Published On: Fri, Aug 18th, 2017

America's default debt risk TWICE as high as Germany


The gap between US and Germany is now at its highest levels since the financial crisis.

It comes as stock markets plunged for the second day in a row off the back of fears the US President will fail to push through his tax and economy reforms.

America’s top stock index the Dow Jones has now crashed below 21,700 for the first time since July.

Investors also rushed to buy gold, which sees demand rise in times of turmoil.

Markets have been rocked by rumours that Mr Trump’s chief economic advisor Gary Cohn is set to resign.

The former banker is seen as key to the President’s tax and spending plans.

Stock markets have rallied since November after Mr Trump promised to boost spending and scale back business tax.

But investors are now losing faith in the President’s promises.

It comes after the president broke up business councils after chief executive quit in protest over Mr Trump’s reaction to events on Charlottesville.

Craig Erlam, senior market analyst at Oanda, said: “Trump has already this week been forced to dissolve his manufacturing council and the strategic and policy forum, while his infrastructure council never even got off the ground, after numerous CEO’s withdrew from the initiatives due to his response to the white supremacy rally in Charlottesville, Virginia, last weekend.

“The next casualty could be the most costly of the lot, with speculation growing that Gary Cohn – a key figurehead in Trump’s tax reform and spending initiatives – could resign from his position as National Economic Council Director.

“This would be a bitter blow for Trump and be the icing on the cake of what has been a dreadful week for the President.

“The negativity is flowing through to the markets as well as such a move would cast doubt over whether Trump will deliver on his tax reform and spending promises in the foreseeable future, two things that have been at least partly responsible for the post-election rally in the markets.

“The traditional safe havens are once again being preferred today, with Gold up half a percent to trade close to $1,300 once again.”


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