Financial disgrace
October 11, 2013No matter which way you look at it, China is the world's workbench, and the United States is still the motor of the global economy. The dollar remains the most important currency on the planet, and the country is a shelter for the free market economy. And at the moment, the political class in Washington is putting it at risk.
If the situation were not so dramatic, it would be easy to dismiss the frequently reoccurring dispute over raising the debt ceiling, and bankruptcy that would come with failing to do so, as an episode in a sitcom that gets rerun every two years. And, just like on TV, by the end of the show everything would be fine and everyone would be friends again. Unfortunately, that's not the case here. Washington has the world economy in headlock and no one knows if it will be released before it suffocates.
The aftermath of an US default would be incalculable. The already fragile world economy would plunge in a deep recession, the financial and bond markets switch to chaos mode. The Lehman bankruptcy in 2009 and its consequences would look like a dim prelude - and that crisis, which also started in the United States, was the worst economic crisis in the last 80 years.
The proud country that so enjoys seeing itself as global power No. 1 and the world's leading economic power, is making a complete fool out of itself. And it is doing so at a time when there is actually much important work to be done. The country's infrastructure is often on the level of an emerging nation, but its mountain of debt is the biggest in the world. Washington needs to release $2 billion worth of bonds every day just to make ends meet.
When the euro crisis was raging fiercely, the United States pointed its finger across the Atlantic. But even then it was obvious that should situation in Europe calm down, the disastrous financial state of the US would come back into focus. Maybe Washington should look to Europe as an example of crisis management.