LONDON The world's disbelief at the political impasse in the U.S. turned to cautious relief Thursday as the country stepped back from the brink of default. But fears remain about another possible shutdown and, even worse, a possible default early next year.

At the same time, experts and foreign officials warned that Washington's credibility had been damaged a point President Barack Obama echoed.

More: Obama slams unnecessary damage from gov't shutdown


It's a huge threat to the leadership of an indispensable power, Klaus Scharioth, Germany's ambassador to Washington from 2006 until 2011, told The Associated Press. That's bad news for all of us. It's bad news for Europeans because we're the closest partners of the U.S., but it's bad news for the rest of the world too if they don't exercise the power that they have.


The answer has to come from within, he said. I hope the current situation is bad enough that people realize it cannot continue.


It will be essential to reduce uncertainty surrounding the conduct of fiscal policy by raising the debt limit in a more durable manner, she said in a statement.



In three months' time, this could be back again, said Chakraborty. If this kind of pushing it back happens several times, then this comfort that the markets had over the last 20 days that a deal will be reached, that comfort may now be dead.



There is a sense that the U.S. as a reliable ally is not necessarily the case anymore, she said, warning that both American allies and adversaries have reached this conclusion. But she, like others, said the damage is most likely short term.



If it's not the debt ceiling, it'd be something else, she said.

Obama: Focus now on budget, immigration, farm bill



It's just gotten to the point now that it's having lots of negative side effects, he said. The effect is especially felt in Asia, where countries were already concerned about America's commitment to the region.



It is easy to remain the reasonable, serene statesman if you are dealing with concrete-headed , self-righteous nihilists like the Tea Party lawmakers, the influential newspaper said in a commentary. It is easy to reject all negotiations if the other side acts like a crazy extortionist gang. Obama played the PR game of guilt and innocence very cleverly. According to the polls, he wins hands down. But that is not the primary task of the president.



There is no doubt that damage was done here to the image of American economic stability, Israel's economic envoy to Washington, Eli Groner, told Israel's Army Radio. It's not good for the financial markets, not in the United States and not around the world.

In Brazil, a large holder of U.S. debt, there was certainly relief, but also concerns that it's just a temporary fix and more turbulence is ahead. Finance Minister Guido Mantega said the U.S. must come to a lasting answer to the temporary solution that was found. He added that as long as the threat of another shutdown exists, there will be a sensation of insecurity, distrust and therefore damage to business in general.

Brazil's biggest newspapers carried headlines like O Globo's Temporary Relief and leading economic columnist Miriam Leitao summed up the mood in the daily.

Nobody won. Everybody lost. The Obama government was held prisoner by blackmail. The Republican party allowed itself to be controlled by a radical minority and no longer represents the average American's way of thinking, Leitao wrote. The government as a whole lost credibility and today there is more uncertainty surrounding the world economy.



Read or Share this story: