PRESS ASSOCIATION -- The global financial markets remain nervous after Democrats and Republicans failed to reach agreement over a crucial deal to prevent an unprecedented August 2 United States debt default.
Asian stock markets fell on Monday after America's political leaders failed to clinch a deal on raising Washington's debt limit necessary to avoiding the impending default.
Oil prices fell below 99 dollars a barrel amid investor concern that the lack of an agreement could damage the economy and reduce demand for crude.
The biggest obstacle to a long-term debt limit extension is coming from the Republican-controlled House, which includes dozens of new Republican members elected last November with strong support from the small-government, low-tax tea party movement.
Late on Sunday night Mr Obama met Senate majority leader Harry Reid and House minority leader Nancy Pelosi, the top Democrat in the lower chamber of Congress, for a progress report. Afterwards, a White House official said Mr Obama and the Democratic leaders "reiterated our opposition to a short-term debt limit increase".
They had hoped to strike a deal to reassure investors around the world that the partisan fight in Washington was nearing an end, lifting fears that the US would be unable to cover its debts when the current borrowing limit expires a week from Tuesday. Instead, both prepared rival debt-limit emergency fall-back plans.
Major global credit ratings agencies have threatened to downgrade the US government's triple-A credit rating unless there are assurances the country will not go into default for the first time in its history.
A default could mean that the US government could not pay all its bills starting next month, including interest and principal on treasury bonds, social security cheques to pensioners and payments to government contractors.
Lowering the US credit standing would probably raise the cost of government borrowing. Americans seeking mortgage or car loans would see interest rates climb, as would people with outstanding credit card balances.
President Barack Obama said that effectively amounts to a tax increase on Americans. Many economists think default could push the US economy back into recession or worse, while causing chaos in the global economy.