The clock is ticking: Lagarde on US debt crisis

Washington:  The head of the International Monetary Fund (IMF), Christine Lagarde, has warned that the clock was ticking on a US debt deal, as the dollar slid to new lows amid concerns of a looming and unprecedented default by the world's top economy.

US President Barack Obama, in a solemn late night address to the nation, hit out at what he called a "dangerous game" being played by rival Republicans with the two sides deadlocked over a deal to raise the debt ceiling by August 2.

"We can't allow the American people to become collateral damage to Washington's political warfare," Obama said on Monday in his White House address, and warning of a "deep economic crisis" if the US defaults.

For weeks Obama's Democratic allies have been at loggerheads over a deal with Republicans, who control the House of Representatives, to raise the US $14.3 trillion debt ceiling and agree on ways to cut the ballooning US deficit.

Republicans have called for a raft of deep spending cuts - which Obama has agreed to - but emboldened by newly elected arch-conservative Tea Party lawmakers they have refused the president's calls for matching revenue increases from the nation's wealthiest.

Lagarde, the new head of the International Monetary Fund, waded into the debate Tuesday urging the two sides to find a compromise, as both parties touted rival plans.

"The clock is irremediably ticking, and people really have to find a solution," she said in New York.

She warned a default "would be a very, very, very serious event. Not for the United States alone, but for the global economy at large."