U.S. narrowly avoids default

The United States in danger of sovereign default has managed to avoid it when Congress voted Wednesday at the last minute of the deadline to avert a default and end a federal government shutdown.

The U.S. Congress passed legislation to end a shutdown and avoid default, at 10 p.m. on Wednesday, only one and a half hours before default. U.S. President Barack Obama immediately signed the bill.

The prospect of U.S. default, which had put the world under great strain, was narrowly averted, and 400,000 public servants on furlough can go back to work in 16 days. Federal agencies, which had been closed temporarily, reopened and started normal operation on Thursday.

The news boosted the stock market by raising all of the three major indices -- the Dow Jones Industrial Average, Standard and Poor’s 500 and NASDAQ Composite Index – by more than 1 percent. In particular, the Dow Jones Industrial Average was closed at 15,373.83, up 205.82 points (1.36 percent) from the previous day.

The agreement reopens the federal government through Jan. 15 next year and raises the government debt ceiling temporarily through Feb. 7. President Obama said in a special statement after the passage that the U.S. should “get out of the habit of governing by crisis” and need to “earn back the trust of the American people, which has been lost” over this crisis.

Because the agreement is not a complete resolution but a temporary postponement of the budget issue, another political debate over the same issue is expected early next year.